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

Market Consolisation

[rtb61]

Less bubble driven pie in the sky greed and more mature market consolidation. The weakest in the herd are failing behind and will be preyed upon by vulture capitalists like Mittens and that's the ones you really have to watch out for, after the vultures have chewed out the juicy bit's and left it a debt ridden hulk with really 'imaginative' book work, pension funds usually buy them (after those pension fund managers make a visit to an offshore tax haven, to 'er' review their balance sheet with the vulture capitalists, purchasing bonuses).

Re:Market Consolisation

[Gordo_1]

Um, I think you've reached your metaphor quota for today. Thanks for coming out. Anything of substance to share?

Re:Market Consolisation

[alexander_686]

You kind of have this backwards. It because everybody is looking for return when there is none.

Normally when the central bank prints money this pushes up inflation. During inflation real assets, such as stocks, tend to hold their value which pushes up their prices.

Quantitative easing is not (currently) causing inflation mainly because the economic is so anemic. Take a look at 10 year TIPs and one comes to the conclusion that inflation will be tame. But an anemic economy does not generate great stock returns. Historically the government bond market has real returns of 2% and the stock market a real return of 7% (plus another 3% for inflation.) Now it is closer to 1% to 4%. Pensioners can’t live on these returns.

  So anything that can deliver yield from junk bonds to junk stock is being snapped up. Or we are kind of talking about the same thing – a chicken and egg problem – just we place different emphasis on different parts.

not to wish bad things on anyone

[rritterson]

Not that I would want to wish bad things like lost of income or livelihood on anyone, but as someone who moved here long before this bubble started, I wouldn't mind what the the tech bubble popping might do to San Francisco rental prices.

Re:not to wish bad things on anyone

[ShanghaiBill]

I wouldn't mind what the the tech bubble popping might do to San Francisco rental prices.

It would also reduce commute times on Hwy 101. When the dotcom bubble popped back in 2001, it took 20 minutes off my morning commute.

I see other crashes looming first ....

[King_TJ]

Could tech be at the end of another bubble? Sure, I suppose. But it seems to me the college tuition situation is more clearly ripe to burst? And how about govt. treasury bonds?

At least with tech, I think quite a few of the highly valued companies are truly successful. (Apple, as a prime example.) For every one of these questionable Tumblr type purchases of some web-based service, therre are dozens of others who nobody seems to be interested in buying at all. I'd say most investors are being fairly selective, even if they do gamble a bit on the occasional "high profile" site that's not yet making a profit.

Re:Well, "if" it does..

[evilviper]

I guess you do not live in California. That's the problem.

"California" is NOT just the SF Bay area, and your extreme myopia is showing...

Guess where you can buy a 1,500sq.ft. house on half an acre for $30,000?
Answer: California