Anyone who has followed Linux-related business events for the last couple of years remembers last year, when Red Hat Software had its initial public offering. It was the darling of the market for a little while, during that weird and brief period in which anything that smacked of technology sold for ridiculously high prices. Some Linux contributors were offered the opportunity to buy Red Hat at its initial public offering price. Some had difficulty doing so. They were angry then. They aren't anymore. Though Red Hat did rise to more than $150 per share and even had a 2:1 stock split early this year, based on share prices at the close of business Tuesday even those "lucky" IPO buyers have lost money, were they to sell their shares right now. Red Hat share prices have dropped 92 percent since the beginning of the year.

(Analysts opine that Red Hat shares will oneday be worth $34, and they rate it what they call a "moderate buy," and at its current price of less than $8 per share, it may well be.)

Caldera has similarly been hammered. After its IPO in the spring, it rose to more than $25 per share. Tuesday, it closed at a little more than 10 percent of that price. Brokers say not to sell it, but not to go out of your way to buy it, either. V A Linux, another Linux company that went public this year, soared to more than $240 before the sled left the top of the hill; Tuesday it closed at $11.19. Some brokers rate it as a moderate buy, while one says it's a strong buy.

So while some people have made money off of Linux equities, by selling them, a whole lot have lost money.

Before we go much farther, a couple of things have to be noted.

A good friend who now lives in a gorgeous 18th-century house on a huge farm in a very trendy section of New York once told me that when investing "you should buy what you know." He meant that if you're familiar with an industry, you have a leg up in picking the winners and eschewing the losers. The entire stock market flung down and danced upon this rule for a couple of years, buying into buzzwords: Internet, networking, fiber optics, Linux. They thought that this was the wave of the future, and they were right. They thought that heaving huge amounts of money blindly at it all would yield vast and boundless profits. And they were wrong. This fall, some sort of sanity returned, and the entire sector all but collapsed.

A dangerous situation was compounded by the fact that the biggest generation in the history, the baby boomers, had a record amount of retirement money to invest and an unprecedented percentage of them were doing it. The simple law of supply and demand tells us that when a greatly increased amount of money is chasing a relatively fixed number of shares, share prices will skyrocket. A lot of this money was being managed by 25-year-old fund managers who had never lived through an economic downturn.

Much of that retirement money is now gone, thanks to those managers and to the law of supply and demand compounded by the need of fund managers to produce growth. (A good investment right now might be a bar in the vicinity of Wall and Broad streets in New York City.)

But a loss is not a loss until a transaction has taken place. If you buy a share for $10, watch it rise to $100, and watch it fall to $10, you haven't lost anything. Anyone with any sense at all is not buying shares to turn a quick profit by selling it when it appreciates, but instead getting it for the long haul, waiting for the company to become profitable and for share prices to rise, resulting in a good investment. Those who bought VA Linux for $242 will wait longer for that to happen than will those who bought VA Linux for $11.19. It might ultimately happen, though. (Day trading, meanwhile, is for idiots who would be better advised to load up their money and head for Las Vegas, where the odds are better and at least there's a good time to be had.)

If I were buying shares (which I do not do in companies about which I write, because it would be unethical to do so), I would probably be putting some money in Linux companies right now. A thousand bucks will get you 125 shares of Red Hat or 400 shares of Caldera. Twelve hundred bucks will bring you a hundred shares of VA Linux. I don't know anyone who thinks that Linux share prices are there to stay.

But even that is not a sure thing.

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