Friday, April 9, 2010

Reporter's Notebook

Paul Leonard can be reached at

Lessons from another bubble burst

It’s a day that does not live in infamy: March 10.

That was the day, more than 10 years ago, that saw the tech bubble burst, causing scores of what had been very profitable firms to go belly-up almost overnight. That day, the tech-heavy NASDAQ started on a precipitous decline, helping trigger a painful economic downturn that lasted more than two years. That spring, restaurants once filled with high-rolling big tippers, emptied. Unemployment rolls swelled. Questions, tinged with regret and recriminations over who was to blame, filled the air.

Sound at all familiar?

It should, since we’ve been down this road before. And if the boom-and-bust cycle intrinsic to our free-market system holds, we’ll surely be down this road again.

But I believe there are important lessons to be learned from the tech burst of 2000, which at the time was filled with a kind of “irrational discouragement,” with pundits lining up to question whether the new tech economy could ever produce profits again.

And though the NASDAQ exchange has yet to recoup all of the losses from the market’s long period of decline, those pundits could not have been more wrong. The best tech firms, one with a solid grasp of business fundamentals, emerged from the crisis better than ever before.

Locally, the tech sector continues to be one of the very few bright spots in an otherwise cloudy regional economy. Semiconductor manufacturers like SEH America, Inc. and WaferTech, which recently was awarded a SEP Formula Grant to fund what may be the state’s largest energy conservation project at its Camas plant, seem poised to emerge from the downturn before many other firms.

The resurgence of tech in the wake of its own bubble burst may provide hope for the victims of the most recent market collapse, this time in real estate.

As was the case in 2000, market pessimism reigns. Despite recent signs of home price stabilization and an expected wave of commercial property foreclosures that has yet to materialize, the outlook is still grim.

I know, you’re thinking tech apples to real estate oranges, right?

But I’ll bet real money that we’ll be here in 10 years, looking back and laughing at all of the prognostication about the real estate “apocalypse.”

And then hopefully, much like March 10, memories of our most recent collapse will be just a faint memory.