Internet bubble
24 April 2001
With the collapse of the internet bubble, many people have criticised Wall Street analysts who were recommending internet stocks right through its peak in 1999/2000. Not least among those criticised is Mary Meeker, Morgan Stanley's internet analyst. In an apparent attempt to defend herself, Meeker has calculated in a report that at the end December 2000, the aggregate value of all 1,785 US technology companies examined was US$3,200 billion, around US$2,500 billion more than the combined value at which they joined the stock markets. She also said, "It's easy for people to shout about the speculative excess. But you don't get this kind of innovation and this amount of wealth created without the excess."
Critics, however, would no doubt note that the end-December figure was about US$1,000 billion less than the market value of those companies at the beginning of the year. And the innovation and wealth created in the high-tech sector would have come at the expense of other sectors which would also have been in need of investment funds, and could possibly have put them to better use. After all, an excess, by definition, means that you have more funds than you can effectively use.
Disclaimer: The commentaries posted here represent the opinions of the author at the time of posting and should not be taken as investment advice. Readers who wish to take any investment action based on information obtained from this site should seek appropriate advice from a qualified financial adviser.