Y2K: Whew, did that get stale fast! After dominating the news for so long, the public’s current temper is well illustrated by the Royal Canadian Air Farce who gave the subject a disgusting blast with their Chicken Cannon. This reaction, though understandable, is a pity, for now is the time for a sober reflection on what investors can learn from this episode.

For starters, the majority of commentators and experts were way, way off the mark in their predictions of what would happen. This included not only the pessimists who warned of an apocalyptic catastrophe, but the optimistic governments and agencies charged with soothing public anxiety were completely wrong in their use of the “three-day storm” metaphor. The rollover came and went, without so much as a three-second gust of wind. The problems that did come up were trivial, compared with something really scary like, say, the 68,000 “issues” in Windows 2000.

All this begs the question of how all these putative gurus could be so clueless? The backlash suggests greedy consultants perpetrated an elaborate hoax. There is a grain of truth here, especially concerning so called “embedded systems,” but the applications problem was real.

Another proffered explanation in academic circles is that Y2K represented such a unique event that nobody knew what would happen. This doesn’t hold any water at all. Essays such as Nick Zvegintzov’s 1996 volley “The Year 2000 as racket and ruse” may not have been widely read, but laid out predictions that were dead on.

The answer lies deep in our very notion of what an “expert” represents. The nature of technology requires that the public, corporate managers and government bureaucrats are all heavily dependent on the opinions of the technical class. Y2K became the epitome of the old saw about “those who can, do, those who can’t teach.”

Professionals with the most realistic approach tended to be hard at work on the problem early on, while those on the interview circuit tended to be people with fluffed credentials and dubious track records.

Take Ed Yourdon for instance. His 1994 book Decline and Fall of the American Programmer claimed that by 1999 most programmers would be standing in unemployment lines, their jobs outsourced to foreign countries. This bizarre claim, coming just as it did when software nerds were making the biggest surge in wealth yet, is reminiscent of Ken Olson, the founder of minicomputer maker Digital Equipment, who in 1977 stated: “There is no reason for any individual to have a computer in their home.” Not surprisingly this blunder led to a complete meltdown in Mr. Yourdon’s reputation among his professional peers.

The public and media saw it differently. Mr. Yourdon’s book Time Bomb 2000 was a smash best-seller, spawning a bevy of cultish survivalist fans, dozens of lectures and interviews, culminating in an invitation to testify as an expert witness before the US Congress.

The explanation for this amazing comeback can be largely laid at the feet of the Internet. Indeed, it is no coincidence that Y2K hysteria was largely confined to those countries with very high rates of Internet participation.

In another era Mr. Yourdon’s bizarre prognostications would have been ripped to shreds by peer review. In the accelerated plane of the Web, gossip and rumour reach wide audiences with no filtering.

Highly motivated fans were not only used to spread the word, but also for vicious counterattacks on perceived enemies. Skeptical journalists were bombarded with email, legions of these “doom zombies” invaded chat rooms and message boards, gamely defying efforts by debunkers to stem the furor.

So what does all of this have to do with investing? We are now seeing exactly the same phenomena on investing message boards. First the self-anointed stock gurus leak the news on the next hot stock. Then the shills use these forums to tout their wares.

Finally the shareholders themselves get in on the action and soon there is a storm of vituperative posts, urging others to buy. Anybody who questions the fundamentals is shouted down in ugly flame wars.

Y2K taught us that the Internet, as well as being a wonderful tool of communication, is also a dangerous propaganda apparatus. Investors beware.