Market Motion Sickness
If self-replicating e-commerce baby tycoons get on your nerves, it's schadenfreude time. It's true that the Nasdaq rebounded after its staggering loss Tuesday. Nonetheless, what AP described as "the most volatile day ever for U.S. stocks" left a distinctly bearish aftertaste. Analysts declared that the bubble was deflating, if not bursting, while jaundiced pundits tried to keep the glee out of their voices as they contemplated the end of Silicon Valley's amok capitalism.
"Even though the markets recovered by the end of the day, traders and investors were shell-shocked by the extraordinary moves," wrote the New York Times' Gretchen Morgenson in one of the most comprehensive articles about the shakeup. "The selling seemed to represent the first serious threat to the all-technology all-the-time market investors have come to love." At the very least, IPO mania is on the decline - the Washington Post cited Bloomberg News as it pointed out, "Of 127 companies that have gone public since Jan. 1, shares of 76 traded below their initial sale price (Tuesday)."
The AP quoted Alan Ackerman, senior VP at Fahnestock & Co.: "Today's pressures came from three M's: Microsoft, margin calls and mounting anxiety." Indeed, as Morgenson reported, "One employee at a large online brokerage firm who declined to be identified said the firm made a record number of margin calls yesterday, four times what is typical. Almost none of the customers put up the additional money, this person said, and were therefore forced to sell some or all of their holdings. This accelerated the declines in already weak stocks."
Most news stories contained the same numbers and general spin, but amusing sidebar features and columns contained a lot of gloating. This came from Reuters: "Amid the chaos of this week's plunge in technology stocks, a wild wail of despair rose in an Internet chat room devoted to Audi's slick 'TT' roadster." Serves them right - it's bad enough they have to drive such flashy cars, but do they have to talk about them too? On ABCNews.com, Forbes ASAP Editor Michael S. Malone delivered a mordant elegy for Silicon Valley dot-com culture, comparing the current period to the post-Altamont Haight-Ashbury scene. "It is the old narcissism in a new bottle," he intoned. "And it is just as doomed to end badly." Those of us without stock options can't wait. - Michelle Goldberg