Last Updated Mar 9, 2010 1:48 PM EST
The dotcoms that started in 2000 and are still around have probably never seen their shares at those millennium levels again.
The FTSE 100-index celebrates the anniversary 20 per cent below its dotcom peak while the Dow Jones is down 10 per cent.
Yet it's now hard to find a businessman, never mind banker, who does not claim now to have foreseen the current financial crisis. The coming crash's date and depth were open to debate, but the bursting of the last bubble was a dead cert.
So why does business not avoid these clearly coming crises? Here are four reasons:
- Uncertainty over timing and degree: acting early can be riskier than being there when the crash comes. A fund manager wants to avoid holding shares after the market has turned down, but they don't want to sell early and watch the market rise to perhaps double it's volumes. Waiting to see the zenith and selling as shares slide makes more sense than exiting before the manager knows the market's upside.
- Not knowing what to do, even if the crash is accurately foreseen: Fund mangers can sell, but a manufacturer cannot quit its core business.
- Bursting bubbles affect everyone: A CEO cannot be responsible for a recession, but he can happily blame it for the company's failings. The reliance on relative performance for everything from directors' remuneration to investment outcomes allows boards to ignore the macro economy, including those bursting bubbles.
- Directors define their job as coping with crises, not averting them: They know some disasters will hit them -- and not only the obvious ones -- but they hope they know how to handle them. So the lesson of the dotcom collapse was not lost; the real lesson was that most businesses survived -- just as they have with the current crises and previous recessions.