In the good ol’ 1990s

November 18, 2008

When I was in elementary school in Pinetop-Lakeside, Arizona my third grade class performed a musical called “The Good ‘Ol 1890s.”  I remember a frankly insane amount of the songs and dialogue that were involved (“in the good ol 1890s, life was really a ball!  Horses, horses, clippity clop, a day on the trolley was such an event…”).  There was one song about the Alaskan Klondike, one about the Irish-American boxer John L. Sullivan (“shake a hand that shook the hand of John L. Sullivan, also known as the great John. L!”) and one about the suffragettes (“the pie-baking, president making, Petticoat Vote of the USA”).   I wore a long purple dress and a matching hat that my mother must have designed for me.

I’m telling you all of this for two reasons, neither of which are very important.   First, the play was the inspiration for the title of this post.  And second because the post is actually about another memory from a far less distant past that I am about to tell you about.  Just now, while doing some research for a paper I’m writing about irrational financial markets, I came across a Financial Times article from July 2000 with news that Telecom Italia had purchased a 30% stake in a Brazilian Internet provider, Globo.com for $810 million, putting the value of the site at more than $2 billion.   Globo.com was the website for Brazil’s largest news and television channel, O Globo.

During my first week of work as an analyst at JPMorgan in September 2001 my boss asked me to do a valuation of Telecom Italia’s stake in the site, which my division had sold to Telecom Italia just over one year before.  By way of background, I was as green as analysts come.  Other than the intensive summer training JPMorgan had given me, I had absolutely no background in anything related to finance.  My skills in doing things like valuing companies were exceptionally rudimentary.  But away I went, slightly terrified, to complete my first task.

I toiled away with a spreadsheet for a day or so, seeking help from the other people on my “team” where possible (not that there was much of a spirit of teamwork around the place), and finally came up with a number.  I don’t think I’ll be revealing any important trade secrets by telling you that the valuation that I came up with was $16 million.  A mere 2% of the price we had sold the company for a year before.  I spent a sleepless night (common around JPM in any case) staring at the sheet, wondering what I had done wrong.  I finally came to the conclusion that I didn’t know what I had done wrong, and brought it to my boss.  He took it without saying a word, looked at it and used a four-letter word.  Not because I had done something tremendously stupid, as I feared, but because a valuation of $16 million looked about right and it was going to create a number of problems for our relationship with the client.

Why am I telling you all of this?  Because that deal was made at the long end of what we could call the good ol 1990s.  When there were billboards on Highway 101 between Palo Alto and San Francisco, California for new businesses such as “cheesegrater.com” (I kid you not) and I and everyone I knew at Stanford was busily registering domain names for businesses we would never found.  I registered one named after a Brazilian snack food, for some reason.  The boyfriend of a Stanford friend IPO’d a business which had no real business plan and made himself over a million dollars.   There was a collective madness.com.

And then came the crash.  The dotcom bust wiped $5 trillion dollars of value from technology stocks, and basically made the Nasdaq irrelevant.  Another boom and bust cycle in the global economy had come to pass.  And yet, the economy recovered, despite the dire predictions made at the time.  The point I’m trying to make (in an admittedly extremely tangential way) is that boom and busts are normal.   The front page of yesterday’s FT stated that predictions are that the UK is facing its worst recession since 1991.  But inside, on the Comments page, the columnists were all describing the current crisis as the worst since the Great Depression.  Note the disconnect – data predicts (not even provides evidence for) the worst crisis since 1991, analyst says worst crisis since the Great Depression.  It seems to me another demonstration that mass hysteria is fuelling this financial crisis.  A bit the way mass hysteria fuelled the person who put up a billboard for chessgrater.com, or the person who spent more than $800 million to by a Brazilian news site.

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7 Responses to “In the good ol’ 1990s”

  1. ADJ said

    Hi! I found you by googling “in the good old 1890s life was really a ball,” hoping to find the rest of the lyrics to some of the other songs that I only partially remember from the musical show that my whole school did when I was in 5th or 6th grade. Each grade had songs that they could handle, and I got to do a duet with solo parts in it with a boy I had a crush on. It was “Fields of my Father.” It began: “Will this new land I see become a home to me? I’ve come so far alone with little of my own. New world I’ll learn to speak, new hopes new dreams I’ll seek. But in my heart will be these things so dear to me: The fields of my father, the songs of my mother, the love and the laughter, the toil and the tears. The woodlands at sunrise, the village at sunset, the ties and the teachings, handed down through the years.”

    You didn’t forget the song about the camera, did you? “You press the button and we do the rest! Just pick the picture that you like the best. A family portrait with every one there–girls in the front and the boys in the rear…….It’s all in the camera for your memory. All of it thanks to George Eastman, you see…it’s all very easy and so we suggest, you press the button and we do the rest! Say Cheese!” (count three beats) “Cheese!” (But that wasn’t even MY class that sang that song, it was my sister’s class, so how come I know the whole song??? The Klondike song was the other one my sister’s class did: “Get your shovels out and go to the land of ice and snow…there’s gold in the Klondike tonight. …..what we thought was Seward’s Folly is a paradise by golly….”

    I’m sorry that I’m not commenting at all about the whole point of your post. I’m off to see if anyone else remembers these songs! :-)

  2. ADJ said

    Sorry…I just remembered ANOTHER song, one that actually connects to the actual content of your post: “The Ladder of Success.”
    “All of us are reading in a brand new book that just came out today.
    If you never heard of a Horatio Alger, here’s what he has to say
    To start you on your way it just takes
    Prudence, patience, personality and you can climb the ladder of success yes yes yes yes yes yes yes
    Honest labor, punctuality and you can climb the ladder of success oh oh oh oh oh oh oh
    You can be a Rockefeller, James J. Hill, John Jacob Aster or a Pierpont Morgan….”

    See? :-)

  3. We performed the very same when I was in 7th grade. I’m 44 now and I can recall some of the lyrics to most of the songs from this musical.
    It helps me remember history in the same similar fashion as Schoolhouse Rock ingrained the Preamble into my memory.
    I’ve been thinking about this musical lately and I did a little research. The book and the instrumental only recording is still available.
    I’ve been entertaining the thought of purchasing it and donating it to our school district for their annual 5th grade play.

    I sang my very first solo on stage in the Petticote Vote.
    “the heart of the matter is radification of…We want the 19th amendment.”

    I enjoyed your writing. Thank you for sharing.

  4. Dena Williams said

    My elementary school did that show, too! I have been trying to find the script or music ever since! “Every day was filled to the rim with hustle and bustle and vigor and vim!”

  5. My school also did that show! Dover, New Hampshire, probably about 1990. I’ve been looking for it ever since and this is the first time I hit on a relevant Google result, thank you!

    Does anyone know who wrote it?

  6. jensenje said

    Oh my goodness! “Penny candy cost you a cent, a ride in a trolley was quite an event!” 7th grade in NJ for me.

  7. Simsbury said

    shake the hand that shook the hand of John L. Sullivan, also known as the Great John L.

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