Can the bubble return? Featured

6:54am EDT May 30, 2003
Is there a possibility of another technology bubble like the one that emerged in the late 1990s?

"I think you can look at that and say it's clearly an anomaly," says Kevin Etzkorn, a senior associate with venture investor CID Equity Partners, a Midwestern firm targeting Pittsburgh for investment opportunities.

Not likely in our economic lifetime, says Glen Meakem, chairman of FreeMarkets Inc., although he points out that bubbles occur in other economies and sectors and go largely unnoticed, like the real estate run-up in Japan of a decade or so ago.

Recently enacted regulatory reforms that affect corporate accounting and disclosure, stock analysts and investment bankers are likely to discourage most of the stock hyping that some in the investment community engaged in, which resulted in deceptive information about and extreme overvaluations of some companies.

"We seem to have had a bunch of people in some places in this country that weren't doing proper things, to the detriment of people like you and me," says Greg Forsythe, director in the business and intangible asset practice at Deloitte & Touche.

The bursting of the bubble appears to have chastened investors, making them more careful about where they put their money. No more are they rushing in to fund a company unless it passes more demanding standards.

The smart money is often going in last, unlike during the bubble, when investors were fighting to get in on the early rounds of funding. And time, it seems, prevents as well as heals all wounds.

Says Etzkorn, "One of the most significant things we've seen is the length of time it takes to get a deal done." How to reach: Deloitte & Touche, www.deloitte.com