Microsoft's antitrust case was heard again. The judge declared that Microsoft had monopolized the market, and the evidence was conclusive. That means Microsoft will be fined heavily and face the risk of being forced to split up.
On this day, many investment institutions noticed that the Nasdaq index had exceeded 5,000 points. This time last year, it was less than half of the index. It had doubled in one year!
So, when they saw Microsoft will lose the case, they thought of Cisco, Dell, and other companies that had business with Microsoft will also be affected. So, they decided to sell their shares.
At this time, some major shareholders dumped their shares at the same time, causing the Nasdaq index to drop by 5%.
Of course, Feng Yu is also involved. Feng Yu, Kirilenko, and Fu Rongqi had sold their remaining shares this year.
But Feng Yu and the rest are curious. There seems to be another hand behind all this. When they shorted the Nasdaq index, someone had bought a large amount of shares before them.
Yesterday, the Nasdaq index had just reached a new high, and someone had bought a large amount of shares. How can they be so sure that the Nasdaq index will fall?
Unless this person knew about the news of Microsoft, Cisco, Dell, and other companies selling their shares at the same time.
How powerful must this person be to be able to contact so many big investment institutions?
Feng Yu thought for a while and felt there is only one person who fits his guess. Soros from Quantum Fund!
Only Soros dares to do something like this and knows about the movements of these big investment institutions. Also, shorting is Soros's favorite thing to do.
Feng Yu is not sure, but he doesn't care. He and his partners had already bought a large number of stocks at 5,000 points. Although the leverage was not high, looking at today's plunge, the panic selling would be worse tomorrow, and the stock index would fall even more.
Microsoft's antitrust case is only the trigger. Last year, when Feng Yu dumped his Microsoft shares, Microsoft's share prices stopped rising. But many other shares are still rising.
The most interesting thing is most of the companies whose share prices are rising are still not making profits. That's why Feng Yu's share prices are rising faster than profitable companies like Microsoft.
Those companies were selling their so-called creativity. As for whether it could be turned into reality, it was like everyone was betting on it. Once he won the bet, he would be able to obtain several times the return. As for losing the bet, they never thought about it.
Even in the past two years, venture capital firms had been particularly fond of network technology companies, and they had been lowering their scrutiny. They wanted to use this opportunity to get their companies listed and make a fortune.
Someone also said those companies dumping their shares had nothing to do with Microsoft's antitrust case. It was because most of the listed companies had suffered losses in their financial reports.
This was a wake-up call for many investors. A company's scale did not necessarily mean that it would be profitable. The assets of these Internet companies had indeed skyrocketed, but the money they had raised through the shares did not bring in any profits.
Their future seemed so far out of reach. Many internet companies had already spent all their venture capital funds and shares raised, and they were still losing money!
These companies used their investors' money to acquire and merge with competitors in the same industry to introduce their new services. They tried their best to penetrate into other industries and promote their brands.
This seemed to have entered a strange circle of the Internet, and it had even formed a novel rule of the Internet. All the bosses of these companies had never considered why their companies were worth so much money. How can Asian tiger's products be worth more than 100 billion USD? How much is their company's annual revenue?
This seems to be a bottomless pit, and who dares to invest in it?
These annual reports and quarterly reports were believed by many to be the trigger for the internet bubble. They were the inducement for those large investment institutions to dump their internet technology stocks.
There is another theory. The Millennium Bug. This is a loophole in the algorithm, and it will cause chaos in many companies' systems. To make up for this loophole, the companies had to increase their spending, and this increased the pressure on their funds.
There are many theories, and there are supporters and opponents of these theories. But regardless of the reason, Nasdaq's share prices started to fall, and the tech companies were the first to suffer.
Feng Yu had another method, and that was to calculate the real returns of the Nasdaq shares.
Since 1998, Nasdaq's real returns are less than 3%, and it is lower than bonds. In theory, the returns should be 6.5%.
Some researchers felt all the shares have different levels of premiums, and the premiums are around 7%.
In other words, Nasdaq stocks are overvalued. Whether it is Microsoft, IBM, or Dell, they all benefited from irrational prosperity.
Now that the bubble had burst, they were also the first to fall. It could even be said that they were leading the fall.
… …
Nasdaq's share prices plunged, and the NYSE's share prices also fell. Many companies that clearly had nothing to do with it were affected.
Some people heard rumors that the stock market is going to crash again. Microsoft, IBM, and the rest of the companies can't hold on any longer!
As a result, more people began to sell their stocks in panic, forming a vicious cycle.
The more people sell their shares, the faster the share prices fall. The faster the share prices fall, the more people sell their shares.
Within a week, the Nasdaq stock index had fallen by almost 10%. This is the biggest drop in the past decade.
Affected by this, the stocks in the world's major financial markets fell, especially the stocks in the internet and technology industries, which fell the most.
Paul Allen is regretting his decision. If he knew Microsoft's share prices will fall, he would have sold a sum of money. Paul Allen still owns a lot of non-voting shares, and even if he sold those shares, it will not affect his authority in the company.
Feng Yu can invest in anything, but he will not wake up every day knowing his assets had shrunk.
But these days, there is no end to it.
Not only Microsoft, IBM, Dell, and many other companies' board of directors are holding meetings every day to discuss how to save their companies and stop their share prices from falling.
Although the falling share price will not affect the company's operations, it will affect the company's brand, reputation, etc., and it will also affect the shareholders who own the company's shares. When the share prices fall, their assets will shrink!
They couldn't figure out why the internet bubble had been burst just like that.
… …
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