Silicon Valley Could Be Heading For a New Stock Collapse.

First time accepted submitter billcarson writes "Even though for most of us the recession is far from over, analysts are worried the technology sector might be near the end of a bubble. Technology stocks are at records highs at the moment. Companies that have no sound business plan have no difficulty in raising capital to fund their crazy dreams. Even Yahoo is again buying companies without real profit (Tumblr). Andreessen Horowitz, a major venture capitalist in Silicon Valley is already pulling up the ladder. Might this be an indicator for more woe to come?"

Comments

Yahooblr

[simonbp]

Yahoo's recent desperate moves (e.e. buying Tumblr) are hardly indicative of the industry, but rather one company that really shouldn't be as big as it is. Silicon Valley as a whole is a lot more healthy than Yahoo.

Re:Yahooblr

[fuzzyfuzzyfungus]

The point isn't that all of Silicon Valley is as incompetent as Yahoo; but that the cash is flowing freely enough that even a company whose business model appears to be "Try to be Google, as imagined by an AOL user" can throw a billion dollars at some goofy blogging platform.

Now, I would not be at all sad to see fewer smart people wasting their lives trying to find new ways to get me to click on ads or analyze my behavior to sell me shit, (and there's a disturbing amount of brainpower going down the toilet on just that problem at the moment); but the trouble with a big wave of easy, dumb, money is that, while the crest is a blast, it can easily take down even solid people and ideas when the VCs eventually get spooked.

Just remember how much fun the economy of more or less the entire developed world managed to have, just because some banks were gambling on US real estate. Barely any connection to whether the economy of people who actually do and make things was stupid or brilliant, doing well, or doing ill; but down it came...

Systemic debt

[Livius]

The problem is a *debt* bubble. Either the debt is extinguished in a bubble collapse - housing, stock market, student loans, tech stock, etc., or it becomes inflationary. As long as debt is above a sustainable level there *has* to be one bubble or another.

Re:not to wish bad things on anyone

[farble1670]

the economy isn't interconnected at all right? it might even reduce your commute to staying your house.

wait for it ... "but i work in the ___ field, so i'm not affected ..." in 3 ... 2 ... 1.

Re:Bullshit from statists.

[ebno-10db]

It's getting harder and harder to figure out whether a post is real or a parody.

Where have I heard this before?

[ebno-10db]

While unemployment generally may be high, in the tech sector it is very low.

How about some actual, you know, statistics.

Tech companies, led by Mark Zuckerberg at Facebook, are lobbying Congress to relax immigration rules so they can hire more foreign talent because they believe domestic talent has gotten too scarce and too expensive.

And that's evidence of a shortage? They've been pushing for more of this crap for 20 years, rain or shine.

I also notice that almost the entire article is about Silicon Valley, which despite its pretenses of being cosmopolitan, or even "globalized" (whatever the hell that means), is one of the most provincial places there is. Here's a clue: there are parts of the US outside of the Bay Area. Amazing but true! Some of those places are tech hubs with lower salaries. Having trouble finding people at a reasonable price? Branch out. It's hardly a new business strategy. The geniuses who claim to have destroyed the barriers to long distance communication don't want to take advantage of it (except to India of course). I know that denizens of the valley are afraid to get on a plane to someplace like, say Pittsburgh, where they have a dreaded thing called "snow", but you can tough it out. Look on the bright side - the plane trip is much shorter than across the Pacific. You can even use Google maps to find this place called "Pittsburgh" .

Re:Define woe

[HockeyPuck]

Let me translate this for you:

I used to do tech IPOs. My money's in broad S&P 500 low cost index funds now.

(yes, I made lots of money from the tech IPOs, and the other IPOs)

Translation from Douche to English:

I made piles and piles of cash during the dot-com bubble. Enough to afford a Tesla and a $1.5m 1500sqft home in Cupertino. However, now that I have all this money, I can afford to diversify. If I didn't have all this IPO cash, then I'd never have the money necessary to send my kids to $20k/yr kindergarten, Challenger Elementary School and then either St. Francis or Bellermine High Schools.

I'm really just writing this to flaunt about how lucky I was to have invested during the dot-com bubble and now I'm telling you to follow my lead, however, you can't since the dot-com bubble is over, so you'll have to get used to taking low digit yr/yr gains of the broader stock market.