This paper examines the real impact of "booms-and-busts" of equity prices of technology-intensive firms, such as the late 1990s episode. We emphasize that what makes such episodes different from "booms-and-busts" related to other assets is the presence of knowledge spillovers. Such spillovers imply underinvestment in R&D at the aggregate level. Therefore, when temporarily high equity prices create incentives to invest more in R&D there are permanent wage and productivity gains. Sufficient conditions for these gains to always offset the direct negative effects from losses of equity trading and firm-level overinvestment are that overpricing is small and lasts longer.