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By Jorn Madslien
Business reporter, BBC News
On 10 March 2000, the Nasdaq index of leading technology shares spiked,
bursting the Dotcom bubble.
At the time, I thought 'there's got to be a way of making money here', but of
course I was wrong'
Mark Simon, chief executive, The Chemistry Club
The decade that has passed since has brought a new realism to the internet
economy.
The Nasdaq has failed to recover and currently trades at less than half its
peak value on 10 March 2000 as investors are once again looking for real
returns and for fundamental underlying value.
But technology is playing a much greater role in most people's lives than it
did when the bubble burst, so clearly many tech firms are thriving.
Some have even grown sufficiently to join blue-chip indexes instead, so the
Nasdaq is perhaps no longer the best barometer of the health of what was once
deemed the "new economy".
What they said then
It may ease off here and there, we may find the Nasdaq being a little
overvalued at some point, but in general it's the way of the future
Analyst comment, 10 March 2000
These days, nobody uses the term.
Indeed, even on 10 March 2000 one analyst said: "A lot of people are tired of
hearing about the new economy versus the old economy".
At the time, the Nasdaq had risen 24% since the end of 1999 while the Dow Jones
index of leading industrial shares had fallen 13%.
And the analyst, who was with Prudential Securities, was convinced the Nasdaq
would smash through the 6,000-level within 12 to 18 months.
"If you're an astute observer, your portfolio will reflect what's new and
exciting and dynamic," he said at the time, insisting that "a lot of those are
the companies that are in the Nasdaq".
Another analyst, from the since collapsed Lehman Brothers, was equally eager to
justify the Nasdaq's strength.
"It may ease off here and there, we may find the Nasdaq being a little
overvalued at some point, but in general it's the way of the future," he said
on 10 March 2000.
Greed and fear
Oh, how wrong he was.
And how we all laugh as we look back at a time when the talk was more important
than the walk, and when scruffy entrepreneurs were courted by greedy venture
capitalists (VCs), their ties hidden in their pockets.
"I remember walking into a First Tuesday event at Lord's Cricket Ground, and
there were thousands of people there creating a very special energy," recalls
Mark Simon, founder of The Chemistry Club, which at the time brought together
VCs with budding entrepreneurs.
"At the time, I thought 'there's got to be a way of making money here', but of
course I was wrong'."
Poor infrastructure
But it is easy to be wise after the event.
And it is equally easy to forget that in fact there were plenty of good ideas
around at the time.
"A lot of the business plans were deeply flawed," acknowledges Mr Simon.
"But a lot of the ideas that were around at the time would have worked had
there been broadband."
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Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8558257.stm
Published: 2010/03/09 23:27:19 GMT