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NEWS: As Podcasts Boom, Big Media Rushes To Stake a Claim

Clear Channel, Networks Jump
At Offering Downloads
After Lessons From Rivals

'Is Anybody Out There?'

By SARAH MCBRIDE and NICK WINGFIELD
Staff Reporters of THE WALL STREET JOURNAL
October 10, 2005; Page A1

Bruised by earlier failures to embrace new technologies, big media companies are rushing into the two-year-old field of podcasting -- audio programs for downloading onto computers or portable music players. The high-stakes goal: grab young listeners, even at the risk of cannibalizing existing audiences or wasting time and money on a technology that may never go mainstream.

Radio giant Clear Channel Communications Inc. is selling memberships to a Rush Limbaugh club that includes podcasts and offering free podcasts of popular radio shows preceded by a 15-second ad. Walt Disney Co.'s ABC News offers a podcast of Nightline and other programs. National Public Radio is offering podcasts of shows from "Latino USA" to "All Songs Considered."

For listeners, the advantage of a podcast is convenience. Their favorite programs download automatically from the Internet, usually free of charge, and they can listen to the programs any time they wish. They can also listen wherever they wish, if they have an iPod or other MP3 player to receive the downloads.

Like many new technologies, podcasting may be snubbed by the wider public or fail to spawn a profitable business model. But the media industry's scramble signals its determination to avoid a repeat of earlier debacles when companies were slow to deal with new technologies.

Tough lessons from the past include Napster and other music file-sharing programs, which damaged CD sales even as the music industry dallied in offering ways to buy music online because of copyright issues. Another example is satellite radio, with its hundreds of channel choices. Its emerging popularity surprised regular radio companies, who dragged their feet on developing technologies to fight it such as squeezing more channels onto the regular radio spectrum.

For traditional media companies, one danger of promoting podcasts is cannibalization: People who are listening to podcasts on their iPods aren't sitting in front of the TV or listening to a regular radio station. But executives say if they don't push their podcasts, somebody else will and they'll lose these listeners altogether.

Tim Brown, a biology graduate student in Salt Lake City, uses a gadget that allows him to play podcasts over his car radio. "I basically don't listen to the radio any more when I drive around," he says. The technology has increased his loyalty to some NPR shows, he says, because he can listen to them on his own schedule.

At the recent Los Angeles Digital Hollywood conference, where entertainment and technology movers and shakers gather to discuss trends, panel members waxed eloquent on "clipcasting," or podcasts delivered to mobile phones. Media executives speculated on how quickly video podcasts would emerge, perhaps to be played on a video iPod that Apple Computer Inc. is developing.

There are still plenty of hurdles to clear before podcasting becomes ubiquitous. Just 15% of American homes own a portable MP3 audio player like an iPod, according to the Consumer Electronics Association of America. And because of rights issues that make it expensive and time-consuming to podcast copyrighted music, podcasting is largely limited to talk radio and unlicensed music.

"All podcasting is about is making it easy for the [small percentage] of the population that owns an iPod to record to a specific device," says Bob Neil, president and chief executive of Atlanta-based Cox Radio Inc., which is not yet podcasting any shows. "People have been recording their favorite radio shows since the age of the cassette."

Begging for Feedback

Even one podcaster is unconvinced. "Is anybody out there?" asked John Montone, a reporter at New York's 1010 WINS, in a recent podcast. He said his regular radio show on WINS, which is owned by Viacom Inc.'s Infinity Broadcasting, inspires many phone calls and emails every day, but on "this new, emerging, cutting-edge technology, where I give out my email and practically beg for feedback, I get nothing." In an email interview, Mr. Montone says the podcast has brought about 20 emails from fans assuring him they're listening.

Podcasting first made it onto the map a little over a year ago when Adam Curry, a former presenter of music videos on MTV, and software developer Dave Winer started a short-lived talk show called "Trade Secrets." It was available only on the Internet, and the site offered listeners a way to download the program automatically each day so they could listen to it at their convenience.

The technology got a big jump when Apple in late June introduced a new version of its iTunes software, which people use to organize songs and audio files. The new version simplifies the process of finding and installing podcasts on iPods. Apple's popular iTunes Music Store, which sells songs for downloading, now includes 15,000 free podcasts ranging from amateur shows to slick mainstream programs by commentator Al Franken and others. Users have subscribed to more than seven million podcasts.

In a development that could further boost the medium, Yahoo Inc. today introduced a podcasting directory akin to Apple's. Yahoo intends to eventually link to relevant podcasts from movies, news and other sections of its sprawling Web sites.

In May, ABC and General Electric Co.'s NBC announced podcasting projects from their news divisions on the same day. Jeff Gralnick, a veteran television news producer and consultant to NBC, said the network felt compelled to announce its podcast plans before its shows were officially released because ABC had announced its own efforts. Both networks offer mostly edited clips from existing television news shows such as Nightline, along with some content available only in podcast format.

Mr. Gralnick says NBC approved its podcasting project quickly, without hand-wringing over whether the network can make money from the effort. "You need to become a stakeholder and you need to be a first adopter of technology," he says. "As it becomes a generally adopted technology people know you are there. Revenue for podcasting is over the horizon."

While the term podcasting evokes the iPod, most podcasts, including many available through iTunes, will play on any MP3 player or computer. Those familiar with the technology draw a distinction between a true podcast, which connotes the regular, automatic downloading of an audio program via special software, and the mere posting of an audio file on the Internet, which users can click on once and never return to. However, the distinction sometimes blurs when audio program makers offer their content in both forms. From their perspective, it doesn't matter which listeners choose so long as they listen.

Few companies are doing more than Clear Channel, the nation's largest radio broadcaster. It offers material from nearly 40 different stations as podcasts. Another part of the company, Premiere Radio Networks, is experimenting with paid podcasts of popular hosts such as Mr. Limbaugh and comedian Phil Hendrie. Fans pay around $7 a month to belong to a membership club that includes podcasts of the full shows.

The moves come as Clear Channel, like other radio companies, is trying to redefine itself. "We're not limited to a single distribution platform," says John Hogan, Clear Channel's head of radio. He argues that radio should start thinking of itself less as a collection of over-the-airwaves stations and more as a content provider. Frequencies and transmission towers, he says, are "the foundation of the business, but they're not the limitation of the business."

Drawing Listeners

"If we take our best pieces of programming, and we brand them, and put them out there, we're going to grow our audience," adds Evan Harrison, Clear Channel's head of online music and radio, whom Mr. Hogan hired away from Time Warner Inc.'s America Online. Mr. Harrison says stations receive feedback every day from people who stumbled across a podcast and now plan to tune into the station regularly over the airwaves or online. Jonathan Clarke, host of the Sunday night "Out of the Box" new music show on New York's Q104, cites emails from podcast listeners as far away as Brazil.

Besides drawing more listeners, Mr. Harrison says podcasting can bring in advertising. That's key for a company that saw radio revenue grow just 2% last year after shrinking slightly the year before. At first ad-free, Clear Channel's podcasts now include a 15-second advertisement before the programming -- short enough that people won't fast-forward through it, Mr. Harrison believes. Sponsors include Virgin Mobile, a prepaid cellphone service; a Phoenix car dealer, and a Dayton, Ohio, Apple store.

Mr. Harrison sees a day when Clear Channel can add another profit source by encouraging listeners who hear a podcast interview or song to visit a station's Web site and buy a full album through a retailing partner. Clear Channel already has a partnership with Amazon.com Inc. He's less enthusiastic about charging for podcast subscriptions in his part of Clear Channel's business. Paid podcast clubs are about "skimming to the core" of the fan base, he believes, whereas he wants to create new fans.

Rather than quick profits, the main driver of podcasting is concern about holding onto listeners, especially among the crucial teenage audience radio executives worry they are losing. A recent survey from Yahoo and OMD Worldwide, a top media buyer that is part of Omnicom Group, shows that 47% of people under 24 prefer to listen to music on the Internet. Only 27% said they preferred radio.

Mr. Harrison has faced skepticism from some of Clear Channel's radio producers, who feared people might skip regular broadcasts in favor of podcasts. "The last thing we want to do is give people a reason not to listen to that appointment media," says Mr. Harrison.

So he is mixing things up. A podcast called "Phone Tap" is based on a regular spoof involving a prank phone call aired on Z100 in New York. But the podcast doesn't replay that day's call. Instead, the clip podcast listeners get might have aired a few weeks earlier or might be created exclusively for the podcasts. Podcasts of "Out of the Box," the Q104 new-music show, typically don't include the entire one-hour show.

Many people listen on computers via a one-time download instead of a true podcast because they don't own portable audio players. "They just click and listen while they work, and don't even worry about getting an iPod," says Tom Jackson, manager of Internet services at Jefferson-Pilot Corp., a Greensboro, N.C., radio company that just started its first podcast.

Write to Sarah McBride at sarah.mcbride@wsj.com¹ and Nick Wingfield at nick.wingfield@wsj.com²

http://online.wsj.com/article/SB112890536522464129.html

COMMENTARY: The Curse of Cheap Credit?

By Robert J. Samuelson

Thursday, June 2, 2005; Page A23

Call it cheap credit's revenge. We seem to have arrived at the curious juncture where the low interest rates that rescued us from the last recession might be the cause of the next -- or, at any rate, might be the cause of some serious economic or financial unpleasantness. It turns out (not surprisingly) that cheap credit, when continued too long, inspires suspect and speculative borrowing. It becomes a formula for its own undoing.

William Rhodes, senior vice chairman of Citigroup, puts it this way: "The speculation here is more evident than people seem to realize. . . . I've seen this movie." The script is familiar. Too much cheap credit induces overborrowing. During the borrowing phase, the economy seems to do fine. But sooner or later the prices of things bought on credit rise to artificially high levels. Prices stop rising -- and perhaps crash. Lenders and borrowers suffer losses. Their spending slows or declines, dragging down the economy.

The present recovery is built largely on cheap credit. Striving to prevent a punishing recession after the 1990s' stock "bubble," the Federal Reserve lowered interest rates. The federal funds rate (the rate on overnight loans between banks) dropped to 1 percent. That policy worked. Americans borrowed heavily, particularly for housing. The result was a construction boom and a helpful rise in home prices. The higher housing values fortified confidence and provided -- through the refinancing of mortgages at lower rates -- huge cash windfalls that fueled consumer spending.

Now the Fed wants to preempt the perils of cheap credit, starting with old-fashioned inflation. The problem is that the Fed directly influences only the obscure federal funds rate, which isn't used by ordinary borrowers. It's risen to 3 percent and may go higher. But the more important rates are those on long-term bonds and mortgages -- and, contrary to expectations, they haven't risen. To take one example: Rates on 30-year fixed-rate mortgages averaged 5.8 percent in 2003 (down from 8 percent in 2000). In 2004, after the Fed began raising rates, they still averaged 5.8 percent. What are they now? Well, they're 5.7 percent.

No one quite understands why. It was expected that, as the Fed squeezed the total supply of credit, all rates would rise. Theories abound to explain what's happened: The Chinese (and others) are buying U.S. Treasury bonds, keeping down long-term rates; a better inflation outlook causes lenders to accept much lower long-term rates (lenders don't want their money eroded by inflation -- thus, prospects for low inflation reduce rates); the economy is actually weaker than it seems; the Fed hasn't yet offset its oversupply of cheap credit. Who knows? Even Fed Chairman Alan Greenspan calls the low rates on bonds and mortgages a "conundrum."

Whatever their cause, they pose twin dangers. One is that more loans may turn out to be stinkers. Borrowers may miss payments or default. The second is that cheap credit is pushing some prices to speculative (that is, unrealistic) levels. "Bubbles," as we've learned, do ultimately pop. Consider:

· Housing: In the past year, median home prices have risen 15 percent, to $206,000, reports the National Association of Realtors. Since 2002 they're up 32 percent nationally. Credit standards appear to have declined. Despite low fixed-rate mortgages, almost half of new home loans in the past year are adjustable-rate mortgages with even lower rates, says Mark Zandi of Economy.com. That's a record; in 2001 the ARM share was 20 percent. Zandi estimates that 20 percent of new mortgages are "interest-only" ARMs (monthly payments don't include principal), which barely existed a few years ago.

· Emerging markets: The Institute of International Finance Inc., a research group for banks and other financial institutions, warned last week that low interest rates may have led to overlending to poorer countries. In 2004 they borrowed $127 billion, up from a mere $1.6 billion in 2002, estimates the IIF. For some countries, interest rates are so low that they're barely above rates on U.S. Treasury bonds, says Charles Dallara of the IIF.

· Junk bonds: In the past year, they've become "dramatically junkier," Steven Rattner, a well-known investment banker, warned last week in the Financial Times. In 2004 companies issued a record $147 billion of these bonds, which have low credit ratings. About 42.5 percent of these bonds had a credit rate of B-minus or below, the poorest record ever, he said.

· Hedge funds: These are sophisticated investment vehicles for wealthy individuals, corporations, pensions and endowment funds. Since 2000 the number of U.S. hedge funds has doubled, to 8,000, and the amount they control has tripled, to $1 trillion, says the Hennessee Group, a consulting company. Many hedge funds finance their investments with short-term loans at low rates. As these rates rise, funds may make riskier investments to maintain profitability, says Andrew Lo, a finance professor at the Massachusetts Institute of Technology. More hedge funds may fail, he says.

The U.S. economy is doing well. The withdrawal of cheap credit would be less worrisome if the rest of the world were doing as well. Any weakness would be offset by higher demand for U.S. exports. But much of the world is struggling. If something goes wrong in the United States, it could spread globally. Everything is interconnected. Hedge funds own mortgages, junk bonds and emerging-market bonds. Losses in one market can cause losses in others. Of course, that's normal. But will the normal trigger something more threatening? Cheap credit, once a blessing, could become a curse.

[MORE]

"The Travelling Quack" (1889), Tom Merry.

ACADEMIC: A Look Back At Tech Spending By Big Biz

Jonathan McCarthy
Federal Reserve Bank of New York
June 27, 2003

This paper examines patterns of capital expenditures across types of equipment and software as well as across industries during the recent investment boom and bust. The analysis indicates that the end of the boom and the bust reflect developments in the telecom sector, as the role of communications equipment was well beyond its size in the economy. More generally, industries that invested more during the boom reduced their capital expenditures more during the bust. One possible explanation for this pattern is that capital overhangs were one factor behind the bust.

Full Paper
Simpler Version

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NEWS: Surveys Say Bloggers Not Yet Big For Mainstream

A CNN/USA Today/Gallup poll released March 11 found 56% of 1,008 adults surveyed have no knowledge of blogs. Even among Internet users, only 32% said they are very or somewhat familiar with blogs. Only 3% read a blog every day. On the other hand, 27% of U.S. Internet users, or 32 million people, have visited a blog site.

Another report, "The State of the News Media," said blogs have potential.

It also said, "They are still experiencing growing pains that will force them to live up to the highest standards of ethics and responsibility -- not to mention dealing with unwanted lawsuits for posting unwanted publicity -- if they are to become a central part of the online media experience."

This report, by the Project for Excellence in Journalism, part of the Columbia University Graduate School of Journalism, said 2004 would likely be seen as a turning point in the evolution of blogs.

According to the two research reports, bloggers get almost all of their news from the mainstream media, rather then breaking news themselves.

The most popular Web sites for news and information remain those run by traditional media outlets, and by a large margin.

The 20 biggest media companies own half of the biggest news sites. A separate survey by Pew Research, an independent opinion research group, found that 71% of people who get news from the Web do not stop using other sources. They just add the Internet blogs as another news source.

Of 19.3 million blogs that have been created, 13.1 million have been abandoned, the firm says. Fewer than 50,000 blogs are updated daily, the firm says.

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NEWS: Inventions that Don't Benefit the Inventors

The transistor. In 1947, scientists at AT&T's Bell Labs created the world's first silicon transistor. Three of its scientists would later win the Nobel Prize in physics for the invention. Bell Labs obtained a patent for the device, but the invention was licensed to, among others, IBM, Texas Instruments and the forerunner of Sony. The goal was to avoid antitrust problems with the U.S. government. (In a 1956 consent decree, AT&T agreed to license the transistor freely.)
But relatively easy licensing terms cost AT&T millions in royalties.

Owning a bit of the Internet. Back in the early '90s, Robert Cailliau of the European Organization for Nuclear Research, or CERN, contacted venture capitalist Sven Lingjaerde to see whether the lab could get funding for its World Wide Web project.
At the time, Lingjaerde was at Swiss firm Genevest; now he's a co-founding partner at Vision Capital.

"When the project grew in size, more money was needed, and the top management of CERN then decided to cut the budget, claiming it was not directly linked to fundamental research and it was starting to cost too much," Lingjaerde said in an e-mail. "We were considering putting money behind the project, but only if a strong U.S. VC would join. We knew that our small means (would) not be enough. The business model was also not clear."

Onsale. Jerry Kaplan had burned through $75 million while running GO Computing, a foiled attempt at pen-based computing chronicled in his book "Startup: A Silicon Valley Adventure." But in 1994, he co-founded Onsale, one of the first online-auction companies. Backed by Kleiner Perkins Caufield & Byers, it became an early leader.

"It's like money from heaven," he described Onsale to BusinessWeek.

Jerry KaplanCo-founderOnsale Heaven was short-lived. In 1995, eBay was born. A few years later, Onsale went on to merge with Egghead and got auctioned off in pieces.

"If you don't get the model exactly right, capitalism can be unforgiving," Kaplan said in an interview. eBay created a forum for people to

Relational database software. IBM's engineers can take credit for inventing the hard disk drive, the RISC (reduced instruction set computing) chip and speech recognition software, among other technology. The company has been granted in excess of 22,000 patents in the last decade, more than its top 10 competitors combined. But the company doesn't take all of its inventions to market successfully. Take the relational database, for instance.

A young IBM engineer named Edgar Codd defined the concept and structure of the relational database back in the '60s and '70s. Codd's revolutionary idea was to organize data into tables of rows and columns, and to relate that data to other tables. His work produced the blueprint for how to build a relational database, as well as the foundation for what would become SQL, or Structured Query Language, a standard way to access data.

At the time, however, the technology didn't mesh with IBM's corporate strategy. The company was heavily invested in an older database model. The result: IBM didn't market a product based on Codd's ideas until 1978--one year after a young entrepreneur named Larry Ellison founded Oracle. Ellison's company went on to become the leader in relational database software, a $13.5 billion market that Oracle leads to this day.

DOS Microsoft got into operating systems by chance, but this story starts with IBM.
For its first PC, IBM initially considered using the C/PM system from Digital Research. Because Digital Research wouldn't sign a nondisclosure agreeent, IBM asked Microsoft, then developing applications for IBM, for MS-DOS.

MS-DOS, however, was actually based on QDOS, an operating system created by Tim Paterson of Seattle Computer Products. Microsoft bought QDOS from SCP (which didn't know about the IBM deal) for $50,000.

The sale became the basis of an empire. Subsequently, Paterson worked temporarily at Microsoft.

Yahoo passes on Google. Most technology mergers don't work, but there are cases in which an established company could have avoided big headaches later. Google was a project at Stanford University's engineering labs in 1998, when the founders showed it off to Yahoo co-founder David Filo. According to Google, Filo said he wanted to talk with them when the technology was fully developed and scalable. Sources said Yahoo even had a chance to buy Google.
Since then, Google, of course, has become Yahoo's biggest competitor. But in retrospect, it seems somewhat reasonable that Yahoo wouldn't have been jumping to buy the company. Search was a flooded field at the time. Stanford had little luck finding early investors.

Yahoo, however, isn't alone. It offered itself--in vain--to Netscape back in the mid-1990s.

The microdrive and hard-drive-based MP3 players IBM started shipping an invention called the microdrive--a mini hard drive with a 1-inch diameter platter, in 1999 and waited for business customers to snap it up. And waited...and waited.

Sales never materialized, and IBM, which invented the hard drive back in the '50s, continued to lose money on drives. (HP also came up with a small drive in the '90s but snuffed it.)
Apple Computer's iPod

Fast forward to 2002: IBM dished its drive business to Hitachi. In 2003 and 2004, the mini iPod and other music players made mini drives a hot commodity.
"IBM didn't see the consumer," said Bill Healy, senior vice president of product strategy and marketing at Hitachi Global Storage Technologies and a former IBMer. "Hitachi is the GE of Japan. They make rice cookers, refrigerators, nuclear-power plants."
Mistake? Hitachi has had more luck selling drives, but the business is still notoriously competitive and profits are often elusive. And, unlike IBM, Hitachi faces a slew of competitors in this market.

On a somewhat related note, Compaq Computer, Dell and others marketed MP3 players with hard drives before Apple did. However, they were home systems with standard PC hard drives. In January 2001, it seemed like a promising market. In October 2001, Apple came out with the first iPod based on a novel 1.8-inch drive that had interested few manufacturers. Portability won out.

Xerox PARC Move along, folks, nothing to see here. Xerox has been flayed mercilessly for allowing concepts such as the desktop PC, Ethernet networking and the laser printer--all invented at its famed Palo Alto Research Center, or PARC--to get exploited by others.
The photocopier giant is now trying to stay afloat in a world going paperless. Still, PARC did help launch the careers of a number of people: James Clark, Alan Kay, Robert Metcalf and Lawrence Tesler, among others

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NEWS: Search-Ad Bubble Shows Resilience

By Kevin Kelleher TheStreet.com Senior Writer4/5/2005 5:55 PM EDT

As search giants Google and Yahoo! get ready to report earnings for the first quarter of 2005, a debate is growing over just how good -- or bad -- the environment has become for the glowing core of the nuclear reactor known as the Internet economy: search-related advertising.

Last year, the sponsored-link ads that appear on Google and Yahoo! search results, as well as a growing number of small-content sites such as blogs, generated growth at a rate that was faster than most areas of e-commerce. In the fourth quarter, sequential search-ad revenue grew 30% at Google and 16% at Yahoo!. But after eBay, one of the biggest buyers of sponsored-link ads, said it was dialing back on its search spending, concerns arose that a small search bubble was about to pop.

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REPORT: Credit Derivatives May Pose Risk

By CARRICK MOLLENKAMP Staff Reporter of THE WALL STREET JOURNALApril 6, 2005; Page A6

LONDON -- The International Monetary Fund, in an otherwise sanguine review of the world's financial system, warned that the growing market for credit derivatives and other complex securities could suffer a rapid and "disorderly" selloff if conditions turned negative.

The IMF's Global Financial Stability Report, which is aimed at identifying potential weaknesses in the global financial system, also expressed concern that it had found anecdotal evidence that big banks may have relaxed credit standards in the hotly competitive race to attract hedge funds as clients for trading, a business known as prime brokerage. Hedge funds increasingly have become a big source of revenue for investment banks both as trading clients and as borrowers.

In the review of the market for credit derivatives -- instruments designed to protect banks and borrowers from losses on loans -- the IMF study said investors could be hurt if the market turned sour. In general, the credit-derivatives market has been praised for dispersing loan and asset risk across a wide array of investors. The overall credit-derivatives market stands at more than $1 trillion and includes complex financial structures such as collateralized debt obligations, or pools of loans divided into different layers of risk and return.

But "if market conditions turn negative, many investors in these products could rush to exit at the same time, causing market liquidity shortages that could amplify price movements," the IMF said in prepared remarks. "Furthermore, elements of risk management systems designed to deal with these complex products have not been through a live test, particularly to see if in time of need, counterparties stand ready to absorb the additional market and credit risks from those who would like to shed them."

Full Report

Can You Spot the Next VC Bubble?

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ACADEMIC: Econometric Tests of Asset Price Bubbles

Refet S. Gurkaynak
Division of Monetary A.airs
Board of Governors of the Federal Reserve System
Washington, DC 20551

January 2005

Can asset price bubbles be detected? This survey of econometric tests of asset price bubbles shows that, despite recent advances, econometric detection of asset price bubbles cannot be achieved with a satisfactory degree of certainty. For each paper that finds evidence of bubbles, there is another one that fits the data equally well without allowing for a bubble.

We are still unable to distinguish bubbles from time-varying or regimeswitching fundamentals, while many small sample econometrics problems of bubble tests remain unresolved.
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NEWS: Too much money going into VC

Aftershock
Mar 31st 2005 From The Economist print edition

...America's venture capitalists put $20.4 billion into deals in 2004. Although this sum was far below the amounts of the bubble years, it marks the first increase after three years of declining investment, according to VentureOne, a research firm. The biggest rise by far was in software, where investment grew from $4.1 billion in 2003 to $4.9 billion last year. Median valuations for American start-ups in 2004 were $13m—the highest since 2001, and a 30% increase compared with 2003.

...Following the dotcom crash, venture-capital funds did not invest much because good deals were scarce. Last year's uptick in investment came from finally finding suitable uses for funds raised in 2000 and 2001, says Matt Garlick of VentureOne. Still, an “overhang” of uninvested money—a breathtaking $54 billion in 2004—is now looking for deals. And more is to come: last year American venture-capital funds doubled the amount of fresh capital they raised from investors, taking in $17.5 billion, against $8.8 billion in 2003.

...But the allure of returns remains. “Limited partners are so desperate to deploy assets in this class that they are willing to fund new firms or old, bad firms—that is unprecedented in history,” says William Sahlman of Harvard Business School.

...Meanwhile, many veteran venture capitalists are fretting, especially now that pension funds and endowments are racing to place money in venture capital (partly because they cannot get decent returns elsewhere). “I am concerned that the inflow of so many dollars will result in overvaluations and inflated prices that we can't recapture on exit,” says Peter Barris of New Enterprise Associates, a large venture fund. Apparently, you can have too much of a good thing.

COMMENTARY: Blogs will Transform Media but Lead to Tiny Profits

There is a lot of excitement about blogs these days. Reminiscent of the heady days of the mid 1990s, upstarts are calling for a revolution. “Off with their heads” they cry pointing to the big media titans. Some of these titans are disdainful of the mobs carrying pitchforks unimportant. The bloggers, cry back, “you don’t get it.” Others in big media are quaking in their boots launching their own preemptive strikes. We’ve all seen this movie before. But like any great movie – we just can’t help getting swept away in the excitement no matter how many times the same types of characters do the same things.

When investor money and corporate development is at stake its key to remain dispassionate – skip the drama – and focus on some key economic lessons.

1) Innovation is fast but transformation is slow. As fast as blogs seem to have arrived and gain in stature every day, the real impact will be gradual. It will not be a revolution that overturns the established order overnight, rather a slow evolution over time. What we are seeing now is the rapid adoption among a ripe and ready group of consumers. According to Technorati, there are more than 8 million online blogs, up from 100,000 just two years ago. A new blog is created every 7.4 seconds generating 275,000 posts a day and 10,800 updates an hour. However, moving to large segments of the population where numbers need to hit tens of millions to register will take a lot longer. That means established companies have a longer than they think to figure out the most effective way to respond. Just remember even now, not even Barnes and Noble was “Amazoned.”

2) Despite the transformation, profits will be elusive. Think about email. It transformed the way humans interact with each other across the globe by making communication free, easy and fast. Despite this it is very difficult to generate notable profits. Yahoo! recently announced that it is increasing its free email storage to 1 Gigabyte. 2 GB is offered fo $20 per year. Blogs offer the potential to further transform communication by making broadcast media more social and interactive. But like email it will be very hard to make real profits. It takes about 45 seconds to log on to blogger.com and create a blog for free.

3) Where will the money go? Over time look for a very small handful of successful personalities to emerge from the blogsphere and capture a large enough group of followers whose demographic is appealing enough to advertisers that they can generate some advertising revenue. However, this model will be little different from an individual perusing a career as a talk show host.

Blog content aggregators and search engines may be able to generate some targeted advertising revenue similar to the paid search approach of Google and Yahoo. But as hot as paid internet placement is today, the market is getting stretched fairly thin with a growing number of competitors and more savvy and demanding buyers.

A few lucky start-ups might eventually get bought by larger media firms and if they time it at the right moment in the hype cycle, they will get far more money than they are worth. If they time it wrong, no one will touch them.

Most likely the money will remain with existing media companies that successfully adapt. Increasingly, traditional media are setting up their own blog content such as Business Week’s The Tech Beat. Local newspapers around the country are dong the same, from the Philadelphia Philadelphia Daily News' anti-war "Attytood," to News & Record, of North Carolina. Njo.com was started by a group of New Jersey newspapers focused on Bruce Springsteen and "The Sopranos."

The future of blogging is bright indeed but long term profit potential is dim.

NEWS: US public Wi-Fi bubble due to burst

By Peter Judge, Techworld
Falling prices of public Wi-Fi services could spell trouble for operators - and may mean less public Wi-Fi than some optimists have predicted. US mobile operators will lose $12 billion in revenue - because there are too many of them competing too aggressively.

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John Bogle: Has Your Fund Manager Betrayed Your Trust?

Keynote Speech byJohn C. Bogle, Founder and Former CEO, The Vanguard GroupBeforeThe American Institute of Certified Public AccountantsPersonal Financial Planning ConferenceLas Vegas, NV, January 5, 2004

Ever since the first of the mutual fund scandals came to light shortly after Labor Day 2003, the circle of fund organizations involved has continued to grow. To date, more than a dozen firms have been implicated in some form of late trading (illegal manager behavior) or international “time-zone” trading (unethical manager behavior), with many of the charges brought by New York Attorney General Eliot Spitzer, Massachusetts Secretary William Galvin, and the Securities and Exchange Commission already settled, resulting in substantial and well-deserved financial penalties imposed on the managers.

Make no mistake about it. Most of the firms involved in the scandals are major industry participants. Their aggregate fund assets of nearly $1.2 trillion represent nearly 20% of the industry’s $7.2 trillion total. As the scandals have unfolded, investor reaction turned from incredulity to revulsion, and then to self-defense, with rising share liquidations at the firms that were affected. Even the firms that have so far received only subpoenas for information seem cautious about declaring their innocence, for it turns out that virtually all 401(k) transactions take place long after each day’s 4 p.m. cut-off time for executing orders. What is more, one of the two prime clearing-houses for these transactions has been forced out of business. And there may be more enforcement actions to come.

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Academic Paper: The Diffusion of Electronic Business in the U.S.

For those with the stomach for a fairly academic paper:

We provide a recent account of the difusion of electronic business in the U.S. economy using new data from the U.S. Bureau of the Census. We document the extent of the difusion in three main sectors of the economy: retail, services, and manufacturing. For manufacturing, we also analyze plants' patterns of adoption of several Internet-based processes. We conclude with a look at the future of the Internet's difusion and a prospect for further data collection by the U.S. Census
Bureau.

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Dallas Fed: Entrepreneurs are Engine of Capitalism

Some of the simplest questions often asked about economic performance have the most complex answers. Three examples: How can profit exist? What causes economic growth? How does a market economy coordinate resource use? Over the long history of the development
of economic doctrine, many great minds have wrestled with these questions and many have turned to the concept of the entrepreneur.

This term has long been used by economists, albeit with varying emphases at different
times, and recently enjoyed a renaissance in economic and business school pedagogy because of the Internet’s evolution and the smallbusiness explosion it generated. The concept remains relevant as America’s economy enters the new millennium, for how we treat our entrepreneurs has immediate and profound effects on our overall national economic performance and the direction of economic activity.

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Innovation is Fast, Transformation is Slow

History shows that new technologies do not move instantly from the inventor's laboratory to everyday usage. It can take a long time for them to increase productivity. The absence of immediate productivity improvement with the advent of new information processing technology was not unlike earlier experiences with general-purpose technologies. Similar delays in the impact of technological progress on aggregate productivity occurred during past industrial revolutions.

Part of the delay, according to Northwestern University economist Joel Mokyr, occurs because, important as they are, fundamental technological breakthroughs often require further inventions to make them broadly applicable: "Such gap-filling inventions are often the result of on-the-job learning or of a development by a firm's engineers realizing ad hoc opportunities to produce a good cheaper or better. Over time, a long sequence of such microinventions may lead to major gains in productivity, impressive advances in quality, fuel and material savings, durability and so on."
For example:
• Although Thomas Newcomen built the first successful steam engine in 1712, it was not until about 1765 that major improvements in the engine by James Watt made it suitable for factory use. Additional improvements, which included the addition of a governor and rotary movement, made the steam engine a huge economic success in the 19th century. Recent estimates suggest that at the height of the British Industrial Revolution (1760 to 1830) output per capita in the United Kingdom grew at less than 0.5 percent per year on average, about the same rate as during the period between 1700 and 1760. By comparison, per capita output increased at an average rate of nearly 2 percent per year from 1830 to 1870. Mokyr argues that despite slow growth during the era of high invention, rapid growth in Britain after 1830 could not have occurred without the technological breakthroughs of the previous 70 years.

• Although Michael Faraday invented the first electric motor in 1821 and the dynamo in 1831, it took nearly a century of additional, substantial breakthroughs to make electricity the dominant source of power in manufacturing. Despite major technological breakthroughs in electricity, chemicals, steel production and other major sectors, American manufacturing productivity slowed in the late 19th century. Whereas output per hour increased at 1.7 percent per year from 1869 to 1889, output per hour increased at just 1.4 percent per year from 1889 to 1909. U.S. manufacturing productivity growth remained modest until after World War I, but grew during the 1920s at an astounding rate of 5.6 percent per year. Productivity growth remained high for another 40 years.
• As with the steam engine and electric motor, the computer chip did not affect productivity in many industries until additional inventions came along to apply the new technology. In banking, for example, microinventions like the ATM, the debit card and credit-scoring software were required to generate the productivity gains promised by the computer.
Stanford University economist Paul David explores the dynamics of technological diffusion by comparing the electric dynamo, a key technological advance of the 19th century, with the modern computer. The dynamo, like the computer and steam engine, is a general-purpose technology, having profound effects on nearly all sectors of the economy. Decades elapsed, however, between the introduction of reliable electric motors and their widespread use in industry. Some of the delay was accounted for by lags in the development of efficient means of electric power generation and by competition between direct and alternating current. Electric power generation was reasonably efficient and commercially viable by 1880, however, and the superiority of alternating current for most applications was clear by 1893. Yet, as the chart to the left illustrates, electricity accounted for just 5 percent of mechanical power in U.S. manufacturing in 1900 and did not exceed 50 percent until 1920.

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The Role of Finance in the Investment Bust of 2001

William Poole*President, Federal Reserve Bank of St. Louis
Annual Southwestern Finance Association MeetingAdams Mark HotelSt. LouisMarch 8, 2002

A recurring topic of debate among economists and finance experts is the role of financial markets in cycles of boom and bust in the real economy. This discussion has flared up once again in the wake of the Recession of 2001. The performance of the U.S economy in the 1990s was remarkable, and so was the performance of the stock market. Starting in spring of 2000, both the stock market and real economic activity weakened considerably. In the real economy, we observed a sharp drop-off in private business fixed investment. In the financial sector, we witnessed the stock market delivering disappointing returns for two consecutive years. The number of initial public offerings (IPOs) fell dramatically, and the market for venture capital dried up. In fact, given that the financial indicators turned ahead of real investment, there is a prima facie case that financial stringency contributed to the decline in physical investment spending. Of course, the financial environment does not come out of the blue; weakening prospects of the tech companies had a lot to do with the financial stringency they faced starting in early 2000.

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BLOGATHON

5 Years ago today, the Internet bubble began to deflate. Interestingly it wasn't a crash like 1987 or 1929. It didn't go out with a bang, but a whimper. For months, many of the most savvy thought it was a temporary correction and the fun would continue on after weeding out some bad apples- just a few bad dot.coms that never should have existed. Many never guessed that the whole thing was a house of cards- there were too many companies for too small a market opportunity and even the best of breed (Cisco, Intel, Yahoo, Amazon) were overvalued.

The Internet bubble was not just a stock market bubble. It was not just about the NASDAQ reaching 5,000 as it did 5 years ago. It affected the entire financial markets, from venture capital, to private equity, to creditors. It affected the guts of the biggest and oldest companies. It affected all of us. It wasn't just an irrational speculative mania- though that obviously played a role. A large company cannot speculate on its investments. It lives with the legacy of its decisions.

It was the frontier of new business opportunities ushered in by a new and powerful technology. What investors (VCs, stock pickers, business managers) got wrong was not that the Internet vision was completely crazy. What they got wrong was how long it would take for that vision to become reality and how to make real profits out of it. The Internet will transform the world as many hoped and expected but it will occur over 20 years of evolution not a 2 year revolution. Profits it turns out are also a lot harder to generate than it seems. When so much new value is created, it is tempting to think profit will follow. But that is not true. Think about email. Perhaps nothing else has had such a Transformative effect as email - altering human communication globally and permanently. And yet it is nearly impossible to make money from email. Its free. Its free because nearly anyone can create an email service. When something is easy to make and copy, it is hard to charge a lot because someone else can pop up and charge less stealing your customers.

These and other more nuanced realities more are key to understanding how to manage waves of innovation in the future.

To help in this process as well as have some fun, we're "celebrating" this birthday with a blogathon. A blog-wide echo chat about the bubble. The participants are growing. Contributing writings so far are: Andy Kessler, Om Malik, serial entrepreneur Ross Mayfield and financial whiz-kid, Paul Kedrosky

• Andy Kessler: Nazdog & The MOMOs
• Om Malik: The Beholden Years
• Ross Mayfield: Relationships Over Transactions, A Learning from the Bubble
• Paul Kedrosky: The Bubble and Me

Learning to Live with Bubbles

They're a fact of market economics, and they can lead to much good -- if managers understand and avoid the pitfalls. At the fifth anniversary of the popping of the Internet bubble, a long shadow remains over businesses and the economy: The cycle of creative destruction is not yet complete. A number of key measures, from the stock market to employment, remain far below levels reached in 2000. More strikingly, individual businesses are still fighting the same underlying strategic battle that confronted them during the bubble -- the disruptive effects of digitized information.

How so? The music industry is being transformed by Apple's iTunes. Television is facing pressures from digital video recorders, online downloads, and now the video-clip searching abilities provided by Google and others. Print media faces a challenge from blogs. Telecommunications continues to be altered by the rollout of voice over Internet protocol (VoIP). Electronic trading exchanges are altering the economics of stock markets. And radio frequency identification tags (RFID) are transforming the management of supply chains.

Emerging from the trough, we realize now that the bubble was not all froth and nonsense. It wasn't like the Dutch tulip mania of 1635, a purely speculative run-up in prices for exotic flowers with no underlying value created along the way. The Internet bubble, like so many business bubbles of the past, continues to create positive changes in business and consumer marketplaces. We have moved out of the hyperactive revolutionary period and into the slower, more significant, evolutionary phase.

BUBBLES AS R&D. The frenzy of business bubbles is like an overexcited learning exercise or a giant research and development effort. All the failures teach the marketplace what works and what doesn't. We learned at an accelerated clip about how the Internet could be deployed as a technology, what new business models might work, how consumer behavior can change and at what speed. What was proven wrong during the crash wasn't the overall vision. No, many of the ideas about how to profit from the vision and how long it would take to become reality were proven wrong. But the vision remains. The dot-com bubble followed historical patterns. Bubbles pop because they're the product of a cascade of bad investment decisions. But bubbles aren't attributable just to irrational exuberance -- although obviously that plays a role.

BUBBLE PATTERNS. In addition to the standard ideas of greed and irrational exuberance, bubbles are fueled by other unexpected forces. They're based on systematic distortion of information, which erodes managers' ability to distinguish the good, the bad, and the ugly. They're based on a competitive marketplace that feeds the frenzy and forces even the wise to jump into the game in order to meet their benchmarked returns. And lastly, they're based on the day-to-day decisions by investors that collectively oversaturate the entire market with capital, leaving a market with too much money chasing too few quality opportunities.

BUBBLES ARE EVERYWHERE AND ACCELERATING. Making sound business decisions is extremely difficult during tumultuous markets. And as we continue to see, the business challenges they introduce last for decades. Business bubbles are the driving force of capitalism, innovation, and change. They're the fuel for the creative destruction that's the engine of explosive change in our economy. Bubbles aren't aberrations to normal economic functioning. They occur all the time -- some big, some tiny. In recent decades alone we've seen business bubbles in biotechnology, PCs, and semiconductors, and in regions such as Southeast Asia. Many more bubbles lay ahead. Since the 1960s, there has hardly been a year where there has not been a bubble somewhere.

In fact, we're likely to see a lot more of them in the future, as the speed and scale of both global investment and innovation accelerate. Several bubbles are already percolating in China, in nanotechnology, VoIP, real estate, private equity, hedge funds, US debt, and perhaps elsewhere so far undetected.

COSTS AND RISKS. For all the benefits bubbles can produce by financing giant shifts in technology and new market opportunities, they do so at great costs and risks. The immediate costs are the obvious and painfull loses that occur when they crash. The risks are far larger and more ominous. Since the 1980s, bubbles have repeatedly brought the US or world economy close to collapse (LDC Debt, S&L Crisis, Asian Miracle turned Asian Economic Crisis, Russian Debt Crisis, Long-Term Capital Management, Argentina, the Internet). Each time we narrowly avoided disaster, frequently thanks to a complex rescue package. Fortunately, so far they worked. We may not be so lucky in the future.

Business managers must improve their ability to navigate these periods of innovation and change by recognizing the patterns and avoiding some basic but common mistakes. Those who plan now for the next big bang can avoid making the major mistakes we saw so often in the last go-round.

For more on what drives bubbles see a book I wrote on the topic called Frenzy. I really like it and other people seem to as well.

Vote for Your Favorites

Click here to vote for the winners, lossers and most unexpected of the Internet bubble.

IF.....

RUDYARD KIPLING, 1865-1936

IF you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise:
If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools:

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: 'Hold on!'

If you can talk with crowds and keep your virtue,
' Or walk with Kings - nor lose the common touch,
if neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man, my son!

Popping Bubble

Measuring Bubbles

INTRODUCTION

Hi,
Welcome to the Bubble Blog. The purpose of this blog is to share insight, analysis, data, and commentary about investment bubbles in order to make better business decisions during these complex market dynamics.

Bubbles occur all the time. They are not aberrations to normal economic functioning. They are normal. Since the 1960s there has hardly been a year where a bubble has not occurred somewhere. Some are big, some are small. They are the driving force of innovation, and change - the fuel that finances creative destruction.

The really big ones do so at terrific cost and risk. The costs are faced primarily by those who are left hodling the bag when bubbles crash. The risks can affect the entire global economy. The last 15 years has seen bubbles that have rocked the world economy (Asian Miracle turned Asian Economic Crisis, Russian Debt Crisis, Long-Term Capital Management, Argentina, the Internet), each time nearly bringing the globe to an economic crisis.

While bubbles are more frequent than we typically realize, they may also be accelerating due to the speed of global capital movements and the pace off innovation.

This blog is dedicated to improving our insight during these period of sweaping transformation so that we can manage them more effectively.

Bubbles Today

There are a lot of bubbles out there today. Top of the list are:
China,
real estate,
hedge funds,
US debt,
nanotechnology.

What else is out there? What about little bubblets?

Search wars (Yahoo, Google, Microsoft, etc...) ?
Blogging ?
Cell phone games ?

Bubbles of the Past

We tend to think bubbles are rare "once in a life time events," but the truth is bubbles occur all the time. Since the 1960s there has hardly been a year where there has not been a bubble somewhere:
Late 1990s –2000 Internet bubble
Early 1990s – 1997 Asian Tigers, opening market, directed lending
Mid 1990s – 1997 Russian Debt
Mid 1990s Long Term Capital Management (1)
Mid 1990s China opening market, privatizing
Early 1990s Biotechnology
1980s Japan stock market, real estate
1982 – October 18, 1987 US Stock market
Early 1980s Personal Computers and related hardware, software in US
1980s and Early 1990s Real Estate Banking Crisis, S&L, others banking crises
Late 1970s-1980 OPEC 1979 price rise in oil
Late 1970s -1982 Third world syndicate bank loans
Mid 1970s REITs, office buildings, tankers, Boeing 747s
1960s-1970s Go-Go years, Nifty-Fifty (1,2, 3), technology companies (“onics”), color television
1920s-1929 Stock market, radio, autos, telephone
Late 1910s – 1921 Postwar boom, stocks, ships, commodities
Early 1900s – Oct 1907 Coffee, Union Pacific
Early 1890s - May 1893 Silver, Gold
1840s – 1945 British Railway mania II
1840s – 1850s US Railway mania
1830s – 1936 British Railway mania I
1820s Latin American bonds, mines, cotton in England
Late 1790s – 1810s Various waves in commodities, securities in England, Hamburg
1790s Canal mania
1770s East India Company in Amsterdam. Canals, turnpikes in Britain
1770s Commodities in Amsterdam
1720s South Sea Company, company stock in England
Late 1600s East India company, new companies, lotteries, in England
1630 Tulipmania in Dutch Republic, real estate, canals

5.5 Myths About Bubbles

Myth 1: Bubbles are rare aberrations to normal rational and efficient economic functioning.

Reality: Bubbles occur all the time. They are not aberrations to normal economic functioning. They are normal. Since the 1960s there has hardly been a year where a bubble has not occurred somewhere. Today, we swimming in bubbles see: China, hedge funds, real estate, US debt, nano-technology.

Myth 2: Bubbles are just “irrational exuberance” seizing the whole market.

Reality: Exuberance plays a role but its just one part of the story. There are both rational and irrational aspects to bubbles. They are based primarily on a cascade of bad investment decisions that follow some classic patterns throughout history fueled by 4 things: 1) distorted information and analysis that appears to justify inflated valuations for many; 2) distorted competitive marketplace that force everyone to play the game in order to earn competitive returns in a hot bubble market; 3) distorted allocation of capital that over-saturate investment opportunities; 4) easy access to money deteriorates sound business decision making leading to waste, bad business, lower return on capital and in the end a crash.

Myth 3: Bubbles are a big Ponzi scheme in which savvy investors take advantage of naïve investors who are consumed by enthusiasm and do not understand what their investments.

Reality: A lot of naïve investors do fall pray to savvy investors, but a lot of savvy investors get sucked in too. There are 3 types of investors regardless of how savvy they are: Believers, switchers and speculators. Believers truly have faith that they are making good investment decisions because they have a “vision” of the future of some new technology or market opportunity. Often the long-term potential of this vision is correct. What they tend to get wrong is how long it takes for this vision to become reality and where profits can actually be derived. As bubbles last for years, many investors switch from being skeptical and staying out of the market to investing. Some do this because they are converted and become believers. Others capitulate, they are forced to invest because in order to meet competitive returns in bubble markets they have to play the game. Speculators are timing the market and trying locate the fools who will hang on to inflated assets longer than they will.

Myth 4: Bubble are caused by excess liquidity driven by Federal Reserve policy that sets interest rates too low.

Reality: Liquidity is a key driver of bubbles, but interest rates are not always the primary source of liquidity for bubbles. Low interest rates can help provide a ripe capital market environment for bubbles and can tip the balance for some marginal investors to put in a little more money than they would otherwise. However, while low rates do lower risks of capital, they do not eliminate risk altogether. No interest rate justifies the kinds of bad investments that occurs during bubbles such as dot.coms that never should exist, Chinese companies that are scams, condo construction in super saturated markets like South Florida. Many bubbles occurred during rising interest rates including: The bubble leading to the 1987 crash, the Go-Go years of the 1960s, personal computers in the early 1980s. The primary source of liquidity for during many sector specific bubbles is investment portfolios targeting bubble assets that rise dramatically with the bubble, reinvest their gains creating self-perpetuating capital spiral that only ends when the bubble bursts. The more important cause of bubbles is not low rates, but a cascade of bad investment decision making.

Myth 5: Bubbles are bad.

Reality: Purely speculative bubbles like the Dutch Tulip mania, certain stocks, commodities, currency, don’t produce anything and typically crash leaving more people worse off. They are bad. However, business bubbles based on new technologies like the Internet or new market regions like China, are the driving force of capitalism. They finance innovation, change and accelerate learning about new opportunities.

Myth 5.5: Bubbles are good.

Reality: Speculative bubbles tend to leave more people worse off than when they started. Even productive business bubbles have great costs and carry great risks. The costs are obvious in the form of money lost during the crash. But the risks can also have sweeping effects in the US and global economy. The last 25 years has seen bubbles that have rocked the US or world economy (LDC Debt, S&L Crisis, Asian Miracle turned Asian Economic Crisis, Russian Debt Crisis, Long-Term Capital Management, Argentina, the Internet), each time nearly bringing the globe to an economic crisis.

Some Good Academic Papers (please add to this list)

Barber, Brad and Odean, Terrance. (2001). “The Internet and the Investor,” Journal of Economic Perspectives. (Winter) Vol. 15 Num 1 41-54

Barber, Brad and Odean, Terrance. (2000). "Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors" Journal of Finance, Vol. LV, No. 2, 773-806.

Paul A. David and Gavin Wright -- General Purpose Technologies and Surges in Productivity: Historical Reflections on the Future of the ICT Revolution.

DeLong, Bradford, Andrei Shleifer, Lawrence Summers. Robert Waldman, “Noise Trader Risk in Financial Markets,” The Journal of Political Economy, 94 (4) 703-738

DeLong, Bradford. (2002) “Macroeconomic Vulnerabilities in the Twenty-First Century Economy: A Preliminary Taxonomy” Conference Draft

Devine, Warren. (1983). “From Shafts to Wires: Historical Perspective on Electrification,” The Journal of Economic History, 43:2 (Jan) 347-372.

Gompers, Paul, and Josh Lerner. "Money Chasing Deals?: The Impact of Fund Inflows on the Valuation of Private Equity Investments." Journal of Financial Economics 55, no. 2 (February 2000): 281-325.

Gompers, Paul A., and Josh Lerner. "What Drives Venture Capital Fundraising?" Harvard Business School Working Paper Series, No. 99-079, 1999.

Haacker, Markus and Morsink, James. (2002). “You Say You Want A Revolution: Information Technology and Growth,” IMF Working Paper WP/02/70 (April)

Helpman, Elhanan and Trajtenberg, Manuel. (1994). “A Time to Sow and A Time to Reap: Growth Based on General Purpose Technologies,” NBER Working Paper 4854, (September)

Helpman, Elhanan. (1996). “Diffusion of General Purpose Technologies,” NBER Working Paper 5773, (September)

IMF World Economic Outlook, April 2003 -- Chapter 2: When Bubbles Burst PDF 355KB

IMF World Economic Outlook, September 2004 -- Chapter II. Three Current Policy Issues - The Global House Price Boom PDF 412KB

IMF World Economic Outlook, May 1998--Chapter IV. Financial Crises: Characteristics & Indicators of Vulnerability

The Myth of Asia's Miracle, Paul Krugman

Ritter, Jay and Welch, Ivo. (2002). “A Review of IPO Activity, Pricing and Allocations,” The Journal of Finance, (August).

Scharfstein, David and Jeremy Stain, “Herd Behavior and Investment,” The American Economic Review, 80 (3) 465-479