The Concept Stock Bubble

Although the past 20 years have given us many “peak mood experiences” and the corresponding bubbles to go along with them, I think few compare to the self-assured certainty that went along with the boom in concept stocks at the very peak of the dot-com bubble. (For those not familiar with the term “concept stocks,” these were start-up, Internet-based companies that had little to no revenue; they were just “great ideas”—companies such as Pets.com and Webvan, which intended to sell pet accessories and groceries, respectively, online.)

What I love about the concept stock bubble (Figure 3.1) is not only the sheer ridiculousness of many of the companies themselves, but also what those companies said about the self-assured certainty of investors at that time. At the very top, investors were so confident of the transformational nature of the Internet that they believed that just about every Internet-based idea would be wildly successful well into the future. Heck, Webvan even convinced George Shaheen, then the CEO of Andersen Consulting (now Accenture) to quit his job to become that start-up’s CEO!