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[Ten Years]5 marks its 10th anniversary with a package of articles that will look back at news and trends from the past decade -- and ahead at what the future may hold. Full coverage is at

Where Are They Now: George Gilder

May 8, 2006

This is the eighth in a series of articles in which we'll catch up with newsmakers from the past decade. For other installments and more go to the 10th Anniversary1 page.

At his peak, George Gilder had the power to move the markets. These days the conservative pundit turned technology guru is just trying to get people to pay attention to him.

Mr. Gilder's fascination with telecommunications companies and their technology wasn't dimmed by the Nasdaq meltdown of 2000 and 2001, which wiped out many of the loyal readers of his once-influential newsletter and nearly tossed Mr. Gilder into bankruptcy. The 66-year-old author and former Nixon speechwriter continues to seek out promising high-tech firms and promote them in the Gilder Technology Report2, though his audience has shriveled from more than 75,000 subscribers six years ago to fewer than 5,000 these days.

[George Gilder]

"The trouble with my business is that everyone came in at the peak," Mr. Gilder said in a recent interview. "The typical Gilder subscriber lost all his money and that made it very hard for me to market the newsletter."

In the late 1990s, a mention of a company in Mr. Gilder's monthly newsletter often sent its shares surging, a phenomenon that came to be known as "the Gilder effect." Investors clamored for his advice and he was paid tens of thousands of dollars to give speeches on his "telecosm" theories, about how bandwidth would become unlimited and free and give rise to new products and services.

Together with his friend and publishing partner Steve Forbes, Mr. Gilder hosted popular conferences featuring tech executives and luminaries. He was profiled in magazines, from the New Yorker to Wired, and feted by fund managers, venture capitalists and investment bankers.

Here's a look at how $10,000 invested in stocks in George Gilder's "Telecosm Technologies" list, which debuted in April 1997, would have fared over the years.
Year Gain/Loss % Gain/Loss $ Year-End Balance
1997 21% $2,100.00 $12,100.00
1998 48% $5,808.00 $17,908.00
1999 284% $50,858.72 $68,766.72
2000 -44% ($30,257.36) $38,509.36
2001 -43% ($16,559.03) $21,950.34
2002 -56% ($12,292.19) $9,658.15
2003 130% $12,555.59 $22,213.74
2004 3% $666.41 $22,880.15
2005 5% $1,144.01 $24,024.16
2006* 26% $6,246.28 $30,270.44
*Year to date
(Figures in parentheses are losses.)
Source: Annual performance data provided by Gilder Publishing LLC

Then came the tech-stock crash. Even Mr. Gilder's boundless optimism couldn't save many of the telecom firms that he had long promoted. Favorites like Global Crossing Ltd., WorldCom and JDS Uniphase Corp. unraveled and their stocks collapsed. "I did not put the companies through a rigorous financial test or filter. It was a real disaster," he said. "I was a nave guy doing this. It almost didn't matter what the hell I did when all the companies went bankrupt, there is no way to look good." (For a look at the performance of Mr. Gilder's picks, see the chart at left.)

"There are two pieces to investing. There is what the company does -- the product -- and there is the stock price. That's the part that Gilder forgot. What price are you going to pay for this?" said Fred Hickey, who for two decades has edited another tech newsletter, the High-Tech Strategist. "He thought the price was unlimited because there was unlimited opportunity. But there was a limit to it and he found that out when everything crashed."

The selloff not only tarnished Mr. Gilder's reputation but erased much of his personal fortune, which was largely invested in his favorite companies. Mr. Gilder has spent much of the last few years paying off tax bills and debts. He has sold the conservative American Spectator magazine, which he acquired in 2000. He still owes money to former partners in his publishing business, one of whom has put a lien on Mr. Gilder's home in Tyringham, Mass. "I was as close to bankruptcy as you can get without filing," he said. His company, which once had more than 50 workers and was being groomed for an IPO, now has three full-time employees.

Last year he published his latest book, "The Silicon Eye," which tells the story of Foveon Inc., a closely held maker of chips for digital cameras founded by Carver Mead, a semiconductor pioneer and professor at California Institute of Technology. Despite its promising technology, the company has struggled to win customers. Foveon has "failed to succeed as fast as I hoped," Mr. Gilder said, but he remains optimistic about its prospects. The book, which was a finalist for the U.K.'s Aventis Prize for science books, has not sold "especially well," he added.

Robert Metcalfe, founder of 3Com Corp. and inventor of the Ethernet networking standard, still considers Mr. Gilder "a hero and a mentor." Unlike other tech commentators, he said, Mr. Gilder brings a deep understanding of philosophy and economics to his analysis as well as an "almost poetic relationship with technology."

"It's true he was wrong a lot toward the end as the Internet bubble was bursting, but a lot of other people were too," Mr. Metcalfe said.

Mr. Gilder still holds regular discussions with subscribers on his Web site3, where he said a few of the people that angrily withdrew a few years ago are returning. He continues to recommend and invest in some of the same tech companies -- at least those that survived the crash. Some of his picks like Qualcomm Inc. and Broadcom Corp. have rebounded in recent years, while others like Microvision Inc. and JDS Uniphase, which he stopped recommending in December, have not.

The fallout, however, has changed how he puts together the newsletter. Previously, any company whose technology Mr. Gilder loved was added to his "Telecosm Technologies" list. Now his choices are vetted by Charlie Burger, a physicist who serves as the newsletter's principal analyst. Mr. Burger examines each company's financial health and stock valuation. "If it doesn't pass or he judges it wildly overvalued, I don't put it on the list," said Mr. Gilder. "I may write about it, but I don't put it on the list."

When he isn't working on his newsletter or one of several book projects, Mr. Gilder increasingly spends his time advocating intelligent design as an alternative to evolution. Mr. Gilder, who helped found the Discovery Institute, a conservative think thank, is comfortable in the role of social contrarian. He was an outspoken critic of feminism in the 1970s and an early proponent of supply-side economics in the 1980s before turning his focus to the high-tech world.

"I do think that writing about technology and picking stocks is a very powerful and edifying discipline," he said. "It requires you to have a purchase on reality that is much more rigorous than the average evolutionary biologist has or the average free-floating technology writer has."

Write to Marcelo Prince at marcelo.prince@wsj.com4

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