Online's golden years

John Willcock: 'We may look back on last autumn's internet share mania as a golden period'

The time it takes for the economy to go from the beginning of a boom to the end of a bust takes years. The internet phenomenon seems to have compressed an entire economic cycle into just a few months.

The time it takes for the economy to go from the beginning of a boom to the end of a bust takes years. The internet phenomenon seems to have compressed an entire economic cycle into just a few months.

The collapse of boo.com this week has had the techno-sceptics out in force. Yet just months ago private investors were piling into dot.com floats, which were seen as virtual one-way bets.

You might take some comfort from the fact that boo.com, which aimed to become the first truly global online fashion retailer, hasn't actually floated yet. The only investors to get burned were the original backers - investment bank Goldman Sachs, Bernard Arnualt, head of the French luxury goods group LVMH, and the Bennetton family. None of them short of a few bob.

But what are UK private investors to make of the fall of boo.com? We've already seen a sell-off in the hi-tech market. Does this mean there is even worse to come? Some commentators think so. Michael Whitaker, chief executive of internet incubator NewMedia Spark, says that more than 70 per cent of current internet-related companies will go out of business within two years.

If even a fraction of those businesses goes down, that's a sizeable shakeout. Should investors feel hard-done-by? Were they taken in by fast-talking sales staff and a complacent press?

In a word, no. This is what investing in risk capital is all about. The risks for start-ups will always be high, let alone for hi-tech ones. Without wishing to see further business failures, if any good is to come out of the recent market gyrations and the boo.com saga, it is a return to reality.

Investing in shares should ideally be for a minimum of five years. People should make sure they can afford to lose their entire investment before they approach the stock market. In the long term, shares are by far the best investment you can make, particularly through a broad portfolio of shares.

But trying to make a killing on a short-term rise in a single Net start-up is little more than gambling. And most people I know who frequent race courses usually end the day short of a few notes.

But investing in Net floats and holding for the long term seems like a reasonable strategy. It's down to you as an investor to work out which will be the winners and losers. Speaking of which, a lot of investor interest has been stirred up by the Pru's decision to float its online bank, egg. There has also been some anger that you can only apply for shares in egg via the internet.

This restriction seems reasonable. Egg is an internet bank, after all. And the Pru's decision is part of an attempt to ration application numbers, following the botched float of lastminute.com. The latter float was so over-subscribed that many investors failed to get the shares they wanted, and then had to wait to get their money back. The Pru's decision may forestall such a debacle.

I am far less happy about the continuing lack of information about the proposed merger of the London Stock Exchange and the Deutsche Borse. This week we heard that companies might not have to list in euros after all. We still don't know whether a merger would make it more expensive for private investors to buy and sell shares, or less expensive.

Many UK brokers may want the deal renegotiated, so that London can keep a technology market instead of the whole hi-tech start-up market being shifted to Frankfurt.

I would be astonished if the Germans would agree to any concessions on that point at this stage. So the deal may unravel after all. If not, we may look back on last autumn's internet share mania as a golden age when you could still invest in hi-tech shares in London.

John Willcock is Personal Finance Editor of The Independent

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

News
Night job: Pacha nightclub DJ, Joan Ribas, is the new kingmaker on the island
news
Arts and Entertainment
Nicole Kidman plays Grace Kelly in the film, which was criticised by Monaco’s royal family
film'I survived it, but I’ll never be the same,' says Arash Amel
Life and Style
Retailers should make good any consumer goods problems that occur within two years
tech(and what to do if you receive it)
Life and Style
healthIf one was missed, vomiting blood was seen as a viable alternative
Life and Style
tech
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

    Guru Careers: C# Project Team Lead

    £55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

    Guru Careers: Graduate Editor / Editorial Assistant

    £16 - 20k: Guru Careers: A Graduate Editor / Editorial Assistant is needed to ...

    Day In a Page

    Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

    Blundering Blair quits as Middle East peace envoy – only Israel will miss him

    For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
    Fifa corruption arrests: All hail the Feds for riding to football's rescue

    Fifa corruption arrests

    All hail the Feds for riding to football's rescue, says Ian Herbert
    Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

    The Kurdish enclave still resisting the tyranny of Assad and Isis

    In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
    How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

    How I survived Cambodia's Killing Fields

    Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
    Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

    How Stephen Mangan got his range

    Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor
    The ZX Spectrum has been crowd-funded back into play - with some 21st-century tweaks

    The ZX Spectrum is back

    The ZX Spectrum was the original - and for some players, still the best. David Crookes meets the fans who've kept the games' flames lit
    Grace of Monaco film panned: even the screenwriter pours scorn on biopic starring Nicole Kidman

    Even the screenwriter pours scorn on Grace of Monaco biopic

    The critics had a field day after last year's premiere, but the savaging goes on
    Menstrual Hygiene Day: The strange ideas people used to believe about periods

    Menstrual Hygiene Day: The strange ideas people once had about periods

    If one was missed, vomiting blood was seen as a viable alternative
    The best work perks: From free travel cards to making dreams come true (really)

    The quirks of work perks

    From free travel cards to making dreams come true (really)
    Is bridge the latest twee pastime to get hip?

    Is bridge becoming hip?

    The number of young players has trebled in the past year. Gillian Orr discovers if this old game has new tricks
    Long author-lists on research papers are threatening the academic work system

    The rise of 'hyperauthorship'

    Now that academic papers are written by thousands (yes, thousands) of contributors, it's getting hard to tell workers from shirkers
    The rise of Lego Clubs: How toys are helping children struggling with social interaction to build better relationships

    The rise of Lego Clubs

    How toys are helping children struggling with social interaction to build better relationships
    5 best running glasses

    On your marks: 5 best running glasses

    Whether you’re pounding pavements, parks or hill passes, keep your eyes protected in all weathers
    Joe Root: 'Ben Stokes gives everything – he’s rubbing off on us all'

    'Ben Stokes gives everything – he’s rubbing off on us all'

    Joe Root says the England dressing room is a happy place again – and Stokes is the catalyst
    Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

    Please save my husband

    As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada