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  Euro on Sunday: Stock History: Expensive Temptation | Message | Bit Updates
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Euro on Sunday: Stock History: Expensive Temptation | Message

Friday, December 22nd, 2017 | bitcoin updates

by Peter Balsiger, Euro on Sunday
One hundred percent plus within nine months – this is the sensational result of the latest stock market star in Germany called Neuer Markt at the end of 1997. Hardly anyone expects such a rally on March 10, 1997, when the champagne corks pop for the first time on the Frankfurt floor. With the IPO of the telecommunications provider Mobilcom, which wants to compete with the ex-monopolist Deutsche Telekom with call-by-call rates ("19 pennies per minute"), the new segment will be opened.
It is the starting signal for the German response to the Nasdaq, the successful growth segment in the USA: Innovative companies from the sectors of environmental technology, telecommunications, biotechnology and, above all, the Internet should be able to provide themselves with venture capital via the Neuer Markt.
The Germans had discovered the stock a few months earlier. TV star Manfred Krug ("Liebling Kreuzberg") had drummed in a massive advertising campaign for the initial public offering of Deutsche Telekom. The demand was gigantic, the T-share became the "popular share": Instead of the planned 100 million papers, Deutsche Telekom placed 600 million. Already on the first day, the price rose by 16 percent.
The foundation for a new German stock culture was laid. Many new small shareholders were enthusiastic about this miraculous form of money multiplication without work. Housewives and pensioners became stock market freaks.
The premiere day of the new segment is still quiet. In addition to Mobilcom only the automotive supplier Bertrandt is listed. The first price of the Mobilcom share is 50 percent above the issue price. In the first year he will shoot up by an incredible 2,800 percent. The prospect of similar profits now attracts tens of thousands of people who have never had anything to do with equities before.
"The New Economy believed in growth, was inspired by the beginning of globalization," said Mobilcom founder Gerhard Schmid later. Suddenly stocks of insurance companies, chemical companies or car manufacturers are boring. This is Old Economy. In demand are the exciting values ​​of the New Economy, everything revolves around computers, the Internet and e-commerce. The stock market segment is growing rapidly. At the end of 1997, 17 companies were listed, and in May 1998 there are more than 100. Soon, a new index will be set up for the Neuer Markt, the Nemax. It starts at 500 points in April 1997, rises to nearly 8,600 points within three years and even surpasses the DAX at that point.
In a short time, more and more daring young entrepreneurs are pushing to the stock markets. At the end of 1999, 201 companies with a total value of € 112 billion were already listed on the Neuer Markt.
TV shows such as n-tv "Telebörse" or "3satbörse" reach ratings like never before. Self-proclaimed stock market gurus give hot stock picks and praise values ​​that they have previously set themselves. The stock market legend André Kostolany warns in vain that "many will still get a bloody nose on the Neuer Markt".

The economy finally has stars
The New Economy produces real stars. "It was founders, entrepreneurs and managers of a very special punch that dominated the scene of the New Market," later wrote the "Frankfurter Allgemeine Zeitung". "Unlike their predecessors, the down-to-earth bosses of the post-war era or the boring managers of large corporations, the entrepreneurs of the New Economy staged with a shimmering, weird and a bit crazy attitude: the economy suddenly had something that they did not know in Germany until then: Stars. "
Some of these brilliant self-starters turn out to be lucky knights and cheats. Bodo Schnabel's Comroad, a manufacturer of telematics systems, has simply invented 95 percent of its revenue. Infomatec, the software developer, uses fraudulent ad-hoc reports to trick millions of orders that do not exist.
The undisputed superstar of the Neuer Markt but is Thomas Haffa, former typewriter seller. He started in the late 80s together with his brother Florian as a marketer of merchandising rights. At the end of the 90's his company EM.TV goes public, he makes big deals like in the height of highs, buys the Henson Company ("Muppets Show") and 50 percent of the Formula 1 marketing at overpriced prices. EM.TV is now an international shooting star with a market capitalization of 14 billion euros at the top. The Haffa brothers celebrate on yachts in Cannes, blowing on the hunt for the Disney group. On July 22, 1999, they will be cheered on by thousands of small investors at the Annual General Meeting in the Frankfurt Festhalle. Anyone who bought EM.TV shares in the IPO in 1997 can look forward to a 16,000-percent gain this summer. A commitment of 6,000 euros to the 1997 issue would have been enough to become a millionaire.
But in the summer of 1999, the New Market has long since run out of control. "The prices do not rise to any rationality," judges Der Spiegel. "Often, new company stocks skyrocket on issue, doubling their value in just a few hours, and the company is writing losses and has no sensible business model – buy!" No doubt, Germany is in stock market fever. "In the bus, at birthday parties, in the waiting room at the dentist, everywhere talked quite normal people about share investments," wrote "Die Welt" later. "Many boasted about their profits, 20 percent, 50 percent, 100 percent, which they had achieved in a few weeks."
On March 10, 2000, three years after the launch of the New Market, the Nemax All Share closed at a new all-time high of 8,546.19 points. The market capitalization of the 229 companies listed amounts to 234.25 billion euros. The Nemax 50, the Bluechip Index, which brings together the largest 50 New Market companies, has an all-time high of 9,665.81 points.

Magic word Internet
But only one day after his birthday begins the descent of the segment. Nevertheless, in some weeks as many as twelve companies go public. Many do not make a profit, some do not even make sales, but are nevertheless valued at billions of euros. Nobody questions the balance sheets. "This is just New Economy, it was then called," said former ARD stock market reporter Frank Lehmann. "We should get used to it".
A prime example is Biodata. The first price is 240 euros and thus 433 percent above the issue price – the highest subscription gain in the history of the Neuer Markt. Another decisive factor is the name, which consists of terms from the two successful sectors: biotech and internet. However, the company only develops software for computers.
But the term Internet causes the prices to explode. Thus, the software provider Intershop is phased worth more than the Lufthansa. Mobilcom founder Gerhard Schmid years later: "The banks have but everyone listed on the stock market, which has submitted an ambitious business plan, while the word Internet has spelled correctly."
The boom mood also affects the banks. "It does not matter to credit institutions whether serious managers, bunglers or petty criminals are at the helm of the companies," criticized Der Spiegel. "They provide the startups with money, the rest does the imagination of the shareholders, no matter how absurd the business ideas are."
Reports on inflated balance sheets, insider trading and price fraud are now making the rounds and bringing the Neuer Markt as a stock exchange in disrepute. More and more companies can not meet their ambitious goals, skepticism is spreading in the press: "Hort
The Greedy "(" The Time ")," The Money Laundering Machine "(" The Mirror ")," The Actors and Charlatans "(" The World ")." Some companies consisted of just two people, had no operational business and nobody knew "What they actually do," quotes the "Berliner Morgenpost" a stock market expert. In the press appear the first "death lists" with potential bankruptcy candidates.
On March 10, 2001, the segment has 337 listed shares. The number of shareholders in Germany rose from 5.6 million in 1997 to a record high of almost 12.9 million after the turn of the millennium. Almost every sixth German ripples.
But suddenly things are moving very fast: Drastic profit warnings from companies, sales recommendations by analysts, the profound case of former flagship companies. Greed turns into panic. Only the big investors and finally the small investors left the Neue Markt in a fleeting way. Thomas Haffa's EM.TV is also torn into the whirlpool. Instead of winning the superstar now makes billions.

"Moral vacuum"
In his speech celebrating the fifth anniversary of the New Market, CEO Werner G. Seifert criticized investors for having taken risks they did not understand and greedy managers and financiers shifting risks to other people: "Venture capitalists Bringing high-risk start-ups to markets without informing investors about the risks involved, creating a moral vacuum that does not draw a clear line between acceptable and unacceptable risk. "
Just six years after its launch, the New Market has finally failed. The once-acclaimed growth segment closed on March 21, 2003, with the index plummeting to 409 points, a drop of 95 percent since the all-time high.
The Neuer Markt has brought some fantastic gains for most investors, but most of them painful losses. And he has spoiled many Germans the desire for stock market. After all, the New Market not only left a debris field, the success story of some biotech or IT companies would be unthinkable without the New Market, quoted "Die Welt" Dirk Schiereck, Professor of Corporate Finance at the TU Darmstadt: "There are quite a few from companies that have permanently extended the price list. "
Investor Info

TecDAX and Scale
High demands
The new market index Nemax, which was severely shaken by financial counterfeiting and insider trading, was discontinued in 2003. As a successor, Deutsche Börse installed the TecDAX in the same year, which includes the 30 of the 35 largest technology stocks below the DAX in terms of market capitalization and sales. Although only introduced in 2003, the basis of the calculation is December 30, 1997 with a value of 1000 points. Several companies of the former Nemax 50 are listed in the TecDAX today. To prevent counterfeiting, every company listed on the TecDAX must be admitted to the strictly regulated Prime Standard, which has the highest transparency requirements. This means that the same standards apply to TecDAX companies as to companies in the DAX, the MDAX and the SDAX. Deutsche Börse reviews the composition of the TecDAX twice a year. In March 2017, Deutsche Börse launched the Scale segment for small and medium-sized enterprises. The companies listed here must meet minimum standards but are less regulated than companies in the Prime Standard.

With the ETF, investors can rely on the values ​​in the German technology index TecDAX, which shines with sustainably high profits. The most important index values ​​are Wirecard, United Internet and Qiagen. For risk-averse investors.

On a five-year term, MainFirst Germany is the best fund for German small caps, and 2017 is going well. The portfolio includes companies in which fund management expects significantly above-average growth in the medium term. Currently heavily weighted are the Deutsche Pfandbriefbank, Hella and Sixt.
Image sources: iStockphoto

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