Let Me Tell You Something About The Internet Bubble...

Matt Yglesias makes an important point here: Almost everyone talking about how there’s a tech bubble these days has no recollection of what the late 90s was like. It was orders of magnitude more crazy.

Let me just share some observations, memories, and personal experiences from that time.

– The summer of my freshmen year, I put $US2,000 into a SureTrade account. By Christmas of that year (1999) I had ballooned that to about $US30,000, enabling me to pay for much of my college education.

– This feat was accomplished by buying the crappiest of the crap. My friend who I got into investing with would trawl the message boards of folks talking about penny stocks and buy whatever was the biggest up mover of the day. Invariably the stock would go even more nuts the next day. We had no idea how it worked, but it kept working for long enough to make a stupid amount of money in a short period of time. There was no skill involved. Just being dumb and lucky.

– Virtually every restaurant in our town in Vermont in the summer of 1999 had CNBC playing all during the day on some TV. The owner of our local pizzeria was into internet stocks. He made a ton of money in Mail.com. There’s a good chance he rode that all the way down.

– One of our best friends’ dad, who never had any interest in investing, got into internet stocks. He found some company building websites. Rode it up for like a 50 bagger, and then rode it all the way down.

– In August 1999, people piled into the penny stock of a Nevada auto company that claimed it had a cure for AIDS. An auto company, people. That’s how gullible and optimistic everyone was.

– People were so optimistic that they believed a one-axel scooter would totally transform cities.

– In November 1999, China came to a major agreement with the US to enter the World Trade Organisation. Literally every stock that had the word “China” in its name, or had any tenuous connection to China that day went bananas. It was ridiculous.

– People seriously got excited about the stock of the company K-Tel (the purveyor of corny oldies compilation CDs) because it was selling its CDs over the internet.

— Everyone knows about the Pets.com sock puppet, so it’s not even worth mentioning that.

— When modem and networking company 3COM spun out Palm (the maker of Palm Pilots) Palm had a higher market cap than 3COM even though 3COM owned most of Palm’s stock.

— The exact same thing happened when a sleepy Canadian telco spunoff Net2Phone, its VoIP unit.

— Some company you’ve never heard of called VA Linux popped over 10x at its IPO. They just made commodity Linux servers, but they had Linux in the name, so people went bananas for it.

— Pretty much everyone I knew at the time living in San Diego got rich overnight because of one stock.

— You obviously remember Webvan, so there’s no point in bringing that up.

— This was an actual book.

— People were quitting their job to just daytrade.

— There were shootings at daytrading places.

So yes, today’s bubble is nothing at all like those days, and if someone even thinks about comparing today to 1999 they know nothing of a bubble.

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