Slashdot Mirror
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?"
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.
It's getting harder and harder to figure out whether a post is real or a parody.
Um, I think you've reached your metaphor quota for today. Thanks for coming out. Anything of substance to share?
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" .
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.
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
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.