Julian Knight: Another dotcom bubble about to burst? No, not yet
Sunday 20 February 2011
I'm old enough to have started working as a financial hack at the tail-end of the late Nineties dotcom boom, when bunkum phrases such as "first-mover advantage" and "new economic paradigm" were being banded around by wannabe internet millionaires and their friends in the City, trying to rush any old rubbish to market.
Much of it was built on the economics of the madhouse. I remember one UK fund manager, Neil Woodford at Perpetual, standing up against it; he shunned internet shares and promptly sank to near the bottom of the performance tables. At his nadir, I took an investor in to meet him for an article – a brave thing for Mr Woodford to do under the circumstances. He set out, calmly and clearly, why he thought that internet companies with a turnover smaller than a local pub were overvalued at several hundred million pounds. The investor bought a shedload of Mr Woodford's fund and that proved a smart move indeed.
Now the cosmic broker valuations of Zynga – which created the FarmVille game on Facebook – and Groupon – a group-buying discount website – have led some to question if we are seeing a return of the dotcom bubble. How can Facebook, for instance, really be worth $50bn, around the GDP of a medium-sized African country?
But despite this, I can't see a late-Nineties craziness developing – or if it is, we are surely still a little way from its peak. Sure, we may be experiencing a bull run in the markets, but it's based on some fairly sound fundamentals – earnings are good for companies, most sit on solid cash piles, and, as we explore on pages 86 and 87, where else can cash go to in order to possibly keep pace with inflation other than shares? As for the internet, even the derided Zynga produces $850m a year in revenues. And Groupon has 50 million members in America and has just launched here. I don't know what Mr Woodford thinks about this, but the economics of the internet and the stock market in general look a lot better than at the time of the late Nineties crash.
Clear thinking on regulation
I am confused. Not an unusual state for me. This particular confusion was sparked by the decision by the Treasury to rename the Consumer Protection and Markets Authority (CPMA) the Financial Conduct Authority (FCA). What was it about CPMA that so offended? FCA certainly trips off the tongue a little bit more easily, but did the Treasury not think that it's virtually identical to, yes, the FSA? In fact, perhaps it's a bit of clever cost-saving – staff can just blob some Tipp-Ex on the old FSA stationery.
Whatever the new City watchdog is called, the Treasury's announcement makes clear that it is intended to give it focus and a bit of bite. For a start, the Treasury says the FCA will have a clear set of consumer-protection objectives to fulfil. This is different from the unsuccessful FSA which was charged with squaring the circle of safeguarding consumers while promoting the interest of banks and insurers. To help it achieve its clear goals, the FCA will have the power to ban the sale of certain financial products for a year while it considers whether they are dodgy.
If we had had the type of regulation that is now envisaged by the Treasury we could have avoided, or at least curtailed, the mis-selling of pensions, split-capital investment trusts and loan payment-protection insurance.
I have always feared that the new beefed-up bank of England would get all the Government's time and attention and that the FSA replacement would be left as a powerless rump. Fortunately, Treasury ministers are getting the message that we need a consumer body with real power; all we need now is the right personnel. One area the FCA may want to look at is the sale to older people and low-risk consumers of traded life policies – investigated on page 85 – this has all the hallmarks of yet another slow burner of a mis-selling scandal.
- 1 Isis 'jihadi bride' claims forced sex with Yazidi girls is never rape because Koran condones it
- 2 Art Garfunkel calls Paul Simon a 'monster' with a Napoleon complex
- 3 Woman accidentally shoots herself in the head while posing for a selfie
- 4 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
- 5 Puerto Rico, island of lost dreams: People are leaving the debt-hit territory in droves as near neighbour Cuba's star rises
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof