The stock markets gave everyone a good scare this week. The one-day dip was related to financial problems in Asian countries rather than to any weakness in the US economy. I can't possibly keep up with that, so you'll have to read it in the newspapers and weekly news magazines. It's reassuring, though, that the electronic services such as Nasdaq and E*Trade didn't entirely collapse under the traffic of a billion shares being traded.

SinaNet (Cupertino, CA) is a 50-person website company that aims to serve the 40M Chinese-speaking people outside of Asia. It offers them news and cultural articles in Chinese, plus merchandise and ads from companies that want to reach the Asian American community. Real-time TV and radio feeds are offered for $40/year. The company was started by three Stanford graduate students in 1995, and now gets 5.6M hits per day. The company's advantage over other foreign-language sites is its text-to-Chinese-graphics technology, developed by founder Jack Hong. Graphic display means that users don't need special operating systems or fonts. SinaNet is leasing the technology to E*Trade and others. (E*Trade is a discount stock broker, and gets a lot of its business from Chinese investors. 85% of SinaNet's users are expatriate Taiwanese, with 30% in CA and another 40% in the US.) SinaNet is hoping to offer online banking and other services soon. [Anne Chen, SJM, 05Oct97, 1E.]

Annalee Saxenian, author of "Silicon Valley: Regional Advantage" (1994), is now studying the extent of Asian entrepreneurship in the Valley and around Boston's Route 128. (The study is sponsored by the Public Policy Institute of California.) Regional Advantage was based on data from the 1980s. "The 90s story is about immigrants in Silicon Valley." Immigration selects people who are entrepreneurial, energetic and willing to take risks. But the new immigrants also have ties to Asian economies, and often jet back and forth on business trips. They are being more accepted in management ranks now, especially entrepreneurial management. Silicon Valley tends to be a meritocracy, whereas Route 128 is more conservative, hierarchical, and status conscious. (Hsinchu in Taiwan is much like Silicon Valley, and may succeed for similar reasons.) But even in immigrant-founded companies people tend to hire others like themselves. Chinese tend to cluster in hardware, Indians in software. It's still a meritocracy, but cultural factors dissipate slowly. [SJM, 29Sep97, 1E.]

Good investment sites and resources are listed by The Mining Company, . [Tom Murcko , misc.invest.stocks, 02Sep97. Bill Park.] (InvestorGuide Weekly is available at .)

Cents Financial Journal offers commentary from analysts, strategists, and economists. . [InvestorGuide Weekly, misc.invest.stocks, 02Sep97. Bill Park.]

Small business lending has become the fastest-growing and most competitive segment of the banking industry. Bank of America recently pledged $80B in small business loans over the next 10 years. Wells Fargo is offering $1B over six years to Latino entrepreneurs, and currently has over $4B in small business loans. Computerized credit scoring techniques -- expert systems? -- allow large, non-community banks to make such loans. Approval rates are holding steady at about 50%, but now there are more lenders to go to. [LA Times. SJM, 04Oct97, 1C.]

Banks won't underwrite stock offerings of less than $5M, so small businesses are starting to sell stock via direct public offering (DPO). Investors are hungry for small stocks, including the 634K members of 32K US stock investment clubs. "Customers who invest in you remain loyal forever." The most common DPO is a Small Corporate Offering Registration (SCOR), with about 160 filings this year. Half the businesses that attempt DPOs are raw startups, which is why only 35% of DPOs are successful. (CA has rules that limit DPOs by profitless startups, but the restrictions may soon be lifted. Caveat emptor.) SCOR filings, administered by each state, can be for up to $1M. Only companies with $4M in assets or $750K in net income can list on the Nasdaq SmallCap market, but there are several websites now that list DPOs. Direct Stock Market gets about 3K hits/day, concerning more than a dozen DPOs. [Steve Kaufman, SJM, 05Oct97, 1E.] (For more on the subject, look for books by SF attorney Drew Fields, or contact the California Capital Access Forum (also in SF).)

Sometimes tech stocks overheat, with valuations far beyond those of equivalent companies. These stocks tend to collapse as the next wave of technology approaches. Watch for stocks with fast run-ups that are trading for high multiples of their sales per share over the past year. (Price-to-earnings aren't helpful for companies that have no earnings.) Excite Inc. has been trading at 13 times its sales; Yahoo Inc. at 46 times sales. Other recent high flyers include Asyst, Spectrian, DSP Group, Credence, Premisys, E*Trade, DSP Communications, Sandisk, and Legato. Kenneth Fisher, chairman of a 1.7B money-management firm, estimates that of ten such stocks the odds are that "eight are crap, two are OK, and none of them is the next Microsoft." [Adam Lashinsky, SJM, 26Sep97, 1C.]

An SMU/Dartmouth study of 1,200 initial public offerings (IPOs) found that neither the rockets nor the laggards were good bets after the first day. The "extra hot" ones tend to decline steadily relative to comparable public companies, dropping 10%-15% below average over a year. The cold ones tend to hold steady at the mean. "Cool" stocks rising 0%-10% on the first day tend to hold at about 5% above average after a month or two. Best stocks were the "hot" ones that rose 10%-60% on the first day; their average climbs steadily to 14% above comparable stocks a year later. Underwriters try to price stocks about 15%-30% below true value; for these "hot" companies, they hit it right. (IPOs of less than $50M or $8/share were excluded from the study, as were financial companies.) Another good bet is larger, more established companies with reasonable initial stock prices, according to other sources. And small investors should be wary if large investors are selling, or "flipping," their shares within the first day. [NYT. SJM, 30Jul97, 1C.]

Rambus Inc. (Mountain View) was this year's spectacular IPO. It went public in May at $12/share, reached $80 in August, and then dropped to $50 by late September. However, that high valuation now makes it hard for the company to hire executives. Candidates are offered stock options at a relatively high price, and have little expectation of another spectacular rise in value. If stock value falls, the options are worthless. This effect keeps siphoning talent away from public companies toward private startups that appear to be hot. (Rambus hired 30 people in the four months before going public, but only one person in the four months since.) 62% of executive pay in Silicon Valley is based on stock options. Keeping people after their options expire often requires "evergreening" techniques such as offering new options and large bonuses. [Scott Herhold, SJM, 26Sep97, 1C.]

NNelmos 1.12: DOS NN demonstrator for BP, SOM.

Data Explorer For Windows 95/NT: free multivariate analysis tool.

Slicer Dicer v2.5: volumetric data visualization tool.

Developing Intelligent Agents for Distributed Systems: book by Knapik and Johnson.

"Neural Organization: Structure, Function, and Dynamics": book by Arbib, Erdi, and Szentagothai.

Neurons, Networks, and Motor Behavior: book ed. by Stein, Grillner, Selverston, and Stuart.

Companies spent nearly $35B last year on Internet infrastructure, Web sites, and data protection. Commercial returns are low because only 15% of US homes have modems, even fewer have fast browsing capability, and only 5% of the population have any interest in shopping via the Web. It may be 10-15 years before the Internet captures significant retail trade. [IBD, 10Oct97. EduP.]

Yahoo! lists over 150 auction sites (but none that specialize in barter). eBay AuctionWeb is one of the largest, possibly getting $20K/day gross from $2-$3 average per transaction. Buyers can usually find good deals on computer memory, software, and other volatile electronic goods. Buyers and sellers often both get a better price than if the goods -- often overruns, overstocks, or discontinued lines -- were sold through a liquidator. (On the other hand, people willing to shop discount catalogs may find merchandise for the same price as the seller.) Direct sellers also get the buyer's name, for possible further sales, and the buyer gets to look around for related merchandise from the same seller or from others. eBay is building infrastructure for 5M auctions/day by the end of this year. (They were doing 7K/day in April, and growing at 25%/month.) Unlike most web services, it hasn't had to do much advertising; sellers take care of that when they announce their merchandise in other forums. [Fred Hapgood , Inc. Tech, 9/15/97.]

CyberQuest's bid4it site allows sellers and buyers to set their own prices -- even using automatic algorithms based on available inventory, trading activity, and received bids. More than 60 categories, usually of brand-name merchandise in close-out sales or with 30-day return policies. The seller may remain anonymous. , 1-800-315-9900. [Michael F. Malone , URLwire, 15Oct97.]

American Auction serves a worldwide market, offering computer hardware and software, collectibles, sporting supplies, etc. Free to buyers, and currently free to listers. . [Chuck Gabbard . Marshall D. Simmonds , net-hap, 26Aug97.]

Another auction site for computer hardware is . [, 04Aug97.]

One interesting use of this technology is to auction off advertising space (or "real-time impressions") on the Web. Advertisers set up a "media buy" record with FlyCast Communications Corp., specifying what kinds of sites they prefer and how much they'll pay. Then every time a user requests a page on a FlyCast-subscribed site, FlyCast sends the highest-bidding banner ad. In essence, it's a microauction -- and since no sales reps are involved, costs can be kept low. . [Fred Hapgood , Inc. Tech, 9/15/97.]

The TravelBids site, , is a reverse auction with travel agents bidding for your business. You pay $5 to post your itinerary; travel agents then bid on how much of their commission they'll kick back to you if you let them handle your reservations. The service guarantees you'll save at least 6%, and you may save as much as 20%. [Joel J. Smith, Detroit News. SJM, 29Sep97, 1E.]

The eBay AuctionWeb site may be offering as many as 50K items at a time. The commission goes from $2 to 5%. People who offer unusual items often get contacts from other people with the same interests. . [Mike Cassidy, SJM, 12Oct7, 1G.] (Or , or .)

More than 100 online auction sites are listed at . It includes a BidFind search engine for finding sites where specific items are up for bid. Many auction sites are limited to specific types of merchandise, such as fine wines at . Good sites for computer equipment and general merchandise include eBay AuctionWeb , OnSale , Haggle Online , and First Auction . [Edward C. Baig, BW, 11Aug97, p. 98.]

In a Yankee auction, the top several bids may all win merchandise from a batch of identical items. Klik-Klock Online Dutch Action -- which offers clocks, jewelry, and gardening tools -- automatically drops prices every few seconds until someone takes the seller's bid. Some auction sites offer special services, such as automatic rebidding up to your specified maximum. [Edward C. Baig, BW, 11Aug97, p. 98.]

Some general tips: Make a low bid early on, since the first bidder wins in case of a final tie. (Bidders on multiple items in a batch get even higher preference.) Sellers often set very attractive minimum bids, and sometimes people win at that price. Make your last bid at least 20 minutes before closing time, to allow for posting delays. (Sometimes the final action is "fast and furious.") If you don't win, there's a good chance that a similar item will be up for auction immediately after -- and it may go for a lower price. Pay with a credit card, for maximum protection against fraud -- but sales are final, so know what you're bidding on and how much you're willing to pay. [Edward C. Baig, BW, 11Aug97, p. 98.]

(I should try selling a few Computists International memberships via auction. Might give me some feedback on pricing the service; no doubt a big slice of humble pie as well.)

-- Ken