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?

Comments

Fool me once, shame on you...

[Anonymous Coward]

...Fool me twice, shame on me.

This is wise advice when discussing the Wall Street crowd.

Re:Fool me once, shame on you...

[MrBigInThePants]

If the "fools" with money realized this then there would be no bubble. But it is easy to make a call when you do not stand to gain or lose from any of it since you are not in the market at all, isn't it?

If you invested in the "bubbling" Uber earlier and sold out now you would be anything other than poor or stupid. As long as you get out before the burst, you win.

Also remember the fools with money are often not the ones making the decisions and giving the advice.
The finance industry is funded on churn and stock fluctuations. They win on the way up AND often on the way down (overall, I am not talking about individual traders or trades).
It is highly possible that Goldman Ballsacks will be investing people's money heavily into these stocks while betting against the stocks with other money as the bubble goes - just like they did during the last one.

But the question is NEVER what HAS happened, it is always what is going to happen in the future and roughly when. Most people fail HARD at this and should really just STFU because they have no idea what they are talking about.

Just waving your hand about predicting doom "sometime" hardly counts as insight in this sort of market.

it's not

[Lehk228]

it's not different at all is it steve?

what, Uber?

[ihtoit]

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!

Round and round.

[MouseTheLuckyDog]

I remember in 1998 hearing the experts all say "This time it's different we won't crash."

Re:Oh i think its overvalued but its much differen

[TapeCutter]

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.

No bubble?

[msauve]

If you think Uber is worth $40B, or Instagram worth $33B, I've got some tulip bulbs to sell you.

Isn't the difference

[aliquis]

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 :).

Re:Isn't the difference

[Aighearach]

There is sure a lot of hate. And I can understand it to a certain extent; I've been running ad-blockers consistently since the 90s. I used to have doubleclick in my hosts file to reduce the filter load, too.

But google is the only ad company that doesn't sell your info. I hear a lot of people just shouting randomly that they are "evil," but without any real reasons. They discontinue services that I used to rely on, which is their right, and as a result I'm unlikely to adopt new services. But there is nothing evil about that, it is a straightforwards application of their own prerogatives.

All the other ad companies sell information about you. All of them. Google is the only one with the reach to even try to offer what they do, which is a system where the advertisers can target ads without any information about the targets. They are clearly way less evil than the other ad companies.

If you're going to host and run your own email, then obviously you can have more power over it. But using another corporate email provider will rarely protect any data, since you're already with the company that doesn't sell data about you. Just about everybody else does sell data, including companies that don't sell advertising. Even my mechanic leaked my phone number to some random company so they could send a TXT spam.

Just wave your hands shouting "evil" while you switch to companies that sell their data on you. That'll teach `em!

Re:Isn't the difference

[AdamHaun]

If your primary security concern is a federal subpoena, you have already made far greater errors than picking the wrong email provider.

Re:Reality Flip Switch

[trout007]

Nope. Booms work when the Fed floods Wall St with cash. It has to go somewhere? It ends when the realization hits and the 40:1 leveraged accounts go bust.

Then it's time for the tax payers to bail them out and start over.

2006: "There's no real estate bubble..."

[kimanaw]

I recall watching CNBC (yes I know, bad choice) circa early 2006 and watching some real estate manipulator say (paraphrased), "Of course there's no real estate bubble, there's an infinite demand for housing!".

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...

Re:2006: "There's no real estate bubble..."

[jafac]

Oh I remember this, too; in 2007; and I kept imagining that housing demand will always go up, because we're always adding more people, right?

I was naive enough that I could never conceive that we'd get to a point in this nation where vacant, foreclosed houses outnumbered homeless people 4:1. I never dreamed that our trusted financial institutions and ratings agencies would sell their credibility and AAA ratings like a crackwhore sells her virtue. Yet, post 2008 - the banks were willing to sit on empty, depreciating inventory, rather than let their fellow americans sleep indoors under a roof. Disgusting. I learned a lot since 2007.

But I'm pretty sure that when the next crash comes, everybody's going to act all surprised like they didn't see it coming, and though it could never happen like that again.

Nope

[rsilvergun]

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.

Re:Nope

[rsilvergun]

The drivers are happy because they're healthy. They're making about $12 bucks an hour after the cost of driving is factored in. That's not enough to buy health care but it is enough to disqualify most from the subsidies. At those wages their paycheck to paycheck, and a car wreck with an uninsured driver away from disaster. Speaking of insurance those drivers aren't anywhere near as well insured as a traditional taxicab driver, which is another reason they can out compete taxis.

But there's another nasty side of Uber we haven't seen yet, which is that as work becomes more and more scarce you're going to see more and more people turning to it to pay rent. It's not so much the sharing economy as the desperation economy. That's the rub. Right now there are some drivers doing OK because $12/hour seems like a lot as long as nothing goes wrong, and there's plenty to replace them when it does. But it's a larger part of the race to the bottom that the modern world's caught up in...

Re: Gotta look at the source...

[Aighearach]

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.

The "Boeing"-rule of thumb

[bkmoore]

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.