Webster's Third New International Dictionary defines the phrase "miss the boat" as "to blunder badly by failing to grasp an
opportunity in time." A 1999 edition of that dictionary might add, "e.g., to
have missed buying certain Internet stocks."
Real or possible losses in those stocks are no longer what keep many
middle-aged investors on edge. Rather, it is the huge gains we could have
had.
All the more aggravating, some of us have friends who helped found
those Internet companies and told us about them early on. Volatile weeks
like the one just past, rather than scaring us away, merely draw more of
our attention to those shares.
Market chatter has grown, turning simple social gatherings in my
neighborhood into local versions of "Wall Street Week."
In Atlanta, the chatter extends to poolside among members of the
Westminster Whales Masters Swim Team. They include Charles Brewer,
chief executive of Mindspring Enterprises, an Internet service provider,
who has been in the club since 1987.
Several years ago, when he was getting the company off the ground,
Brewer would often join other members for breakfast after practice on
Saturdays and talk about the great idea he had. Some club members
were impressed enough that when the company eventually went public in
1996 -- for $2.66 a share, adjusted for splits -- they dove in.
But many other members, fearful of betting on technology ventures they
didn't understand, held back. Now the stock is trading in the $90s, and
those who didn't buy are having second thoughts.
Bruce Wetta, 43, said Mindspring hadn't fit in with his conservative
strategy. Chuck Courtois, 36, steered clear because he didn't know
much about the Internet.
Deborah Maslia, 37, said she had thought the investment was too risky.
"I didn't completely understand what it was about," she said. "It just
didn't seem like a real thing. I kept saying that I should do it, I should do
it, but I always felt it was as high as it would go. But it kept going up and
up and I keep regretting that I didn't buy any."
In my own recent experience, at a neighborhood Christmas party last
year, a man who runs an initial-public-offering fund suggested that I invest
in E(star)Trade, the on-line brokerage firm. I ignored the advice and the
stock has since shot up fivefold.
Or there was the time in January, when I was standing in the checkout
line at an electronics store and everyone around me had boxes for cable
Internet service under their arms. I looked into the company providing
that service -- the At Home Corp. -- but didn't buy. The stock of the
company doubled in three months.
I feel like a dope. But when I recently bemoaned my slow investment
reflexes to William Gartner, a professor of entrepreneurship at the
University of Southern California, he said I should instead feel fortunate.
Investing in the Internet is nothing more than a gamble, he said. "A
company rarely went public before it turned a profit, but now we have
companies who are going public without profits or any prospects of
having profits," he said.
The Internet scramble reminds him of the 1980s frenzy for disk drive
makers, fed by venture capitalists and by analysts who predicted stunning
rates of profit growth.
William A. Sahlman, a Harvard Business School professor, said that at
its peak, about 120 companies were in the business. Of these, 12 went
public, with a market capitalization of $5.4 billion in 1983.
But with so many producers, prices for the drives tumbled, and the profit
projections became jokes. By 1985, the market capitalization of those
12 companies had fallen to $1.4 billion. Today, only a handful of the 120
companies still exist.
"I promise that competitive pressure will make it difficult for all these
Internet companies to succeed, and, like the disk drive industry, there will
be a high mortality rate," he said. "I think it's a sucker's bet. In a poker
game, if after 30 minutes you don't know who the sucker is, then it's
probably you."
Strong words, but warnings usually are. And if you think you really
missed the boat on the Internet, then you have the luxury of sitting back
and seeing just how seaworthy the new ship will be.
nytimes.com |
