Reporter & Editor, 1999-Present Mutual Fund Market News
Even though the signs were all there, for us as members of the media and as investors, the frenzy of multi-million-dollar deals and the Internet funds did not go bust until March 2000. Age and experience tell us that when a market hits an extreme, it's hitting a brick wall and the tide is about to turn.
I sat down with Ryan Jacob, who had run the $1.5 billion Internet Fund, as a reporter covering the mutual fund industry in 1999, The dot-com wunderkind's forward-earnings rationale seemed untouchable, even if it was not understandable.
But just as Kevin Parker, the famous Morgan Stanley trader who made a fortune for the firm by shorting the Japanese market just before it crashed in '89, once told me, there were signs of the death of the dot-coms.
For Parker, the sight of the Japanese buying Hawaii real estate with suitcases filled with cash and the sheer decadence in the nightclubs in Tokyo's Roponggi Square, were the telltale signs.
When New York City taxicab drivers began installing market data feeds and giving out stock tips, we should have known. More profound, even, was when Peter Lynch, mobbed by reporters at the ICI General Membership Meeting in May 1999, avowed that Fidelity would not open an Internet Fund. We should have known then, for sure.
The fund industry has fared surprisingly well in the bear market and Wall Street scandals of the past three years. Assets are down $1 trillion, yes, and 1,000 funds have been merged or purged out of existence. But the American public continues to invest and believe, perhaps not so much in equities right now, but certainly in the advisability of investing and diversifying in the markets to protect their retirement.
Yes, the fund industry is resilient and, even in bad times, when nearly every fund is in the red, relevant.
As Mutual Fund Market News heads into the next decade, we will continue to expose the industry's strengths and weaknesses, all with the intent of making it stronger.
Who could ask for more interesting times to cover? Let's just make sure that when the next big ruse of a bubble comes along, we're savvier, as members of the media and investors, to know it when we see it, or at least to get out before it's too late.