November 27, 2007
Posted by Ryan Graves
Internet Index for NASDAQ
Today the National Association of Securities Dealers Automated Quotations (NASDAQ) released that they would be creating an “internet index” that will follow many of the large internet companies (i.e. Google, Yahoo) and other publicly traded internet companies. As Duncan Riley on TechCrunch speculated, it is likely that any good or bad news around Google would have a VERY large effect on the index. I strongly agree with Riley that the rise of this index shows the growing importance of the internet and the companies that it spawns in the US and global economy.
My question is this…Will the existence of this index alleviate or encourage another bursting of a tech bubble? Now that there is one number that inevitably everyone (myself included) will comment on and scrutinize as the “grade” given to our industry, will it serve as a pump to the next tech bubble? Or, will it help us to track the industry more closely and help prevent another bubble?
My hunch is the former. I think that having this new index that people can follow and get inevitably excited about, people will blow it up even faster causing another “pop”. The more stock people put in this number as it grows the more money will poor into Silicon Valley and nationwide internet start-ups. Eventually, as it always does, the newly measured internet economy will correct itself.
What do you think?
