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

Oh, no hot air, I see...

[dachshund]

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.

Re:Oh, no hot air, I see...

[Anonymous Coward]

PS- has anyone ever clicked on a google ad? I haven't.

Oh, even if you don't click on them, they're still worth something to the advertiser.

For example, if I search for "poop" on google, then perhaps an ad will show up saying "Search for poop on eBay!"

Even if I don't click on the ad, I may happen to read it. This will improve eBay's brand recognition, since it will cause me to think of eBay whenever I see poop.

What if it's a "rush?"

[Aqua OS X]

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.

Some people just don't learn

[pubjames]

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..."

Infrastructure not old business model

[Flying pig]

Amazon is (just) a department store that runs over the Web. All its tricks are just derivatives of the way that traditional department stores operated - hosting stores within stores, customer accounts, POS advertising. It arose at a time when the infrastructure did not really exist to support it. Google is an enabling technology. It is funded through advertising, but it is something fundamentally new. I'm in the process of completing a personal engineering project. When I look at the stuff I have had to learn and the technology I have had to acquire, it's probable that without Google and the Internet it would have taken several times longer and not worked so well. As for my day job, it would be nearly impossible.

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.

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.

Definition of a Bubble

[LukePieStalker]

You know it's a bubble when people are calling it a "boom".

historical blindness

[elmegil]

This time, though, it's no Bubble: it's a Boom.

Riiiight. Anyone remember the Wired with the smiley face, subtitled "The Long Boom" claiming that this time it wasn't a bubble?