SINGLETON: Yes. I think we have seen this in the history of our country and our economy. When a new vehicle or technology is introduced that changes the way we communicate or increases productivity, everybody gets in because there are extremely low barriers to entry. Now, you have a lot of folks in there. What tends to happen is that the smaller players that can’t enhance or add value will either die off, be acquired or just go out of business. In that case, the bubble will break on them. I think that all the valuations will come down and it will cannibalize players in time.
GOODWIN: The last technology bubble involved the software companies in 1995. There were a series of IPOs. They all ran up 100% on the first day and they basically did not perform for the duration. I don’t know if you would call that the bubble bursting, but anybody who is looking for Internet stocks to be up 300% and 400% for 1999 is going to be sorely disappointed. I think that the more likely direction for the group is down, but I do think that there are a couple of leaders that have merged. [They] are probably going to do well because they have a real business, real strategy, real earnings and make smart acquisitions.
I would like to caution investors not to equate Internet stocks with technology. We own several triple-digit winners, from 1998, that have nothing to do with the Internet except that it saves them money as a direct conduit to their customers. You’ll probably see one or two winners out of the spate of Internet stocks. There are also Internet funds that have done very well. I know investors like to kind of play with these hot stocks. My caution would be that, if you look at a 100% of your liquid assets, maybe you could risk 10% of your portfolio in these types of stocks and [other] areas that are considered very risky.
HOLLAND: Technology was the dominant performer in 1998 and was responsible for much of the 3.9% return of the Nasdaq. The mania surrounding the Internet is probably a bubble waiting to burst, however we must understand that the Internet is the greatest invention since the light bulb and has revolutionized communications. The Internet reminds me of the bio-tech craze in the late 1980s, early 1990s. Many of those companies have disappeared, but bio-tech research remains one of the most promising sectors in the pharmaceutical industry.
FRAZIER: I think that [investors] should be cautioned about [buying these stocks] especially on margin (buying securities with money borrowed from the broker). When the market really pulled back in September and October of last year, I had clients who were on margin. They had excellent stocks, especially Internet stocks, that have doubled and tripled and quadrupled. But when that market dived 19%, they started getting margin calls (money that must be paid to the brokerage to maintain your account). Consequently, they had