Editor's note: This is the second part of an article published earlier today. Read Part One, The Trader, here.

The Traded

There was a time when Freddie's Sandwich Shop was a jovial and vibrant microcosm of the Internet-inspired bull market. Lately the mood, pegged as it is to the shaky tech market, has been less exuberant.

The line at the sandwich shop today is much as it was a few months ago, stretching through the shop and out the door. The queue still slowly inches forward along the counter, with a handful of 30-somethings in chinos and open-collared shirts eyeing news flashes from


even as they talk about weekends in Lake Tahoe and interoffice politics. The headquarters for

CNET Networks

(CNET) - Get Report

is just down the hill, and a group of employees gather each day at Freddie's for lunch. When the CNET symbol scrolls across the TV screen, the group's conversation stops.

Just a few months ago, the share price would bring a smile, or a snicker. I remember one Docker-clad young dude laughing; "Whoa, another dollar and I won't be underwater." Sadly, the laugh has been on him. CNET shares have been devastated, falling more than 38% since then. Despite having $13.73 in cash, despite turning a profit as an Internet company (!) and despite a 3-year revenue growth rate of 96%, the stock is trading under $39 a share, at eight times earnings. If Docker-man were underwater in February, he's drowning now.

He's got company at Freddie's these days, where the regulars tend to be CNET employees, and even the owner, Eddy Sweileh, is a shareholder of both CNET and its spinoff,

NBC Internet


. Although the atmosphere is slightly more restrained these days, for the most part lunchtime still hums along. The business of turkey and swiss on whole wheat remains the most pressing concern.

Long before the Internet -- let alone CNET -- was conceivable, Freddie's has been a business of regulars. Once they were the second-generation Italian-Americans for whom North Beach is so well-known. The late mayor Joe Alioto stopped by regularly for pepperoncini and mustard, no tomato, no mayonnaise and no lettuce. Today, however, the crowd is dominated by the dot-com contingent.

There may not be a better metaphor for the dot-com investing economy than Freddie's. Today, just as always, Freddie's needs its customers as much as its customers need sandwiches. But now Freddie's owner, Eddy Sweileh, needs stocks to trade, and Freddie's Internet-employees customers need someone to buy their companies' shares. Across the lunch counter, the traded and the trader meet.

As an online trader, Sweileh checks in with the market every morning from his


(AMTD) - Get Report

account. With millions of other Sweilehs out there, the market needs fresh meat to trade, as it were: The CNETs, the



, the



all hunger for investment dollars. Investment banks, more than happy to fill that need, bring new companies public by the dozens. And through trial and some error, they've found that these new traders are interested in one type of stock above all others -- Internet stock.

Internet IPOs Continue to Feed a Hungry Market

Is it any wonder that the growth of Internet IPOs has closely tracked that of online trading?



, for example, had 485,000 accounts at the end of the fourth quarter of 1998. That same quarter saw 10 Internet IPOs. Two years and three months later, E*Trade had some two and a half million accounts, and the market has seen 54 first-quarter Internet IPOs in 2000.

Sweileh, for his part, says he's going to stick out the recent market dive. The turmoil hurt him, but his biggest position,

America Online


, has hung tough, staying about where it was trading in mid-March. If anything, he says, this market dip reminds him that his main job is making sandwiches, not watching stocks. The CNET crowd must take refuge in their work too, as their stock price offers no comfort.

Indeed, there is a slight irony: While a bloated IPO market may have bruised Sweileh's portfolio, it has also filled his shop with customers whose jobs have been created by the white-hot Internet economy and bankrolled by IPOs.

The pace of Net IPOs has now slowed in consecutive quarters, suggesting the stock market may have seen more IPOs than it could swallow. But along the way, tremendous wealth has been created. IPOs provided Net companies with more than $1.5 billion in December alone, according to the research outfit

IPO Monitor

. Though all those companies don't necessarily spend the money they raise, it unquestionably finds its way back into the economy -- and back into sandwich shops. And in the case of Freddie's, into the back of the sandwich shop, where it starts the whole process over again.

Cory Johnson files weekly from TheStreet.com's San Francisco Bureau. In keeping with TSC's editorial policy, he neither owns nor shorts individual stocks, although he owns shares of TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Johnson welcomes your feedback at


For more columns by Cory Johnson, visit his column