mills - buy, lie, and sell high; how investors lost out on enron and the internet bubble (2002)

[...]... Progress The Social and Economic Utility of Capital Markets The Internet, Capital Markets, and Innovation The Early-Stage Financing of the Internet 12 12 13 14 xiii xiv Contents The System Hits a Glitch Talking Points 15 16 Part II How the Bubble Happened 17 chapter 3 Causing the Bubble 19 The Technology Bull Market The Bubble Why Did the Bubble Form? Day Trading and the Source of the Bubble Other Bubbles... bubble The bubble first wildly exaggerated the company’s value, inducing the firm’s leaders 12 Buy, Lie, and Sell High to expand far too rapidly, and then, like a balloon when the nozzle was suddenly released, quickly deflated, causing employees at the company to lose their jobs and the investors their money The Capital Markets as an Engine of Progress The dot-com bubble was the result of the introduction... work All interpretations and any errors are my responsibility alone Daniel Quinn Mills Boston, Mass May 2, 2002 I The Bubble and Capital Markets The great Internet bubble in the stock market burst in the spring of 2000, but the repercussions of the mania continue Even today, companies that have held on since the bubble are finally collapsing Far from the bubble being gone, it and its consequences are with... got the money I lost? ” 3 4 Buy, Lie, and Sell High How This Book Was Written So a small team and I went to work studying the great Internet bubble We looked at the various players who were involved in the process by which venture funds and entrepreneurs built companies, and then with the investment banks, took them public We made a list of how the venture funds changed their investment criteria as the. .. as the bubble developed, and how investment banks changed their criteria for taking firms public We looked at how the mutual funds shifted their investment criteria so that many funds became loaded with dot-com and telecom stocks We looked at Alan Greenspan’s warnings, and at the inflation and then bursting of the bubble We looked at who made money in the outcome, and who lost We have read the literature... professionals (including the business press) were young and inexperienced, and believed that the New Economy was qualitatively different from the Old Economy so that valuations weren’t recognized as inflated; and (4) it was another example of the madness of crowds—individual investors were prone to mass hysteria and didn’t do their homework and so drove stock prices to unreasonable levels, and when the bubble. .. Blaming the Entrepreneur—He’s Dumb Amazon.com’s Miracle How Amazon Flouted the Rules The Learning Failure Talking Points 59 60 61 62 73 How Some VCs and Bankers Led Entrepreneurs in the Wrong Direction 75 Having to Go to the Venture Firms Pressure to Spend A Strategy’s Limitations Like Sheep to the Slaughter Get-It-Right Instead of Get-Big-Fast Talking Points 75 79 81 83 83 90 How Venture Firms Changed Their... As excitement grew about the potential of the new technology and its commercial applications, the price of shares in Internet companies soared Soon the price far 14 Buy, Lie, and Sell High outdistanced long-term real value When the public perceived this inconsistency, the share market collapsed, taking with it many firms, many of which were not ever likely to be viable However, the collapse also took... the research and defense community continued to use and improve the network In Switzerland, at the high-speed particle accelerator (CERN), Tim Berners-Lee and his associates needed a way to find items on the computers connected to the Internet and developed the World Wide Web Again, there was no private capital involved Thereafter, young engineers at the University of Illinois, in particular Mark Andriesson,... to take from it to a discussion with others An Unusual Feature of This Book: Contributions from Others An unusual feature of this book is that it includes short contributions from people other than the author and his team Several American and German participants in the bubble have consented to give their experiences and their views about the issues with which this book is concerned, so that this book . way, he’d buy, lie, and sell high.” 1 FMMills.F 5/14/02 3:56 PM Page i FMMills.F 5/14/02 3:56 PM Page ii Buy, Lie, and Sell High: How Investors Lost Out on Enron and the Internet Bubble FMMills.F. 2001 12:16 PM Buy, Lie, and Sell High: How Investors Lost Out on Enron and the Internet Bubble D. Quinn Mills An Imprint of PEARSON EDUCATION Upper Saddle River, NJ • New York • London • San Francisco. Need to Lead D. Quinn Mills Buy, Lie, and Sell High: How Investors Lost Out on Enron and the Internet Bubble Dale Neef E-procurement: From Strategy to Implementation John R. Nofsinger