EXCERPT: Diary Of a Hedge Fund Manager

One of my most vivid memories of the tech bubble, as seen from my seat, came during the middle of the summer of 1999.

The Nasdaq Composite Index was midway through what would end up being a stupefying 86 percent annual gain in 1999. As indicated, Quattrone and his minions were literally birthing sometimes as many as three new companies per day.

One morning, some executives from one of the dot.coms we’d just helped go public (an online music download provider) paid a visit to the CSFB trading floor to mark the company’s debut trading on the Nasdaq.

These guys, thirty-somethings, dressed in suits, were completely over the moon. They had a domain name, and a dream, and now a ticker symbol, and the market said cool. Investors bough hundreds of millions worth of their stock the first day alone. I recall watching the CEO as he whipped out a camera and started excitedly snapping pictures of himself, taking different angles to make sure captured one of our traders’ screen showing his company’s symbol and price in the shot.

I recall thinking to myself, well this market is topping out.

Of course, I had to learn to spot some things the hard way. CSFB had a policy that employees could buy shares in the companies we took public as long as we held them for at least 30 days. I used to watch some of these stocks jump multiple points in a day, which, unless there was some merger or acquisition news or major regulatory firestorm, was unheard of on Wall Street before 1999. But some dot.com come latelys would fall just as fast, even in the heyday.

I once bought three lousy shares of a company that CSFB took public, a software developer that had opened spectacularly. After tripling in a few days, the stock eventually fell into the tumbler. That 30-day rule made me grind my teeth. I was soured on stockpicking, on the technology boom.

This was a valuable lesson, though. It showed me how The Street works.