Paul, I can't pass up that one! Overall, I agree with the sentiment, but I don't agree that the business mistakes were not mistakes. They were definitely bad things to happen and capital was destroyed on a grand scale.
However, a bit like entropy and the idea that you can't make scrambled eggs without breaking a few of them, perfection isn't possible. In any system there are losses. The question is whether the losses are justified by the eventual success.
The driving force, as you said, is the excitement of a vast new profit opportunity when something as big as rail, cyberspace or CDMA is involved the excitement is justifiably huge and hordes of people pile in.
The reason that mistakes are made is that the unknowables are huge but so is the profit opportunity people think they see. Many pile in with the hope of being a winner and making a fortune.
There are other rewards, apart from the financial ones. There is the excitement and fun of participating in a great new possibility. Investors risk a percentage of their assets in the hope of having a lot of fun and making a lot of money and achieving great things. Philanthropic investing is part of the deal; people get involved to create great things, not just to make money and those things will benefit everyone and enable other things to happen [the shared assets].
Sure there was a bubble. But there have been huge quality of life benefits created even if no profit and that is a good thing. That's part of what was achieved. If the survivability of the species was enhanced, then even in the absence of profit, that's part of the mechanism of nature [nature is about gene propagation, not profit].
I wonder what the total losses are compared with the total gains which will be made. The losses are not the reductions in market capitalisation [those are just arbitrary paper figures, though they feel real to people]. The losses are the capital put in which will not earn a return.
But even a total loss like Globalstar is a bit more complex when looked at broadly. With any product, there is a consumer surplus - many people get benefits far above the cost of the service and few people don't get sufficient benefit to justify buying the service [the white elephant problem - and we've all experienced a dumb purchase and buyer's remorse]. So the value of a product needs to be measured not only in the profit line over the life of the product but should include the consumer surplus.
Okay, that's enough rant from me.
Suffice to say that I agree - the technological revolution was born in mass excitement in Y2K and it is growing rapidly, even as the market capitalisations tumble. The value created is enormous - more value than has ever been created before, even if almost no money changes hands [as is happening right now as I type and you read - okay, maybe my words aren't that valuable but the cyberspace experience is, which is why we all spend so much time in it].
Thanksf for the thought-provoking comments.
Mqurice |
