The New Boom

DarkClown writes "Wired is running a piece discussing the recovery from the burst Bubble in Silicon Valley. This time, though, it's no Bubble: it's a Boom. They suggest that this latest boom, fueled by Google's ascent, is under steadier footing than last time. Technology and the market seems to be catching up to the hype." From the article: "A boom perhaps, but not (phew!) a bubble. There's a difference. Bubbles are inflated with hot air and speculation. They end with a wet pop, leaving behind messy splatters. Booms, on the other hand, tend to have strong foundations and gentle conclusions. Bubbles can be good: They spark a huge amount of investment that can make things easier for the next generation, even as they bankrupt the current one. But booms - with their more rational allocation of capital - are better. The problem is that exuberance can make it hard to tell one from the other."

Comments

No credibility

[binaryDigit]

They suggest that this latest boom, fueled by Google's ascent, is under steadier footing than last time

Oh man, they're actually stating that this bubble/boom/bulge/b???? is on steadier footing but is being fueled by Googles ascent? My, what short memories we have. If anything, the latest b???? appears to be more of an aftershock, related to it's predecessor, just to a lessor degree, but the same root causes and issues.

Why economic equality is sometimes bad

[MikeRT]

For better or for worse, the stock market used to be something that only those that knew how to invest really did anything with. Those with no clue on how to invest usually just avoided it, or invested in safe mutual funds or big companies like GE or IBM. Then millions of average families got involved, went crazy thinking it was the lottery and lost obscene sums of money.

I am a pretty good investor, but then my mom taught me the basics of investing. My father and I are two archetypes of investors. He's the type that goes with the flow, whereas I'm conservative with the amount of money I'll invest, but willing to take risks with small companies that I rationally believe have a good shot of growing big. If I had control over my assets in the dotcom era (I was still in high school), I'd have made almost $1,000,000 before taxes and would have ended up keeping the bulk of it after the bubble burst. My father would have lost everything because he never researched what he was investing in, he'd just buy what the latest rag said was a cool company... like most of the Linux "companies" back then.

The biggest problem we have is that most people don't want to realize that investing is serious work and that it requires that you **learn** what you're doing. It's not the "insert money into slot to double each year for five years" game that they want it to be. Losing everything you invest is a realistic possibility which is why it should come after savings and bills... not before. And if you do nothing but short term investments, you'll only make your broker rich and yourself poor unless you're GOOD at it and have a lot of money to buy in bulk.

My point is that maybe enough of the casual investors have left that we can move forward now. Google's stock, though, is still a holdover from the .com era. Sorry, but at barely $6.00B in projected revenues for this year, they aren't worth $500/share. If they were consistently making $25B in profit on expenses of $2B, yes, I could see that. God help us, though, when Google utilizes all of its information its indexed to maximize its profits. Privacy won't be just dead, but it'll be publically humiliated, tortured, executed, its body cremated and its ashes unceremoniously pissed on for good measure.

"Boom vs. Bust" is not that complicated

[guitaristx]

It seems that the difference that TFA sees betweeen "Boom" and "Bubble" is that the latter is marked with unwise spending, from the VCs to the board room. TFA could be simply put in a readers' digest form as:

There is economic growth in Silicon Valley that we predict will be more stable and longer-lasting than the "Dot Com Bubble" era, because VCs aren't handing out money as freely, and companies aren't being [as] stupid with their money as they used to be. *GASP!* Real, honest, tried-and-true business practices apply to the internet as well!

Call it a "boom" if you want. It's a new, lucrative market that's gaining financial stability because there are plenty of examples from the "bubble" of what not to do.

All Bubbles are Booms.....

[bobdobbs3]

...until they burst. Look at almost all of the press before Greenspan's "irrational exuberance" claim - it was all boom, no bubble, "new economic paradigm" talk. Hindsight is 20/20, if people had largely identified the bubbles we've had a significant time BEFORE they burst - they probably would have not been bubbles.

e.g:
Stan: "Hey, Bob wanna through your nest-egg in to the stock market? I heard it's a big bubble just waitng to burst!"

Bob:Um...no.

No. The next boom will be automation.

[vertinox]

Hear me out on this. The new boom will be automation.

Cars that drive themselves, house hold robots, robotic lawnmowers, expert systems, and better search engines etc etc.

Put your stocks into these areas... Its the next big hype because VCs will see these things and be mystified and start hurling wads of cash at the next roomba.

Michael Faraday and electricity

[Flying pig]

Story one:

Prime Minister: What use is it, Mr. Faraday?
Faraday: I know not, but I wager one day your government will tax it.

Story two:

Prime Minister: Waht use is it, Mr Faraday?
Faraday: What use is a new born baby?

Probably both urban legends (BTW I'm a former RI member, I'm allowed to say this) but they make a point.