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Predicting a Net Collapse!

So much nuze, so little time. Maybe a recap is in order? Stuff that’s been going on:

  • I took delivery of my new espresso machine (you’ll find out more about this soon)
  • I’ve been juggling 4 different work projects with two personal projects, all web based. I’m tapped!
  • I took delivery of a part that prevented my espresso machine from working
  • Jean and I had a little getaway this past weekend
  • I had this amazing rant in the works (a bunch of predictions) but it’s not done yet
  • I’m building a coffee mecca website. It looks pretty cool, and it’s my first fully framed project in about 2 years (not counting the archive on this site) – yep, it’s coffeegeek!
  • My notebook is shipped off for a major warranty repair. I don’t wanna talk about it (sob!)
  • And other assorted stuff.

And other assorted stuff.

Okay, some meat. First, I know I said in the last rant I was gonna pontificate over how Microsoft was gonna pursue Flash like they did Netscape, but I’ll save that for another time… My current subject? I’ve been working on this for a while now, and I think it’s going to be a two parter. Here’s part one.

I’m predicting a major collapse of the Internet as we know it, within 3 years, and possibly as soon as 2001.

Collapse? What the hell do I mean? Think 1929 and the stock market.

Let’s look at some background, and similarities between the events leading up to the 1929 stock market crash and the current Internet frenzy, especially when it comes to commerce. During the couple of years leading up to the 1929 crash (and subsequent worldwide depression), the market was growing in huge leaps and bounds based on speculation. Stock traders would trade and sell stocks simply because they were there. They wouldn’t even pay full price for the stocks… they would pay the equivalent of “bonds” on the stocks, placing about 5% real cash down on their stock purchase, and financing the rest. The speculation part comes from the idea that this stock, bought for 5% down, would increase in value so quickly, that the additional 95% would be paid by the profits the stock made.

For a while, this worked. Stocks increased in value (paper value) enormously, leading up to the crash. And how did the crash occur? It started when the money lenders and stock sellers decided, na na, no more 95% speculation loans. You want to buy this stock? Pay the full price. It only took a few to start the wave, but within days it became a giant tidal wave that ruined millions of people and thousands of companies. Companies that one day were worth $10 million on paper were worth $10,000 on paper the next day.

I think the same thing is going to happen to the Internet, and it’s associated stocks.

Let’s look at modern day examples. Yahoo stock is worth a fortune. But it hasn’t made a dime yet, and probably never will (except of course for the owners, who have made millions already). Netscape – never made a cent, but the stock was gold. Same thing for most Internet stocks you see on the market. A shitload of cash has been moved on the various stock markets into “internet stocks”, and almost no company shows a profit for their stockholders. Yet speculation on the “hip” stocks to own runs rampant throughout the trading world. These prices are hyperinflated, and with the current way these businesses operate, I doubt any of them will show real profit, or even demonstrate that they are worth 1/10th their current paper values.

The bubble is going to burst on these soon. The way I see things (albeit from a layman’s position), most of these stocks are bought by people who know nothing about the Internet, but do seem to think Internet stocks are the most valuable things to have in their portfolios. I blame it on Netscape. Remember when Netscape went public? A $10 presale valued stock sold for something like $60 the first day! I recall it peaked at over $100 (or was it $200?) within a few days of trading. All this frenzy because at the time, Netscape was the top browser by a wide margin, and rumours and speculation were everywhere about how Netscape might even unseat Microsoft as the O/S king.

The thing is, those are semi valid reasons for buying the stock at the time… especially the browser part. But because of the explosion in Netscape stock value, people forgot why it sold so high when it came out… all they could remember was… “yeowtch! $10 initial offer, $60 first day trading! I coulda made a killing!!! I’m buying the next initial offer internet stock I see!”

So Yahoo goes public. People go nuts and make Jerry et al instant near billionaires. Excite goes public. Geocities goes public. E-bay goes public. People continue to go nuts. Anytime a major presence on the Internet goes public, the stock trading world loses it’s marbles and buys the stocks for hyperinflated prices.

And it’s gonna end soon folks. Think about it. The guys that bought Yahoo initially, then turned around weeks later and sold for 1000% profits did good, but how about a long term stock owner who bought high, makes maybe .05% profit if he sells 3 years later, yet sees no dividends or profits from his stock ownership because Yahoo constantly loses money? Do you think, after say 5 years as a publicly traded company, Yahoo stock will be still popular? No… people are finally going to go “this is ridiculous, and these stocks are hyperinflated” just like they did in 1929.

So why do I say “the Internet is gonna collapse” within 3 years? Because my big time buddies, the progress of the Net as you and I know it today is directly related to the value of all these Internet stocks, and once the money is pulled (big time pulled) I think the plug on the Internet will be pulled soon after.

But I’ll have more on this in my next rant.

Till next time… thanks for stopping by!



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