Kenneth Burns: Bull market likely not a return to Internet mania
Like a lot of regular people, I have some money in the stock market. We’re not talking Daddy Warbucks wealth, but I’ve invested enough that I pay attention to the market reports.
And I notice that lately, the Dow Jones Industrial Average is hovering around 16,000. That’s good news for people whose portfolios got wiped out during the Great Recession, when the market plunged to less than half its current value.
When the market surges like this, people worry. Is it overvalued?
Probably. And some of the overvaluation likely owes to new offerings by technology companies like Twitter, whose stock soared 73 percent on its first day of trading last month.
But is this, as a recent Wall Street Journal headline asked, a return to Internet mania?
Probably not. Heaven help us if it is.
You remember Internet mania. The dot-com bubble, they called it. It was a delirious time in the late 1990s. People got very rich, on paper, thanks to a newfangled invention called the Internet.
The mania peaked in March 2000, when the Nasdaq exchange hit a still-unmatched high. Three years later, the Nasdaq was down to less than a quarter of what it had been.
The Nasdaq is where technology zillionaires made and lost megabucks. One of history’s most successful stock offerings took place Dec. 10, 1999, on the Nasdaq, where a tech company called VA Linux attained a market value of almost $10 billion.
VA Linux was, a New York Times report noted, “a tiny company with powerful competitors, little revenue and no expectation of earnings in the foreseeable future.”
Which pretty much sums up the dot-com bubble. As with any bubble, it wasn’t based in reality. Values rose because they rose. Investors jumped in because they were afraid of losing out.
In the end, of course, most people lost out. Not counting very lucky people like Dallas Mavericks owner Mark Cuban. In 1999, during the mania, Cuban sold Yahoo his company, Broadcast.com, for $5.9 billion.
Remember Broadcast.com? Me neither.
But I do remember the dot-com boom, vividly. I’m a member of Generation X, and I was in my 20s in those days. Generation X was closely associated with the dot-com era.
The dot-com era came right after the slacker era, which was in the early 1990s. That’s when people my age, like characters in the Richard Linklater film “Slacker,” were supposed to have spent all their time lounging in dingy coffee shops and arguing about pop culture minutiae.
By the end of the decade, people my age had made stock fortunes working for Internet companies with dubious business models. The New Economy, they called it. If you ask me, it was another version of slacking.
Needless to say, I made no Internet fortune. True, I worked as a software programmer in the mid-1990s, after college, but I left the industry just as the mania was taking off.
I knew people who were caught up in the it, though, including a college friend who seemed on the verge of making a great deal of money at the e-commerce company where he worked. After the dot-com bust, he got laid off. Like a lot of people.
And I watched as the Internet frenzy took over everything. I’ll always associate it with Super Bowl XXXIV, otherwise known as the Dot-Com Super Bowl. In January 2000, Internet companies spent a bundle on commercials that featured sock puppets and dancing monkeys.
How did that work out? Consider this Business Insider headline from a couple of years ago: “8 Dot-Coms That Spent Millions On Super Bowl Ads And No Longer Exist.”
As for today’s bull market, it’s probably due for a correction before too long. But I’m not worried that it will be the cataclysmic event the dot-com bust was.
Unless, before then, we start seeing sock puppets and dancing monkeys. Then I’ll worry.