I spent much of the day reading David Denby’s “American Sucker,” his 2004 account of blowing most of his retirement funds on the tech stock bubble of the late 1990s and early 2000s. At its height, in March 2000, the NASDAQ composite index closed at 5048.62. We’re now 14 years on, and the NASDAQ is now—only now—approaching that level. The day after Christmas, it reached 4813.511, and it closed 2014 at 4736.05.
Denby, who recently stepped down/was pushed from his perch at The New Yorker, came in for a lot of abuse in reviews of “American Sucker”—for his insane stock speculation, his idolatry of hucksters, but also for his apparent obliviousness to his own privilege.
But the book holds up well as an account of the star players of that era, from Henry Blodget, Martha Stewart and Sam Waksal to Amazon, ImClone and Enron. And it’s a record of Web 1.0, this cool Internet thing that no one had quite figured out how to monetize.
Denby made many poor decisions, but he’s not an idiot. In fact, his instincts were often pretty sound, even if he couldn’t make money off them. For example, he recognizes the importance of emerging fiber optics technology, even taking a subterranean tour below the World Financial Center (a year or so before 9/11) to look at the new wiring there. He blew a significant wad on a company called Corvis, but he saw that fiber optics was a medium that lacked a market.
At home, most of us had modems that could transmit 56,000 bits, or 56 kilobits, per second, sufficient for e-mail and basic Internet traffic, but slow for elaborate Web sites and, more seriously, incapable of accommodating the enormous flow of material that was building up, including the added demands made by the “rich” media—teleconferencing between offices and the transmission of vast amounts of corporate, military, and institutional data (inventories, complex designs, the complete illustrated catalog of the Louvre). And there were such unspeakably important cultural goods as the complete movies of Annette Funicello and every episode of Leave It to Beaver, not to mention such things as the recordings of Muddy Waters and Creem, and Richard Strauss’s operas and Jules Feiffer’s complete cartoons, material both serious and trivial, the contents of archives and museums everywhere, both the majority and the minority tastes, all potentially available on demand. Like water struggling to get through a clogged drain, the “rich” media were demanding wider passage. […] There were two “broadband” solutions, DSL and cable modem, both very effective, yet most people were sticking with their old, slow modems. Why? Because, apart from Napster, which was legally in peril, there was not much available—no “killer application”—that required broadband. Not yet anyway. Broadband was rolling out slowly. —Sucker, pp. 155-6
For what it’s worth, Netflix’s IPO occurred May 29, 2002. Denby was still throwing money at the NASDAQ then, but he missed his chance to buy Netflix at its opening price of $15 a share. Of course, IPOs are a racket, as Denby points out in his book. But even in 2004, he could have bought Netflix for $15.85.
Yesterday, Netflix ended the year at $341.61.
Books I’ve read this year: 1
Read in the last month or so:
Benjamin Graham, The Intelligent Investor
Ring Lardner, You Know Me Al
John Lanchester, Capital
Lanchester, Debt to Pleasure
John Berger, Ways of Seeing