BBC put together an interesting review of Internet stock bubble, that ended on March 10, 2000.
David: If your not a media stock, dot-com stock or a telecom stock, valuations are very low.
BBC: So what you’re saying David is that it’s really the result of this asset bubble. In other words, the actual stock market value of these companies was way out of line, compared to their potential to earn money.
David: Right, and I think that was fairly widely known. In our consciousness, it was just way out of whack. But, every day you heeded it, or you got left behind. These things were going up by the day, they were going up by the rate of warp seed, regardless of whether they had earnings or not.
BBC: Though you though it was all a bit ridiculous, you still felt you had to keep recommending these dot-com shares to your clients.
David: Looks, this seems kinda ridiculous, maybe we should look at pulling back on the aggressiveness of your styles, because they had all of the proof they needed – in their track record. It was fabulous. And it was very difficult to convince them of any other type of approach to what they were doing. I think it was quite difficult to tell clients to pull back, when every month they were making another 5-10%.
The Internet stock bubble was a classic stock market speculative bubble. The 2007 subprime crisis is a bubble in credit and the price of money. The discussions people were having about Internet Stocks in February 2000 sure sound a lot like discussions about the Chinese Real-Estate market.
They had all of the proof they needed – in their track record.