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The following commentary comes from an independent investor
or market observer as part of TheStreet's guest contributor
program, which is separate from the company's news
coverage.

BEIJING (TheStreet) --
One year ago, shares of Molycorp(MCP) and Rare Earth
Elements(REE) were each up by several
hundred percent in a few months due to an investor-buying frenzy
for all things related to rare earths. Many investors piled into
shares of tiny fluorite producer Shenzhou
Mining(SHZ), which was trading below $1.
Within weeks, SHZ ran to over $10 -- a quick return of more than
1,000%. More stunning was the fact that SHZ wasn't even in the
business of producing rare earths, it was just mistakenly lumped
in with the sector. For a while the "greater fool theory" held
and the stock continued to skyrocket, but once the party ended,
shares of SHZ plunged back to $1 to $2. For those who piled in at
the top, they are looking at potential losses of 80% to 90%. We
are seeing the exact same thing again with "social media" stocks.
The hot stock driving the space is now the impending IPO of
Facebook. Despite the fact that everyone knew the IPO of
Facebook was nearing its filing with the SEC, and even had an
idea of the proposed valuation (up to $100 billion), a Wall
Street Journal article on Friday discussing the impending IPO
led to frenzied buying of anything related to social media. This
included most of the Chinese internet space. Shares of
RenRen(RENN), mislabeled as the "Facebook
of China," surged as much as 30% (36% in after hours) and Sina
Corp(SINA), which runs China's most
popular mini-blog service, jumped as much as 15%. This buying of
internet stocks set off a quick chain reaction, spreading to most
of the Chinese internet space as a whole (even non-social
networking stocks). Shares of eCommerce China DangDang
were up by nearly 20%, Baidu(BIDU) was up 7% and
Youku(YOKU) was up 13% . In December,
investors had seemingly given up on RENN completely. The stock
traded as low as $3.21, roughly equal cash per share. The
conclusion, it seemed, was that RENN's business was worth
precisely zero and the company was only valued for its cash.
Since that time, very little has changed with RENN, except that
it has continued to lose money and burn more of its cash, yet the
shares are up 63% and the run up shows little sign of slowing
down.

Read more:
Will Facebook Frenzy Fizzle for China Internet Stocks?