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dryrot

Reading "dot.con" By John Cassidy

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hi

Entertaining look back at the dot.com boom. Book a little whiny at times, and a sort of knee-jerk anti-americanism which grates - not sure why he included 9/11. But overall great fun and highly recommended as a sardonic history to those internet-hyped times.

Why relevant to hpc? Well, the author notes how many savvy commentators were urging caution in 1997 - stating that tho the internet was new and amazing, valuations were mad. This sensible caution got harder as the boom continued - the bears, especially those employed as business journalists, got moved aside or changed tune - after all, if you said yahoo was overvalued at $100, and then it went to $200, then (1998) $300, then (1999) eventually $500 (market cap $131B!) it took some courage to stick with any normal valuation.

Then it all crashed, of course (at least yahoo is still there, although ~20% of peak. Many hyped cos just went bust, as you know)

My point is all those who bought in 2005 - will they see losses? Is 2003 the 1998 of the property market? Will we go back to 1997-type prices, before the mad hype? (I hope not, as I bought in 2000 :) )

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My point is all those who bought in 2005 - will they see losses? Is 2003 the 1998 of the property market? Will we go back to 1997-type prices, before the mad hype? (I hope not, as I bought in 2000 :) )

The overswing in this boom is higher than any other housing boom, and as it roughly follows the same trend then the downswing will be also more extreme. I am afraid that you will not find reassurance from me. We could be looking at 1995 prices as the market decides that property as loans or investment is unpalatable.

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The danger this time is not a housing bubble - but a credit bubble spanning across the globe. This bubble is bigger than anything ever, making the dot.com bubble look tiny.

Ideally - those in control want those who bought in 2005 NOT to see losses or at best to see small losses. A soft landing will be engineered just like in 2000 - a mini recession. Target to go back to 2005 prices - for them.

Be agile and stay liquid - if they succeed in a soft landing expect - get in. If they fail - and it will be obvious [e.g commodity deflation - high unemployment] - we're back to 2000 prices.

Edited by notanewmember

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I really remember the exuberance of the dot.com bubble.

As a relatively new internet user, I used to joust with people on fool.co.uk about a company called Gameplay plc. It was a true disciple of the "burn money for market share" attitude. It used to be on the Open... platform on Sky Digital.

I bought 2,000 shares at 150p (iirc) and sold at 400p thinking there was no way it could go any higher. It did - and then some. Its high was 1150p. After the bubble burst, it was one of the famous 99%ers - companies trading at 1% of their market high.

Eager to jump on the bandwagon, we set up an internet company designed to attract investors. We took out advertising in some 22 titles as part of an advertising collective called topukwebsites. In three months, it cost £80,000 and nearly brought down the entire company. We were still being chased a couple of years later for things related to it. Mad days and bad days.

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I bought 2,000 shares at 150p (iirc) and sold at 400p thinking there was no way it could go any higher. It did - and then some. Its high was 1150p. After the bubble burst, it was one of the famous 99%ers - companies trading at 1% of their market high.

What's that great quote from a Rockefeller or similar zillionaire?

"Many fortunes have been made by buying low and selling too early"

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What's that great quote from a Rockefeller or similar zillionaire?

"Many fortunes have been made by buying low and selling too early"

There's an article on a very similar quote attributed to Baron Rothschild here

Along similar lines: nobody ever went broke taking a profit.

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There's an article on a very similar quote attributed to Baron Rothschild here

Along similar lines: nobody ever went broke taking a profit.

Very true. However the £6000 profit made on the Gameplay shares were dwarfed by the £80,000 loss on the website venture. :(

Second biggest mistake of my business life.

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Very true. However the £6000 profit made on the Gameplay shares were dwarfed by the £80,000 loss on the website venture. :(

Second biggest mistake of my business life.

Kudos for admitting it! Better than boo.com who burnt $140m in 10 months... Mind you, it was'nt their money i suppose...

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Will we go back to 1997-type prices, before the mad hype?

No, there's a big difference between paying 200 grand for a 2-bed flat in a crappy town and buying lastminute.com for £1 billion. I can make the case for the flat, but I don't know how anyone made the case for lastminute.com. I don't know if the bearish journalists got cast aside like you said but The Guardian wrote at the time "if you purchased the entire company for £800m, then on annual revenues of £1.63m, it would take you nearly 500 years before revenues would cover your purchase price. And that's an unreal calculation because all of the revenue and more is being eaten up by costs"

Edited by pablopatito

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Eager to jump on the bandwagon, we set up an internet company designed to attract investors. We took out advertising in some 22 titles as part of an advertising collective called topukwebsites. In three months, it cost £80,000 and nearly brought down the entire company. We were still being chased a couple of years later for things related to it. Mad days and bad days.

Interesting post, I only wish I had the nerve!

However the .com boom resulted in a hell of a lot network infrastructure being built (fibre, cabling, datacentres etc).

As a result of various dot come failure a lot of cheap tech became available to be picked up by others.

Although not strictly a dot com failure, I have only just pensioned off my ex - Enron server stack

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I've read dot.con and an extraordinary read it is too which I thoroughly recommend.

Cassidy recants at great length the way the VI's recklessly ramped the internet concept. Read it and you will see characters back then that parallel the likes of Krusty and Ztuart now.

There's also a section that listed the names of hundreds of websites and how they bombed. Its very well researched and a great book for all bears. Click here for Amazon.com page.

Make sure to read the 44 customer reviews.

Edited by nmarks

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My US brother has a cable infrastructure contracting firm. He was bought out at the height of the .com boom for 90million USD, post-crash, it was valued at 9m USD, sadly for him he was locked in for 5 years after the take over and couldn't liquidate all his stock. He bought it back a couple of years ago. Took him about 20 years to build it up and didn't want to see it fail for the people who'd worked for him.

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No, there's a big difference between paying 200 grand for a 2-bed flat in a crappy town and buying lastminute.com for £1 billion. I can make the case for the flat, but I don't know how anyone made the case for lastminute.com. I don't know if the bearish journalists got cast aside like you said but The Guardian wrote at the time "if you purchased the entire company for £800m, then on annual revenues of £1.63m, it would take you nearly 500 years before revenues would cover your purchase price. And that's an unreal calculation because all of the revenue and more is being eaten up by costs"

So then you don't see any parallels in Detroit or Cleveland OH where property is changing hands for as little as £2,500? That same property would have been haemorraging money as a BTL - just as lastminute was. Meanwhile, the market for it has up and left along with the local industry, with entire lines of car production machinery being shipped to Russia, lock stock and barrel. That's left residents little choice but to move, not just out of town, but out of state to the Carolinas. Meanwhile the streets have become increasingly lawless as tax revenue falls. And the effects are long lasting, at least for a species that lives only 100 years. How much do you think this place is worth :

belmontmill12.jpg

And yet its price was once supported not by fashion or leisure or tourism or advertising or some such other 'unnecessary' pursuit. Neither was it supported by manufacturing or finance. It was supported by an "intrinsic value" business : mining. But at some point extraction costs exceed the desire to extract. But what drives that desire? Nothing of intrinsic value, that's for sure.

You like so many seem oblivious to the fact that the key driver is simply cashflow. There is no business model too stupid that cannot be supported and made profitable by a steady injection of capital or easy credit. None. There is also no asset that cannot be made to look as if it has intrinsic value by the same process. Not only that, the converse is equally true. The fact that our farmers struggle yet shoe designers are hailed as gods should inform you of that.

Whilst you suggest the internet business model has no intrinsic value, perhaps you should consider just what parts of our own economy now face off-shoring as a result of the web. What then for the "intrinsic value" of UK property?

Great link to show anyone who believes their property has "intrinsic value" because of the reputation of a local "good school" (which could be changed by one child's overdoese).

Edited by Sledgehead

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  • 295 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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