found it ! from canada's national newspaper, the globe and mail...note the reference to bre-x near the end, ho ho...
Extraordinary popular delusions and the madness of couriers
MARGARET WENTE
Saturday, March 11, 2000
After the Toronto Stock Exchange's computers crashed this week, brought down by an unprecedented feeding frenzy of insatiable day traders, I thought I'd phone my friend Sue. Sue works on Bay Street managing money for people. She actually studies the companies she invests in. "Who are all these day traders?" I asked her.
She told me about the two couriers in the elevator. They were discussing their plans to quit the courier business because they'd made so much money on tech stocks. Last week, she sent someone out to get pizza. The pizza guy bragged that he'd made enough to pay off his mortgage. We will not mention the Italian waiter who is heavily into Research in Motion, or the cabbie who trades stocks on the computer in his car between fares.
"The worst thing about it," she said, "is that these people are doing better in the market than I am. It makes me feel like a moron."
Well, we all know by now that the old rules don't apply in the new economy. Still, something about these stories struck me as weirdly d‚j… vu. So I typed in "tulipmania" on the Internet and hit the search key.
"Until the year 1634," I read, "the tulip annually increased in reputation, until it was deemed a proof of bad taste in any man of fortune to be without a collection of them. The rage for possessing them soon caught the middle classes of society, and merchants and shopkeepers, even of moderate means, began to vie with each other in the preposterous prices they paid." All of a sudden, I felt like I was in 17th-century Holland.
"The ordinary industry of the country was neglected, and the population, even to its lowest dregs, embarked in the tulip trade." At the height of the frenzy, one speculator paid 12 acres of prime Amsterdam real estate for a single bulb.
Come to think of it, that bulb was cheap. There's a new Toronto company called 724 Solutions that's worth $7-billion. It's trading at 4,000 times revenues, I guess because it has the word "wireless" in its business plan. If Nortel traded at that multiple, it would be worth $28-trillion.
But, as one market analyst says, "you have to ignore revenues."
Another friend of mine has simply given up on logic altogether. The other day, she bought some shares in a dot-com company she knows has lousy management and terrible technology. They went up 50 per cent right away.
Unfortunately, I'm in the moron camp. My own pathetic little mutual funds are riddled with junk such as Stelco and Procter & Gamble. My net worth, such as it is, is shrinking faster than a cheap silk sweater. Sue tells me the problem is that these companies actually make and sell things that people use every day, such as steel and toothpaste. They are obliged to employ people and own bricks and mortar, unlike, say, eDispatch.com (yesterday 53 cents, today $29). These major strategic blunders have sent their stocks plummeting. Who wants to own P & G when they can own eDispatch?
As for Research in Motion, I had never heard of it until last week, when two of its former employees made news by giving away $13-million to charity. They became so wealthy working for the Waterloo-based company that they chose to spend the rest of their lives self-actualizing. And why not? Research in Motion is worth more than the Bank of Montreal, which is worth a billion dollars more than it was a few weeks ago because it owns a little bit of 724 Solutions.
I was amazed to discover that RIM actually makes something. It's a little gizmo called Blackberry. Blackberry is a pager that also delivers your e-mail, in case you can't wait for even one second to get it. It is unplugged, which is very hot. This explains why the company is worth $200 a share. Don't you wish you had bought it for $6? Don't you wish you were worth $3-billion, like the two guys who run it? At least they have the decency to be over 30.
Pretty soon, unplugged little gizmos will be everywhere. That fact makes RIM worth 1.2 per cent of the entire TSE index. Of course, someone else's unplugged little gizmos might win out, and RIM might some day be a grease spot on the information highway. Who knows? Who cares? The Italian waiter is feeling like a genius, and he's about to quit the restaurant business so he can trade full-time.
"You know what this market feels like?" says Sue. "This feels like Bre-X on cocaine."
In the past three months, stock-market debt in the United States has increased by $61-billion. It now stands at $243-billion. In other words, for every guy who's paid off his mortgage, there's some other guy who's taken one out to play the Nasdaq.
Sue needs cheering up these days, so, yesterday, I phoned her to share some good tulip quotes.
"Nobles, citizens, farmers, mechanics, seamen, footmen, maid-servants, even chimney-sweeps and old clotheswomen dabbled in tulips," I quoted to her. "People of all grades converted their property into cash, and invested it in flowers. Everyone imagined that the passion of tulips would last forever."
"Yeah," she said. "And as long as it does, I'm doing my best to avoid couriers in elevators." |
