Crucially, nobody was calling it a bubble, until at least a year after it had, in retrospect, popped. Proper bubbles are a product of the madness of crowds, and are impossible to call in anything but hindsight. If we are in the middle of a bubble at present, by definition, almost none of us know what the bubble is in.
I disagree- Knowing it's a bubble doesn't mean you aren't contributing to it. In any bubble there are people who know it's a bubble but think they can make a ton of money in the meantime and then shrug their shoulders when it pops.
I'm not so sure that nobody was calling it a bubble. I sure felt it was, but didn't have a lot of money in the stock market then, so I wasn't personally concerned. I just billed my skills out at crazy rates and loved every minute of it.
For example, people knew there was a real estate bubble and were trying to flip houses to make as much as they could before it popped. My mom has a neighbor that didn't plan on being her neighbor, but he bought right before the real estate crash and couldn't sell in time.
It's a mix of exuberance, ignorance and hubris that seems to lead to this sort of fall.
But what if this is a "bubble" Who will get hurt when it pops, especially if it pops before major IPOs happen. Lots of private investors will lose out, but will the general public get hurt?
All due respect, but I think that's retrospective bias talking. It feels obvious in hindsight that it was a bubble, so those conversations with bearish people are amplified in your memory. The fact that some bears existed proves nothing; no matter what is going on in the macro-economy, at any time in the last 20 years Nouriel Roubini et al. would have been happy to explain how it's all an illusion, we'll all be eating out of trashcans in two years, just you wait.
While the music was playing in the late '90's, the cautionary voices weren't any louder, or taken any more seriously, than they were at any other time. They weren't even all particularly focused on the Internet boom; much, much more pessimistic sentiment at the time was focused on Russia's sovereign debt default, the currency crisis in Asia, or the LTCM bail-out.
As for the Internet stock valuations at the time, many people reasoned that if you looked at the entire investment in "new economy" companies, all that was required for those investments to reward their holders' level of risk was one Microsoft. This was essentially true, by the way, and if you stuck to your guns and held onto Amazon from its local peak on 3/31/1999 ($86) you would be up about 120% today ($188).
It's pretty easy for me to sanity check - I sold a large block of YHOO in '99 because I was convinced it was strongly over valued, several friends congratulated me on my wisdom. Of course I spent over a year feeling like an idiot, but it does make for a clear memory.
There was one of the well-known columnists for Infoworld / EWeek / Computer World / One-of-those-magazines, that was calling it a bubble quite a while before it popped. My memory is telling me it was Bob Metcalfe, but I couldn't find a citation to back that up during a brief search. But, at any rate, there were definitely some people recognizing the bubble a bit early.
