ABSTRACT
The fallout from the Internet and technology boom of the late 1990s brought several different elements of the investment in innovation into sharper focus. As the collapse of https://www.boo.com" xmlns:xlink="https://www.w3.org/1999/xlink">boo.com, clickmango, excite, chemdex and the like showed all too well, just as with the hype generated around some of the railway pioneers a century earlier, this was no guaranteed bet. As even the share prices of those companies that survived took a massive hit, with firms like https://www.Lastminute.com" xmlns:xlink="https://www.w3.org/1999/xlink">Lastminute.com suffering 90 per cent falls from £3.50 to 35 p over an 18-month period, it was clear that the investment gravy train was no longer in the station. The early successes like Amazon, eBay, Netscape had fuelled an explosion of venture capital input into Internet and technology opportunities, with annual investment rising from $10 billion in 1996 to over $50 billion in 1999 in the USA alone. This in turn had generated an investment rush into the associated shares as investors bought into stocks with the single intent of selling them on at a higher price to maximize their profits. As momentum investing took off and the bubble grew and grew, the underlying fundamentals of company performance, its products, its market and its management capability were forgotten. It was only when these underlying fundamentals in many of the new firms were shown to be so poor that they began to affect the perceived value of the stock that the bubble burst. With the fear of being the one left holding shares in a worthless company, investors reacted. Their expectations of continuous growth of new companies at crazy rates were hit by less than incredible results and so confidence was shattered. 212Without the experience to put all this into context, panic set in, the frenzy became a rout, and buy became sell.
