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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."
So when Amazon.com was selling for hundreds of dollars a share, that was ridiculous. But when Google is selling for $434 per share, everything's just fine. Because, um, they sell advertising, or something.
It might not be a bubble or a boom... it could be a rush. I have noticed a lot of grizzled men wandering around the bay area lately. Sure, they might be homeless people, or box car hobos, but they could very well be old prospectors. An abundance of old prospectors is a sure sign of a pending rush.
"Things are more moderner than before- bigger, and yet smaller- it's computers-- San Dimas High School football RULES!"
One thing I learnt from the last bubble (and having read up about other ones in history) people always say "It's different this time..."
Google shares are possibly over-hyped, but they reflect a very interesting perception: that the Internet is now good for something, but that we don't know where it is going. We had the mass transit revolution (railways), the personal transit revolution (bicycles, then cars), the communications revolution (telephony.) Now we have the information revolution, and anyone who looks like they are reading meaningful signposts is likely to be highly valued.
Pining for the fjords
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.
.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.
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
You know it's a bubble when people are calling it a "boom".
I'd say it's more like one of those belches that brings up stuff from your stomach. When it bursts it doesn't disappear completely like the dot com bubble. It splatters stomach acid (offshoring) that stings your throat and the bile (downsizing) leaves a bitter taste in your mouth. There, can we all just agree on this metaphor?
If you can read this sig, you're too close.
As reported by Nasdaq, Google's current P/E is 95, predicted for next year is 36. That means you get 1% return this year. You are predicted to get 3% next year. ING pays 3.80% on a simple savings account today.
Solid foundation. Right.
Riiiight. Anyone remember the Wired with the smiley face, subtitled "The Long Boom" claiming that this time it wasn't a bubble?
7 November 2006: The day Americans realized corruption and incompetence weren't addressing 11 September 2001