More than any other misconception, this was the most fundamental of the myths to which people succumbed. And like many of the others, what made it so seductive was that it had so many elements of truth to it. But tech fans ignored the fact that even companies involved in a revolution eventually face market forces. Most early auto makers failed to survive. Radio Corp. of America and General Motors Co. were two of the hottest stocks of the 1920s, but that didn't prevent both from crashing along with the rest of the market in 1929.
Some analysts remain unrepentant defenders of their views on tech stocks.
Mr. Steinberg of Merrill Lynch says he never tried to justify the highest of the tech valuations. As for the rest of the sector, he adds, it will recover. But some money managers warn that certain tech stocks, notably in the networking and optical-fiber area, still haven't fallen enough to reflect the real world. Inc. All Rights Reserved. Copyright and reprint information.