Those Who Don't Remember the Past Are Condemned to Lose Money By Adam Lashinsky Silicon Valley Columnist 4/20/01 6:09 PM ET

Editor's Note: After a wild rebound in the market this week, is it time to feel happy again? No one seems to agree -- including our columnists. Earlier today, Adam Lashinsky warned against reverting to 1999-like exuberance. Later, Jim Seymour retorted against being frightened of optimism. And now, Lash responds.

Jim,

I'm not worried about a return to the wildness of 1999. It's just that we paid a lot for our new sensibility, and I'd hate to see us squander that.

I'm not worried about the sky falling on Microsoft (MSFT:Nasdaq - news - boards), just musing that a company growing earnings perhaps at a rate of 7% annually isn't worth 36 times forward earnings. And, as for eBay (EBAY:Nasdaq - news - boards), I love that company. Always have. But it's a smallish ($600 million in annualized sales), quirky concern that is the exception to the rule that the Internet is just another distribution channel. Hurray for eBay. It's neato. But it's not changing the world; it's just making it slightly better and more entertaining.

Jim, the problem is that during the late bubble period some people took leave of their good senses. They deluded themselves that things like stock splits mattered. They put too much faith in blue-chip investment banks that backed losers. They decided that because a stock is way off its highs it is "cheap." I'm guessing that investors in CMGI (CMGI:Nasdaq - news - boards), Webvan (WBVN:Nasdaq - news - boards) and eToys would have some pungent and poignant comments about that. Now that sensibility has returned, I'd hate to see it slip away.

I was guilty, too. When TSC banking reporter Eileen Kinsella pointed out to me today that the chief financial officer of Silicon Valley Banchshares (SIVB:Nasdaq - news - boards) resigned, I revisited the piece I wrote a year ago on the bank that's the lender of choice to technology start-ups. Sure, I hedged my language and said what could go wrong. The stock traded for a split-adjusted $42.31 at the time. But with the shares at $23.70 today, I sure wish I'd screamed about how overvalued it was.

For most of investing history, facts mattered. The fact is, facts still matter. There absolutely is room in this market for individual investors to manage their own finances, to invest alongside the pros, to utilize the technology in order to deploy sophisticated strategies. But what those investors need is analysis and straight talk.

Over and over readers tell me they're trying to avoid making the same mistakes this time around they made during the bubble era. All I'm saying is that critical commentary here -- from me as well -- helps of us avoid making the same mistakes.

Collegially,

Adam

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