If a 10% drop in the stock market is a correction, and 20% is a crash, why did the 37% Nasdaq drop barely elicit a yawn?

Yacht designers say they've got a depression-proof business. Could that be true?

Don't Worry. Be Happy.

By Ken Kurson

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WHEN TAXI DRIVERS BECAME DAY traders and grandmothers started playing with computers more than with crochet needles, you had to figure America's intoxication with technology stocks had peaked. Despite the signs, the tech-heavy Nasdaq stock index chugged on, hitting its high of 5,048 on Mar. 10.

Ten terrifying weeks later the Nasdaq sank to 3,164--a 37% drop that vaporized $2.3 trillion in market value. Internet stocks were the biggest losers, a drubbing cheered by the world's dwindling supply of value investors. New Economy acolytes reacted the way Russia explains submarine tragedies: They blamed gremlins from the industrial age.

Whatever caused the March collapse, falling stocks, like sinking ships, should normally cause great anxiety for those on the ride. This is not always so in the Internet age. We asked Arthur Rock, the San Francisco venture capitalist famed for his backing of Intel and Apple: Are the rich smelling the end of the boom? "I don't know what you're talking about," he snapped.

Perhaps Rock protests too much. For the first time since the early 1990s real evidence of creeping economic anxiety is beginning to take hold. "Price reduced" signs are appearing in Silicon Valley classified ads. Though typical single-family homes still fetch about $500,000, they no longer attract dozens of competing offers. Layoffs at dot-com companies are so commonplace that there are no fewer than three schadenfreude sites devoted to chronicling the woe.

The thing about anxiety is that when it does arrive, no one cares to call it by name. "Correction." "Catching our breath." "Taking profits." "Long-Term Capital Management collapses." Julian Robertson hangs a "Gone Fishin' " sign on his hedge fund, Soros loses all his deputies and admits he was wrong about the global economy. And the world answers with a Stepford cadence: "Everything's fine."

Sellers of luxury goods maintain--insist!--it's business as usual. Boats are flying out of the yard, says Mitchell Gibbons-Neff, president of Sparkman & Stephens, New York's oldest yacht-design firm. "It's virtually depression-proof."

Demetrio Merlino of Ferrari of Long Island says there have been no cancelations this year, a claim echoed by Evan Christodoulou, head of sales at Manhattan Motors: "The Boxster S has a two-to three-month wait. The Twin Turbo, two to three years."

Which causes us to ask: If a 10% drop is a correction, and 20% is a crash, how does a 37% drop barely elicit a yawn?

http://www.forbes.com/forbes/00/1009/6610049a.htm

-- Carl Jenkins (Somewherepress@aol.com), September 27, 2000

Answers

Shhh, I think it's supposed to be a SECRET. The public is not supposed to be worring about these things. :)

I've been enjoying your Board for quite some time. Come in to get the news we usually DON'T get anywhere else. Thanks!

-- Sam Strand (lcross@quicktel.com), September 27, 2000.

This is a real fine, informative news piece, Carl. Sure do appreciate your bringing this kind of commentary to our attention.

It is a real thought-provoker.

-- JackW (jpayne@webtv.net), September 27, 2000.