FASHION CAN be funny and fickle. It can also be financially damaging, as anyone who invested in tulips 300 or so years ago will know. The Internet has created many millionaires. It has also stimulated a demand for the shares of companies that ply their wares around the Web - firms that, with few exceptions, have yet to deliver any profits to shareholders.

Until now that the Net madness has stayed on the other side of the Atlantic. This week it came to Europe with the flotation of Freeserve, the UK's largest Internet service provider that, you guessed, has yet to make a profit.

Faced with advising our clients, we had to admit that, while you might make money, it was not possible to value the ISP on fundamental grounds.

Freeserve could be the first in a number of Net flotations. It has Dixons' muscle behind it (and who can blame them for pocketing a million or so). But we still don't know if the Net will really revolutionise business as many think it will. Even in America, where the world and his wife are wired, it's taken a relatively small proportion of consumer trade. But it is making a difference. Easily available information is a great contribution that is empowering consumers.

Probably next in line to cash in will be the eXchange, at present an information supermarket for financial products, with insurance companies and independent financial advisers as its customers. It has real revenue, though raising development capital seems to be behind the flotation (but pocketing a few millions must help).

Their founders plan to develop other ideas for the one commodity that can easily be sold in a virtual market place - financial services. Buy a book, a shirt, or a toy and you may want to pick it up, try it on, handle it or bounce it against the wall. You can't do that on a computer screen, even if prices are a few percentage points lower. None of this applies to financial products, where easily accessible information and electronic forms can let you examine, choose and commit all at once. It's so easy it is frightening. Who'll take me to lunch if I am replaced by a screen and a home page?

So does this make the eXchange a better option than Freeserve? The same considerations apply - lots of hope, but not much substance. That said, probably more millionaires have been created by people who invested in Internet stocks in the US, than among those who dreamt up the ideas in the first place. If ever there was a case for caveat emptor, this is it. This type of investment is hard to value.

You could argue that the Internet is not new. The Victorians did much the same with the telegraph system - being able to transmit information without having to wait for a coach or sailing ship to travel the miles should not be under estimated. Millions were made then, too, so perhaps it is the Luddite in me counselling caution when it comes toinvesting in the new wave of Euro Internet stocks. But I feel nervous when the multiple applied to the shares is one of price times sales, rather than price times profits.

Brian Tora is chairman of Greig Middleton's investment strategy committee