On Wednesday the Federal Reserve put money on sale, lowering interest rates a full half percent, in the middle of the day no less. The market took this as a double espresso and rocketed upward, creating yet more money.
The big questions are: Who is going to get all this money and what will they do with it? I know a lot of y’all are hoping they’ll put it into Internet stocks so you can get out of your $80-per-share positions in Amazon.com.
Don’t hold your breath. Everything is going to be OK, but things are not going to be like they were a year ago. They never will be again.
The fact is that every great new industry starts with a boom-and-bust cycle, and the stage following the bust is not another boom. The cereal boom ended with the Panic of 1907, the radio and movie booms with the 1929 stock market crash. The office machine boom (Xerox, Polaroid, etc.) ended in 1969, and so did those stocks’ best days. The same was true for the oil boom in 1981 and the PC boom five years later. (Remember Quadram and Ashton-Tate?)
What happens now is consolidation around existing technologies and the emergence of a few big companies (some owned by even bigger companies) surrounded by a ton of little companies. A very few of those little companies may grow up to challenge or be bought by the big companies. But by and large, no new gold rush will take place. The San Francisco ’49ers weren’t followed by the ’53ers when the gold market came back, and the San Jose ’99ers won’t be followed by ’03ers either.
This is not a bad thing. It’s really a sign of maturity, a sign that the industry is ready to build careers on. The companies that have survived to this point, outfits such as Amazon.com, Yahoo and DoubleClick, probably have the strength to carry on, either independently or merged into other companies. The disciplines you’ve been learning — page design, ad targeting, and databasing — will remain valuable and become full-fledged professions, complete with college courses, annual awards, and secret handshakes.
But the boom times are going to move on. They may move to broadband or wireless, assuming we can create applications for those technologies that are worth paying for. Someone may find a killer app for space travel (I hope so), or we may see a new biotech boom. The future is wide open.
Meanwhile, we have an industry to protect and serve. It’s a great industry that’s filled with great companies and great people. It’s a growing industry that really is changing the way business gets done. Financially, it’s also a mature industry, with real valuations and metrics for measuring them.
If you preferred the excitement and confusion of the Internet’s Wild West days, that’s OK. I’m sure we’ll get some good movies, TV shows, and PBS specials out of it. It is certainly something worth telling your grandchildren about, something they’ll roll their eyes over the way you used to roll your eyes over Grandpa’s World War II stories.
Grandpa probably didn’t tell you this, but that rolling of the eyes you did during his stories? That was OK, too.
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