In Italy, as elsewhere, there is bewilderment and concern in the media and in business circles. Has a tornado hit the stock market and business in general? Not really. There have been drops in Nasdaq stock prices and some fluctuations also in traditional stock trading. There are similar ups-and-downs in stock markets around the world. Those adjustments were to be expected. The bubble hasn’t exploded, but a bit of hot air had been let out of balloons that were flying too high. And of course there are speculative waves that exploit the ups-and-downs. It’s happened before, especially at times when the stock exchange was experimenting with new types of business. And it will happen again. Many “new economy” stocks are overpriced; many startups have failed and more will stumble before real long-term winners can be identified.

Some fluctuations are hard to understand. For instance there were heavy sales of Microsoft shares when the decision of judge Thomas Penfield Jackson was announced on April 6. The matter is very complex, the investigation had been going on for years and there will be no practical effects for another year or more. It will take a long time before the problem of the Microsoft monopoly comes near to a (much overdue) solution. Nothing happened on April 6 that could have any impact on the company’s profits for months and years to come. It this just an emotional reaction to the news? Maybe. But it would be very surprising if some large operators hadn’t caught the opportunity for a quick and easy gain. As is happening in many other cases.

Nobody (including financial analysts) has a clear idea of what will happen in coming months. Will there be more haphazard fluctuations or will the market gradually settle to more realistic stock prices and a more considerate choice of investment? That’s likely to happen – eventually. But nobody knows when and how.

If that’s a problem in the United States, where there are strong leaders in technology and the general public has many years of experience in the stock market, it’s even more difficult in countries like Italy where most companies don’t know how to cope with the new environment and many people shifted their savings from government bonds to stocks only a short while ago. Several people made some good earnings in a fast-growing market, but there was a general delusion that uninterrupted growth would go on forever. Of course there has never been, and there never will be, any market that works like a rigged slot machine. But that’s what many people were led to think and that’s why now there is so much disappointment.

So far the bitter medicine of stock disappointments hasn’t worked. The media are continuing to feed the myth that the “new economy” is built on short-term gains, playing with venture capital or the stock market. Many companies have failed to meet their objective, several have gone out of business altogether, lots of new ventures have been canceled or are being inadequately supported. There are may more failures than are reported in the media. But that isn’t (so far) leading to any deep reconsideration of objectives, to more considerate mid-term (if not long-term) planning. A few companies have learnt the lesson and are building for the future, but of course they are seldom those that have the most publicity.

A few clear voices are being heard, here and there; but they are still isolated in the overwhelming reports of a miracle success one day, a catastrophe the next. Antonio Fazio isn’t an ethics philosopher. He is the chairman of the Bank of Italy and his mind is on business and money. In an intervieo on February 26 he explained quite clearly that there is a big opportunity for Italian companies (especially the “small and medium enterprises” that are the strongest part of our economy) and that there is an opportunity for growth that could equal the “Italian miracle” of the Fifties. But that will happen only if they concentrate on the real stuff: products, services, quality, innovation, competitive edge. He pointed to the fact that people should learn to be more selective in investing their savings and companies should be building on sound ground, not just chasing quick money.

Of course everyone agrees – in theory. But we shall need more cold showers before these words of wisdom are really understood – and practiced. No matter who makes a “quick kill” (or dies a quick death) today, the real future of the new economy, everywhere in the world, is with the people who know how to make money the old fashioned way – by making sound investments and working hard for lasting quality.

back to top