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No Tech Bubble Here, Says CNN: "This Time It's Different."
ErichTheRed writes I saw this on the Money page of CNN today. Apparently, various stock analysts have declared that this run-up in stock prices is different than the 1999 version. OK, we don't have the pets.com sock puppet, Webvan or theglobe.com anymore, but when Uber is given a valuation of $40 billion, can a crash be far behind?
...Fool me twice, shame on me.
This is wise advice when discussing the Wall Street crowd.
it's not different at all is it steve?
Snowden and Manning are heroes.
ALL bubbles end badly as they are doomed to burst from day one.
Booms work on psychology of crowds until some unseen actor "flips the switch."
Stocks go up, stocks go down. If the market doesn't crash I'll make money. If the market crashes I'll make even more money.
Seven puppies were harmed during the making of this post.
That ridesharing thing that's getting sued ten ways from Sunday for butthurting established taxi firms?
Something's definitely up if they're getting valued at $40 billion! That's 4 times the UK's annual agricultural output!
Political debates have me rolling my eyes so much I think I got optical whiplash. I should sue. - Foamy The Squirrel
I remember in 1998 hearing the experts all say "This time it's different we won't crash."
The reason I would avoid Uber stock is their business model falls foul of the law in most of the countries where they operate, only a matter of time until they are shut down. A comparison to Kazza's business model would be more apt than snapchat but I agree the eyeball market is saturated these days.
And did you exchange a walk on part in the war for a lead role in a cage? - Pink Floyd.
If you think Uber is worth $40B, or Instagram worth $33B, I've got some tulip bulbs to sell you.
"National Security is the chief cause of national insecurity." - Celine's First Law
In that the companies make money this time?
Google seem to be traded at P/E 26 (Google finance, assume that's on actual profits and not ideas for the future) which is pretty reasonable. The interest environment is shit and Google at least have an urge to do new products. Whatever they will always be the search and information gathering giant I guess one could question.
Facebook mean-while is valued at P/E 75 which is way higher.
Do I trust or care Facebook even remotely as much as Google?
No I don't.
I don't care for Facebook at all. So do their social platform deserve that? Then again at least they have made more money than before.
Something like Microsoft is 17.7 so whetever. H&M is 30 as comparison. Sure there's a bigger market to sell clothes to but there's a bigger one for Microsoft products too :).
I also figured out when the 2000 tech bubble was about to burst: I was at the local grocery store and overheard the following conversation between the clerk and bag boy as I was checking out:
<clerk>: "The manager said you don't need to come in to work tomorrow."
<bagboy>: "*chuckle* Hehe thats ok, I'll just stay home and day trade..."
I literally went home and cashed out 90% of my mutual funds after that. Unfortunately, my judgement failed me a couple months later, when I bought back in...and lost most of it...
007: "Who are you?"
Pussy: "My name is Pussy Galore."
007: "I must be dreaming..."
Don't buy their stock, and don't get in a car with one of their drivers.
Come on man. UBER isn't even a stock. The so-called 'valuation' is somebody's pipe dream that hasn't been exposed to the marketplace.
ALSO there will ALWAYS be stocks that are over hyped and overvalued. Cherry picking individual issues and using them to characterize the market is a fools game.
March 10 2000 the NASDAQ hit 5132.
Now the NASDAQ is still well below the 2000 high on an inflation corrected basis. Even more so considering the burgeoning size of the tech economy over 15 years.
Maybe there is an argument that things are overwrought, especially in Vulture Capitalist Fantasy Land. But bubble? Nah.
one rule of thumb we were told in both my finance and economics units:
as soon as "experts", particularly media experts, start saying "no bubble" you can be pretty damn sure there is a bubble
The difference here is that Uber has a product. A vile, rent-seeking product built on the corpse of the American Middle Class, but a product nontheless. What companies like Uber and Amazon are doing is bringing the Wal-Mart model to the rest of the workforce. Driving down wages and benefits and skimming off the top of just about every transaction. The money there is huge, especially once you're entrenched. That's why they're valued so high. Real money is in ownership, not petty things like making products and providing services. That stuff's for the plebs.
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You only lost your 401k if you cashed it out while the market was in the dumps. If you'd have left it where it was, like you were supposed to do, then it would have increased in value.
You're also supposed to shift your stock investments out into money market or other low-risk devices about 8 years before you plan to retire, so that the timing of the market fluctuations doesn't leave you screwed.
You see the game being rigged because you drank the propaganda and believed that when the market goes down, 401k accounts some evaporate. But they don't.
Uber has something the others don't... customers. It could be argued that the government created the market for them.
And in your estimation how many millions of non-expert "investors" also didn't perform "correctly" with their retirement funds.
You can place blame wherever you like, but the reality of a very broke generation of retires-who-can't-retire isn't going anywhere,
While at the same time, Wall Street has never in history been this wealthy compared to median income. And the gap between haves and have nots now far exceeds where it was in the roaring 20's.
Something is wrong, and what is wrong in hhtis particular case is that we are staving off collapse at the expense of a generation of savers (who can no longer buy annuities) -- and to the benefit of the 1% who will gladly sell them high risk paper of 100 different flavors.
Collapse is not only good, it's vital.
You dont think people like Elon Musk and Jeff Bezos made that money?
And you know what both of them have in common? They each run at least one business that has a viable revenue model, and a damn good one at that.
All money is "funny money". The gold standard is long gone.
Table-ized A.I.
I predict that the future is not predictable.
Table-ized A.I.
When thinking about tech stocks, I like to use a "Boeing" rule as a measuring stick. The globe.com is valuing Uber at 40 Bn (1/3 of Boeing). Boeing had 90.8 Bn in revenue for 2014. Uber claims to be able to generate 10 Bn "soon" Business Insider, but conservative estimates are closer to 2 Bn. So revenue is somewhere between 1/45 and 1/9 of Boeing. I know the comparison is a bit apples (not the computer) to oranges, but Uber's overvalued IMHO. Especially considering that Uber has almost no physical assets and Uber is a privately held company with no public numbers.
People fail to understand is that bubbles are not bad for the people who are lucky enough to get out in time. (And, yes, it's usually simply a matter of luck.) They are only bad for everyone else.
Financial analysts are the last people with an incentive to tell people about a bubble if they suspect one.
"This time it's different."
We are, and by we, I mean tech investors are far more discerning now days then before primarily because we know what it was like to get burned in the past.
Except the biggest investors, the vulture capitalists, still have no fucking idea which end to point towards enemy, let alone anything more complex. They don't have friends with brains, only friends with money. People whose every other word isn't some kind of bullshit can't stand them.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
8 years, this year. But when the people whose 401ks are worth 1/2 what they were 8 years ago still don't recover this year, you're going to have to start saying "9 years". There was a permanent loss of wealth, or at least the value on paper of it, and it's not coming back. Gains since then are gains since then, not restoration of what was lost. 401ks and the current "retirement system" are deeply flawed, because they were designed to supplant pensions, not to sufficiently support the retirees.