Yesterday the Wall Street Journal ran an extraordinary op-ed piece by George Gilder, called Tumbling into the Telechasm. In it, the celebrated author of Telecosm and the publisher of the Gilder Technology Report lists all the federal government’s catastrophic policy blunders that led to today’s technology depression, a devastating bill of wrongs.
Gilder indicts deflationary monetary policy. He blasts socialistic telecommunications regulatory policy. He savages Internet tax policy. He eviscerates anticompetitive antitrust enforcement policy. And he’s dead right on all counts. These are all important truths that absolutely must be spoken.
The tragedy of it is that no one takes George Gilder’s views on these matters seriously. And so Gilder’s brilliant counterblast is likely to sink without leaving so much as a ripple.
Why? Well, as MetaMarkets analyst Sean Donovan wrote yesterday, “Mr. Gilder’s op-ed piece reads like an apology.” Or perhaps, if not an apology, then an excuse. According to Dick Sears’ Gilder Technology Index website, in the techwreck of 2000 — when the largest number of investors had put their faith in Gilder’s “Telecosm” paradigm right at the top — his recommended list of techstocks lost 44%, compared to the NASDAQ’s loss of 39%. In 2001, so far, Gilder’s stocks have lost 33%, compared to 16% for the NASDAQ.
Far be it from me to criticize George Gilder for losing money in technology investing. I’ve done my share of that, and more. But George Gilder is a special case. So let me admit that I live in a glass house, and now throw a stone or two.
First, Gilder played the very public role of the Pied Piper of the late great bull market. He used the seductive power of his florid prose to lead investors up the high mountain of technology investing, promising them the kingdoms of earth — and then he marched them right off a cliff. To this day his Reports read like epic poems, celebrating the heroic accomplishments of the very technologies and the very companies that have been destroyed by the forces of darkness that he decries in his Journal piece.
Second, Gilder has always wanted to have it both ways. He points out in his Reports that he’s not really writing about investing — he’s writing about technology. But have you ever gotten the junk mail that Gilder’s publisher Forbes sends out to promote the Report? Touting the fabulous returns earned by Gilder’s early picks like Qualcomm and ignoring his more recent craters like Avanex, they brag of a “Gilder effect” and invite potential subscribers to “Grow rich on the coming technology revolution.” Or go to Gilder’s website right now, and answer this tantalizing question: “Can you turn $10,000 into $17,708,483?” All this from a man who says it’s not about investing.
And third, if the issues Gilder raises in his Journal piece are excuses, then George Gilder of all people should not hide behind them. Long before Gilder morphed into today’s preeminent technoguru, he was a leading conservative supply-sider political economist. He has known all along, and full well, the hazards of political and regulatory interference with business. He should have seen it coming.
The lesson for George Gilder — and for me, and for you, and for all investors — is that, in investing, there are never any apologies and there are never any excuses. There is nothing but responsibility for outcomes. We are each of us responsible fully for the results we get, for whatever reason we get them. Investing isn’t just about understanding technology. Or economics. Or technical analysis. Or any one particular thing. Investing is about everything that influences risks and returns.
I’ve often written about the same political and economic issues Gilder raises in his Journal piece. I agree with him almost word for word — he speaks for me. And I know what it’s like to be accused of using these issues as excuses. Even when my ideas are offered as my best explanations of the way the world works, and my best judgment.
But I know the difference between judgment and excuses. I’m not sure George Gilder really does.
The views expressed within represent those of the author, and do not necessarily reflect those of Capitalism Magazine’s publishers.
