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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?"
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).
Chaos - everything, everywhere, everywhen
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.
-Ryan
AUWYHSTOT (Acronyms are Useless When You Have to Spell Them Out Too)
Remember that bears have predicted 60 of the last 3 stock market crashes.
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.
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.
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.
Overpriced assets need to come down sometime.
FB will be dead soon. Twitter IPO overpriced (but still not that bad). Most Silly Valley stocks are based on insane projections for the most part.
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)
-- Tigger warning: This post may contain tiggers! --
It's getting harder and harder to figure out whether a post is real or a parody.
The Dotcom crash happened mostly because there was a massive gold rush to throw money at any startup that said they were going to do cool things on the web. But there was way too much money being spent on Aeron chairs and expensive digs and nothing being spent on figuring out if the idea was good. This comes from having been to a lot of bankruptcy auctions. Hell, the CEO of one company spent investor dollars on a powered paraglider. Da fuq? I also wonder if Y2K was something of a catalyst. In the 90s, companies were spending gobs of money to prepare for Y2K. When that came and went without a hitch, all that money evaporating and may have caused investors to question their other high risk ventures.
The housing bubble was could be seen a mile away by anyone who wasn't living in a utopian stupor. You can't force banks to issue sub-prime mortgages knowing full well that most of those buyers couldn't keep up with the payments without the lenders passing the hot potato to the next sucker. BTW, CDOs and mortgage-backed securities had been around for 20+ years without a problem. Again, the gold rush of house flipping was eventually going to crash when the music stopped in the form of enough people saying "You want HOW MUCH for this P.O.S house?! Nope."
Honestly, I don't really see the same scope of bullsh*t in Silicon Valley. Social networking companies are at risk because they don't have a tangible product just as dotcom companies didn't in 2000. But the hardware companies aren't going away. Will other companies get injured as a few collapse? Sure, but that would be panic selling and hence a good buying opportunity.
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" .
Google, Apple, and a few others are overvalued right now as well.
But the stock market is all about gambling, not real value. Most of the big players treat it like monopoly money, because it's not coming out of their own pockets. :(
That's a problem with the stock market overall, though, not just tech stocks.
I do not fail; I succeed at finding out what does not work.
Sure they have, the Chinese search provider even trades as an ADR on NASDAQ just look up BIDU
I guess you do not live in California. That's the problem.
It's the factory workers, and other non technology people buying/using your product that provide YOU with a job, not the other way around.
It's both, and neither. Both "tech" and factories are productive parts of the economy. All productive sectors add something.
Gee. I'm a factory worker, and I bought a house recently. So have other people I have known. Look outside your insular bubble.
A lot of people from areas where housing is very expensive (like where I live) don't realize that housing is much more affordable elsewhere. I'm just glad I bought before the bubble went nuts. I don't think I could afford my own house today, even after prices have dropped a bit, and I assure you my house is nothing fancy.
P.S. Glad to know there are still some people working in factories here. We ought to have more of them.
Poe's law: Without a blatant display of humor, it is impossible to create a parody of extremism or fundamentalism that someone won't mistake for the real thing.
"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
Slashdot gets worse every day... Pipedot: News for nerds, without the corporate slant
I suspect that with the types of devices using computer chips and software and the proliferation of OSs it is a risky bet to put money into the computer or electronic device industry. We can see this in the smart phone segment where companies jockey for position without knowing if a brand or new enterprise might suddenly sweep up the market. Although risk might yield a lot of earnings second guessing the computer industry is just far too difficult.
While unemployment generally may be high, in the tech sector it is very low.
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. It's driving up wages bills like crazy. Matt Allen, a tech recruiter at Vertical Move, told me recently:
of course he told you that, he's a recruiter! the truth is that the tech sector jobs are either offering insultingly low wages or out-sourcing to save a buck, the bigger the pool, the more control they can screw people over, especially if you are under the threat of being deported if they fire you. The whole rent-a-coder thing went awry because people offer to work for wages below minimum wage because in their country, $3/hr is a good wage and tax free by keeping it in paypal.
You don't see every tech person driving around in beamers.
Anons need not reply. Questions end with a question mark.
How do you figure that a college education is a good bargain? Tuition prices have vastly outpaced inflation, mainly due to permissive government loan programs (throw money into a system, watch prices rise, economics at work). Meanwhile, because a college degree is the new high school diploma, the college offerings in - let's be blunt - useless fields have expanded. Here is some data from DOE:
Degrees with, um, limited employment prospects, change since 1985
- Visual and performing arts: up 150%
- Interdisciplinary studies: up 175%
- Recreation, leisure, fitness: up 620%
- Liberal arts, general studies: up 120%
- Family science (wtf?): up 50%
- Social science & history: up 80%
Meanwhile, technical degrees with good employment prospects, again since 1985
- Mathematics: no change
- Engineering: down 5%
- Computer science: down 5%
The only real exception seems to be in medicine and healthcare, which is eminently employable and is also up quite a lot. Otherwise, our colleges seem to be producing more and more well-qualified hamburger flippers.
p.s. I didn't mention business, although that is the most popular degree by far. Up 50%, whichever category you care to place it in.
Enjoy life! This is not a dress rehearsal.