Investment-history

"Investing in Internet stocks was often like playing Russian Roulette."

His analysis into the post Y2K NASDAQ is even less insightful. He has the ring of that smug kid who constantly shouted on the playground, "I told you so."

Still, considering the lack of serious and even semi-serious work on the subject, I think his effort is noteworthy. Hopfully something with a little more spice will come down the pipe.

The plot was lacking, although the story of Salomon and the volatile financial markets kept my interest.

I like this book because it focuses on fundamentals. The most successful investors invariably focus on value stocks and long term growth. They look for basics such as earnings and cash flows. They look behind the accounting numbers and are not bamboozled by glossy brochures or big name executives. A wise investor would not have been sucked up by the dot com hype. They would have seen the companies for what they were, overpriced flash-in-the-pans.

Whilst this book contains many valuable lessons, the style was dry and at times difficult to get through. So, whilst the book is not an entertaining read, anyone interested in purchasing quality stocks should definitely have a look at this book.

The author goes on to further explain the rational economics fundamentals behind the Mississippi Bubble of 1719-1720 resulting from an attempt to swap French government debt for equity in a private company, financed by printing paper money. He similarly explains out in similar economics terms the South Sea Bubble of 1720 which was the equivalent of a leveraged buyout of the national debt of Great Britain. Both investment schemes ultimately collapsed, but their respective economics and strong government support at the onset gave these investment propositions very strong fundamentals. These investments are not so different than investments today in GSEs like Freddie Mac, Fannie Mae, and Sallie Mae. Because of accounting irregularities, the stocks in these GSEs have recently taken a beating. But, there is no ground for talking about a GSE stock bubble.

The author has strong credentials to support his iconoclastic thesis that is not that well known by the economics establishment. He is a global strategist at Global Markets Research at Deutsche Bank and Professor of Economics at Brown University.

The Internet bubble has often been compared to the three investment bubbles mentioned above. Sadly enough, internet stock investors were by far the most foolish among investors of these four different investment bubbles. This is because at the onset the fundamentals behind internet stocks were far weaker and speculative than the ones associated with the investments associated with any of the three other bubbles.