The spectacular Bull Market in high-tech stocks is the investment story of the decade.
The numbers are astonishing. The Internet boom has created new household names such as Yahoo, Amazon, and America Online -- companies that today command billions in market value. Internet startups like Healtheon and eBay have seen their stocks sky-rocket over 3000 percent since their IPOs, and dozens of other Internet stocks have doubled, tripled, and even quadrupled on their first day of trading.
Here is a market where:
- entrepreneurs like the thirty-something founders of Yahoo and Amazon become global billionaires overnight;
- money-losing startups command market valuations that make the captains of traditional industry cry their hearts out and tremble with competitive fear;
- and venture capitalists and investment bankers cash in big on companies barely out of the cradle.
But individual retail investors -- the outsiders in this turn of the century roulette game -- are left to foot the bill, paying exorbitant prices for stocks that will end up diving off a cliff.
TheInternet Bubble is the story of the turbulent world ofhigh-tech stocks, a place where fortunes aremade and lost in a day. This book uncovers the innerworkingsof an industry that increasingly thrives ongreed and hype. It shows who is really getting rich, and how they use small investors to finance their empires.
Silicon Valley insiders Anthony and Michael Perkins provide a behind-the-scenes look at the forces -- and the people -- stoking the money engine in the technology stock market. They show how the allure of fast-paced innovation and overnight success has driven an ongoing market frenzy around Internetstocks, creating what they call an "Internet Bubble." Most important, the authors show that, when the Bubble inevitably bursts, Main Street -- not Wall Street -- will take the big hit, unless individual investors take steps to protect themselves now.
This is a book that will make every investor in America think twice before chasing the latest "hot" Internet stock.
Canals. Railroads. Automobiles. Computers. The Internet. Each represented revolutionary shifts in the way Americans would live and do business. Each saw a corresponding rush of investors to get in on this great new investment opportunity. Each saw a lot of investors go broke. In
The Internet Bubble, Anthony Perkins and Michael Perkins, founding editors of
The Red Herring, look at it this way: In the early 20th century, there were more than 500 automobile companies in the U.S. Now how many are there? Same with the new Internet companies, the Perkinses predict. A few will grow into profitable businesses in 10 or 20 years, but even then, their stocks may not be worth much more than their 1999 prices. They argue that buying an Internet stock today is really nothing more than gambling that someone else will come along and buy it from you for more money.
The book includes an overview of the biggest players in the Internet explosion, the market mania for Internet stocks, and profiles of companies such as Amazon.com, Yahoo! and At Home. The authors also interview venture capitalists who help new companies get off the ground and the investment bankers who help them go public. And while they don't pretend that they know when the Internet bubble will burst, or what the damage will be, they are convinced that most .com companies will never make a dime. The book concludes with some thoughts about investing in this climate, and argues that ignoring the Internet may be as dangerous to your portfolio as investing too much. Some guidelines about product cycles and diversification appear, but the biggest rule seems to be: Don't be the one holding the hot potato at the end of the game. --Lou Schuler
