FRAMINGHAM (04/24/2000) - The stock market is an odd creature with largely unpredictable habits, but when you stop and look backward those habits seem to fall into recognizable patterns. That gives rise to predictions about what the market will do in the future.
And so the cycle continues, despite ample evidence that the stock market is an odd creature with largely unpredictable habits.
Here we are at the end of a particularly wild cycle and I, like millions of other would-be stock analysts, can't resist analyzing the recent past in an effort to see the future.
The market, it seems, had been run up on the backs of "technology" companies, everyone from network infrastructure players to would-be "e-tailers" trying to make a go of selling items over the Web.
Wall Street and the public rewarded these companies handsomely because we are, after all, in the middle of a technology revolution. That largess gave rise to more companies looking to cash in on the gold rush, even companies with questionable business plans.
When it became clear with time that some of these new emperors weren't wearing any clothes, people looked around and saw how badly inflated things had become and started an all-out retreat, hence the huge stock sell-off.
But had anything really changed? Not really. Perhaps there were some dogs that needed to be shaken out, but it wasn't long before the market woke up to the fact that technology was still central to American business.
In fact, I would argue we are only about a third of the way into this profound shift. The real story is still unfolding. Companies like General Motors Corp. and Ford Motor Co. are just now embarking on business-to-business electronic exchanges that will profoundly change the way they buy parts. Major retailers like Wal-Mart Stores Inc. and Sears Roebuck & Co. have yet to realize the full potential of the Web. And upstarts like Amazon.com Inc. and Yahoo Inc. still have open vistas before them.
There isn't a company in the country that's not looking at how to reorder its business around this new medium, and that much change means huge opportunity and huge investment.
There will, of course, be bumps along the way. But I suspect we'll see a healthy technology stock sector for a few years to come.