Business Insight Zone

Somewhere I dug up this story, published a couple of months back by MarketWatch, about the history of the IPO market during the past decade. Whether you were embroiled in the markets at the time or not, it’s a useful reminder of what happened and what it meant.

From Netscape to Google
The hottest of hot stocks — then and now

Particularly worth noting: the talk about the “story stocks” that started with Netscape and made IPO winners out of a motley band of companies including VA Linux Systems and TheGlobe.com.

Good speakers and writers have long known that human audiences respond much better to narrative than to analysis. Sure, we train ourselves to look at the facts, but our brains just love a good story. This helps to explain why so many smart investors (and many, many others who jumped on the IPO-investment bandwagon) went so far off the reservation in terms of the valuations they were willing to put on unproven companies.

It’s worth remembering the heady days of the dot-com boom, if only as an ongoing corrective to the temptation to invest hopes and dreams — a good story — into IPO offerings that can’t really support that weight from a cold, calculating business perspective.