
More money than anyone imagined: an explanation for why the bubble never burst - Balgair
https://www.theatlantic.com/ideas/archive/2019/07/whatever-happened-tech-bubble/594856/
======
thorwasdfasdf
This so called bubble isn't tech at all. This is the everything bubble caused
by excessively low interest rates, held down by the government for
inappropriately long periods of times. Sure, 0% may have been justified in the
wake of the 2008 crash, for maybe a year or two, but not 10+ years!!

People shouldn't be surprised that SOOO much money is sloshing around looking
for increasingly risky returns when interest rates have been 0 for so long.
And here we are, at barely 2.5% (far below where it should be) and the fed is
already considering rate cuts even though we're in the biggest bull market.
This article is doing the world a great disservice by trying to blame the tech
industry without even once mentioning the real reason: excessively low
interest rates forced on us by the Fed. And it's not just the Fed, other 1st
world countries are doing the same thing. They're all following the call of
Keynesian economics: Keep the party drunk as long as you can by refilling the
punch bowl. By creating every incentive in the world to separate people from
their money as quickly as possible in a hopeless attempt to spur money flow,
ultimately resulting in increasingly risky investments.

~~~
nostromo
The Fed doesn't have a target interest rate, they have a target inflation rate
-- and the current policy has not been causing inflation -- so by all measures
they've been successful at doing exactly what they're supposed to be doing:
helping the economy grow without creating high inflation.

I notice that goldbugs in particular get very upset about low interest rates
-- as if there is something "natural" or "normal" about 7% vs 3%. But there is
no magical number -- if you can create wealth without inflation, you should
_obviously_ continue to create wealth.

Also, the government doesn't owe you a risk-free return of 7%. In theory, the
risk-free return should be equal to the rate of inflation -- nothing ventured
nothing gained.

~~~
rm445
Yes, if you measure inflation as a basket of consumer goods, you can pat
yourself on the back doubly for having an asset bubble at the same time as
"low" inflation. Nice that the population can still afford bread and eggs, not
so nice that the prices of property, artwork and the like disappear into the
stratosphere far beyond their reach.

~~~
nostromo
Housing nationwide isn't actually that expensive:

[https://fred.stlouisfed.org/series/USSTHPI](https://fred.stlouisfed.org/series/USSTHPI)

Remember: the Fed governs the entire US economy, not just San Francisco and
Seattle like HN would prefer.

~~~
sfkdjf9j3j
The vast majority of people live in, and the vast majority of economic
activity takes place in, major urban areas. So yeah, housing inflation is very
relevant.

~~~
nostromo
And all of those sales are included in the link I provided, which shows that
housing has gone up 13% nationwide since the peak twelve years ago.

~~~
YeahSureWhyNot
considering the fact that in all metro areas housing prices have almost
doubled, I'm curious in which parts of the country the housing prices
decreased by half to reach the 13% average increase

~~~
sbjustin
Washington DC has for one not doubled. I'm not sure you're statement is
accurate.

------
hogFeast
A key constituent of almost every "bubble" (massively overused term) is a long
period where everyone laughs at the doubters.

Contrary to popular understanding, almost every major bubble has been reported
as such before the fact. When Bitcoin was running up, everyone said it was a
bubble. Read issues of the Economist from 04/05, they even had a cover story
on the housing bubble. Before 2001, we had "irrational exuberance" (and the
Fed choosing to cut rates into a boom). Before inflation in the 1970s, read
minutes from the Fed...literally three or four years before multiple board
members said: "There is going to be significant inflation". Before multiple
currency crises in Britain through the 1960/70s, again BoE was telling govt:
"If you continue you will cause inflation and devalue" (amazingly, one prime
minister was actually responsible for both devaluations in this period). Go
back even further, I read a paper about the Bicycle Bubble in Britain in the
1870s...again, lots of press about how it was a bubble.

It isn't hard. These aren't "black swans". This is human nature, it never
changes. Because something is not happening now, does not mean it can never
happened (incidentally, when these things do pop...you usually have a year
plus to get out...humans are slow).

The amount of self-important puffery going on in tech is somewhat unique (the
people involved are unusually insufferable) but it will burst. No path to
profitability for most tech companies, most will go to zero. This has happened
with every innovation, every capital cycle since the early 19th century.
Again: not hard.

Also: it isn't just tech. It is technology innovation plus the most short-
sighted practice of monetary policy in history. What is happening in Europe
and Japan is staggeringly dumb (I am glad I will live to see the fallout from
this group of self-appointed "experts" using all this massive intellect to
drive the economy off a cliff).

~~~
hash872
Eh. This is only true because there's an absolutely staggering amount of
financial commentary, and some % of it is negative- and then after a recession
you can always go back and use confirmation bias to find the negative comments
that 'predicted' it. Recessions & crashes are normal parts of markets and will
never go away. Fringey characters like Roubini or Grant's Interest Rate
Observer just call for a recession every single year (really! Roubini has
predicted a recession every single year since 2008!) Then when it happens
pundits can say he 'predicted' it, because they ignore all the times he was
wrong.

Anyone can easily go through past financial commentary and find quotes saying
that good times & growth periods won't work out, it's a bubble, it'll crash
soon etc. No one ever points out all the times negative commentary is simply
wrong, mostly because being contrarian & negative is fun.

Modern Internet companies are fundamentally changing the world similar to the
Industrial Revolution. And lumping Facebook/Google/Amazon in with Juicero or
whatever is just lazy, handwavey analysis. Yes, some tech companies won't make
it out of the next recession- but some are huge, immensely profitable players
that are here to stay

~~~
roenxi
On the one hand, yes. On the other hand, the 2008 recession [0] saw
unemployment 1 person in 20 lose their jobs. If 1 person in 20 is doing
something that is not value-adding there would _have to be_ massive and
obvious evidence of that beforehand.

Recessions and crashes aren't necessarily evidence of anything in particular.
But there is a tendency for people to assume that economic outcomes are
mysterious and unexplainable. Many of them are obviously not; things happen
for reasons. Exactly what those reasons are is a very political question, but
it is obvious that a lot of people do clearly see these things coming a mile
away and we just don't have a method of distinguishing them from the broken
clocks.

[0]
[https://en.wikipedia.org/wiki/File:US_employment_1995-2012.p...](https://en.wikipedia.org/wiki/File:US_employment_1995-2012.png)

~~~
UncleEntity
> If 1 person in 20 is doing something that is not value-adding there would
> have to be massive and obvious evidence of that beforehand.

There was "massive and obvious evidence of that beforehand" which was the
central banks had to keep interest rates below what the market would have
priced them without interference...it's just that this isn't seen as evidence
but "just the way things are".

------
lordnacho
The scope of the article is too small to see the real cause. Look around,
there's a bubble in everything.

There's literally trillions of dollars of debt yielding below zero. There's
entire currency yield curves that are under zero. That's right, not just the
short terms like a year or two. But decades out.

Tech firms may be doing well but valuations are still quite high for a lot of
things by traditional measures.

And there's the influence of cental bank purchases that we don't know when
will end or restart.

~~~
sjg007
>There's literally trillions of dollars of debt yielding below zero. There's
entire currency yield curves that are under zero. That's right, not just the
short terms like a year or two. But decades out.

Can you provide a citation or a more detailed explanation?

~~~
Excel_Wizard
Euro bond rates are below 0 nominal for maturities up to 15 years:

[https://www.ecb.europa.eu/stats/financial_markets_and_intere...](https://www.ecb.europa.eu/stats/financial_markets_and_interest_rates/euro_area_yield_curves/html/index.en.html)

I don't have data on the quantities of these bonds outstanding, but trillions
is almost certain.

There are many other bonds that are still above 0 yield nominal, but which are
below 0 real yield due to inflation.

~~~
blevin
Barclays Global Agg bond index includes $13T USD of negative yield bonds. And
Swiss bonds have negative yields out to 50 years.

------
wahern
> All that capital from institutional investors, sovereign wealth funds, and
> the like has enabled start-ups to remain private for far longer than they
> previously did, raising bigger and bigger rounds.

This misses the forest for the trees. These investors have so much money
because the global economy has exploded over the past 20 years. Saudi Arabia
has money to spend because it's selling oil like crazy--oil revenues began to
explode after 2000. See [https://tradingeconomics.com/saudi-arabia/government-
revenue...](https://tradingeconomics.com/saudi-arabia/government-revenues) I
didn't even _know_ about Saudi Arabia's increased revenue, but I knew I could
find data like that as it's a consequence of the monumental revolution in
global wealth. It's not just China. The economies of Africa and Latin America
have exploded over the past twenty years. Similarly, since 2000 most Asian
economies began following the trajectory of the so-called Asian Tigers before
them.

I've posted it elsewhere, but some reports from a few years ago projected over
$300 trillion (trillion!) in global assets floating around, _exclusive_ of
real estate and capital equipment valuations (though some of that wealth shows
up as securities). That dwarfs interventions like QE that everybody loves to
bring up, which even if you account for the inflationary effect still only
amounts to a small fraction of global assets.

If you don't appreciate the _fundamentals_ for this explosion in cash then
you'll be waiting forever for the other shoe to drop. Keep in mind that the
global economy has been depressed since 2008-2010. Indeed, that's one reason
there's so much cash parked in the U.S. But when the global economy picks up
there'll be even more cash, so even if countries begin reallocating cash
elsewhere, that doesn't necessarily mean a substantial drop in absolute terms
in the U.S.

The U.S. has a significantly diminished position in global trade, relatively
speaking. We may be the biggest trading partner for most countries, but most
countries are also trading globally, so being the "biggest" partner for each
country doesn't mean we dominate the global economy in the way we once did.
Similarly, the complex global supply chain means the emphasis on bilateral
accounting fails to appreciate how the underlying flows work and thus how the
fundamental global economic engine operates.

The only "bubble" is in the U.S., and while we may see a correction any day
now, it's not going to be cataclysmic. Not unless we make it so.

~~~
wp381640
> These investors have so much money

Saudi Arabia is running out of money - they have huge budget deficits and are
steadily draining reserves. They're so desperate they considered selling parts
of ARAMCO but couldn't get the over-inflated valuation they wanted

The reason Saudi Arabia is spending money in foreign investment is because
it's part of a last-ditch effort to diversify a dying and unsustainable
economy

~~~
wahern
> The reason Saudi Arabia is spending money in foreign investment is because
> it's part of a last-ditch effort to diversify a dying and unsustainable
> economy

It's not a last ditch effort. It's been their strategy for like 50 years. It's
just that it was always doomed to fail from the beginning. What changed is
that they now have a lot more money to throw around and more places to throw
it.

I want to disagree with your characterization of their budget problems, but
it's all beside the point. My point was that Saudi Arabia has ridiculous
amounts of cash--much more than ever before--because the global economy has
exploded. Saudi Arabia isn't printing funny money to invest in the U.S. They
don't give oil away, and countries don't buy it with IOUs. The cash they're
burning reflects actual, global economic growth. Likewise for SoftBank. Even
if Saudi Arabia and SoftBank implode tomorrow, over the coming decades we're
going to see these types of cash-rich investors multiply many fold. They're
not anomalous; they're representative of changing fundamentals. The article
author _almost_ comes to this realization, but not completely.

The world grew up while Europeans were navel gazing, Americans were shooting
terrorists, and the Japanese were doing whatever the Japanese do (secretly
bankrolling SE Asian growth?). We still act as-if the industrialization of the
rest of the world is in the future. Spoiler alert: it already happened. Not
happening. _Happened_. It may not look like what we expected, but the future
never does.

Like, 5 billion people doubled, tripled, quadrupled, and more their wealth.
Global GDP more than doubled, much of which happened on the backs of people we
assumed (and continue to assume) still didn't have two stones to rub together.
That's where this surfeit of cash is coming from. It doesn't matter that most
of these places still seem (and are) ridiculously poor from our perspective,
or that in absolute terms the cash surfeit they're generating isn't that huge
relative to our own GDP. The world is overflowing with cash, and whatever the
_magnitude_ it still represents a fundamental, qualitative change in the
global economy.

Even if global growth rates fall, from _our_ perspective the avalanche of
money might still continue and even accelerate. Fast or slow, for the next 50+
years things will only get crazier and weirder.

------
dehrmann
What the article fails to mention is just how much tech has changed people's
lives in the past decade. People spend more time staring at their smartphones,
order more through Amazon, are more likely to take an Uber or rent an Airbnb,
etc. With tech companies being a much bigger part of people's lives, it's only
natural that the industry will be more valuable.

My only real fear right now is what happens when funding contracts, and how
much of the growth in the sector is a synergistic circle jerk? Is Amazon only
worth a lot because of AWS, and only because AWS makes a big chunk of its
revenue off startups?

~~~
Bombthecat
That's how I feel about Google ads. Half of money might come from small and
medium size businesses.

In most cases, it's wasted money. As soon as those businesses realize it is
wasted money,they will stop using Google ads. Leaving behind only the big guys
(cops, IBM etc)

~~~
jp555
"In most cases, it's wasted money."

Of course it is!! In a business, it's pretty normal that almost everyone you
tell your offer to (advertising) will decline most of the time.

Expecting an advertising impression to turn into a sale 100% of the time is
delusional. Even just 10% can be easily considered a remarkably good campaign.

Google ads are not that different from putting an ad in the newspaper back in
the day, as in almost everyone who sees it wont care.

~~~
sp332
What on earth... hopefully no one was expecting 100% of ad impressions to turn
into sales. Putting ads in the newspaper was fairly effective at driving
interest. It still is in some cases, and so is online advertising. You price
out your cost per click or cost per thousand impressions and then you see if
it changed your sales numbers enough to stand out from the noise and more than
paid for itself.

~~~
jp555
Absolutely. If your market is geographically concentrated, a newspaper - if
the people you're targeting in your geography read that newspaper - can be a
great channel.

------
jfengel
Some of it may just be the general economy. We've had a very long expansion
that has been surprisingly general. It was considered slow growth, and the Fed
is still talking about cutting rates as if a recession were in the offing,
following very reasonable indicators. The S&P's P/E ratio (a decent measure of
it's over-priced-ness) is around 20, a bit high but not ridiculous.

The tech-heavy NASDAQ, however, is at 45. For comparison it was at 29 before
the last big crash.

The NASDAQ P/E is always speculative. People often bid up companies with low
current earnings but expecting future earnings. That got very silly during the
90s tech bubble, where it would require profits of the entire world economy to
justify some of those prices. But 45 suggests that we're due for a market
crash.

It's textbook irrational exuberance, and the whole economy is in a weird
place. All signs point to a pending crash, and at least some of the companies
that the article is talking about will fail. But we've been talking about that
pending crash for half a decade now, and it's still not here.

~~~
thorwasdfasdf
We keep waiting and waiting for these companies to finally start making a
profit. And those companies keep making up new narratives about how those
profits are coming soon.

Are we in a new age? Is there a chance investors will keep waiting forever? In
a age where interest rates are near permanently 0 and people invest in bitcoin
( a currency that has no real value other than the faith people have in it ~
as a store of value), perhaps people will keep investing tesla, uber, etc even
if profits never really come.

~~~
anthonypasq
> a currency that has no real value other than the faith people have in it

this is how all currencies work

~~~
jfengel
Some currencies require less faith than others. Like when a large organization
with an enormous infrastructure insists on paying in that currency and demands
payments in that currency. And when that large organization is in control of
the land you live on -- including depending on that organization to defend
that land in case of invasion.

There's a whole lot more behind those currencies than with Canadian Tire Money
or Flooz. When you live in the place you're committed in a way that you just
aren't with any other currency. Losing faith in that currency is bad for you
in a way that goes far, far beyond the exchange value of a token.

------
opportune
Misinformed article. The reason the tech bubble never burst is that

1) The largest tech businesses are actually hugely profitable. The only way
they could burst is getting regulated or disrupted out of existence

2) Relative to other industries, bay area tech employees in the right
employers are getting paid huge amounts leading to the largest creation of
wealth perhaps of all time. This only looks like a bubble to people outside
the industry because they don't understand how much this large group of people
is making.

3) Yes there is still a lot of venture capital (some foreign, and most of that
being biased towards only recent years) chasing large returns in a low
interest rate economy, but that is only because of people chasing more #1s.
And new hugely profitable businesses are still being made, like Square or
Shopify or the yet-to-IPO Airbnb

It's not the acquihires. That only affects a small (relatively) number of
people compared to the hundreds of thousands of very well compensated
engineers at FAANG and smaller companies.

------
apo
This article cites foreigners and big techs as the source of money without
much to back it up.

We know that in its institutional panic the US Fed pumped trillions of dollars
into the economy in the form of QE 1-3:

[https://www.federalreserve.gov/monetarypolicy/bst_recenttren...](https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm)

Central banks around the world have followed the US lead in a coordinated
effort to pump up the volume and avoid currency appreciation against the
dollar.

The Fed for its part is now done with its feeble attempts to draw down its
balance sheet. The only reasonable conclusion is that more QE will be on tap
at the first hint of either deflation or economic weakness.

This created the everything bubble we now face. Prices have become so
distorted that it's impossible to value anything or even rationally discuss
the end of the cycle.

The entire episode is without precedent and will probably end in an
unprecedented way.

------
navigatesol
> _If there was a bubble and it were to burst, kitchen-table investors might
> scarcely notice, unlike in the late 1990s._

When bubbles burst the average person doesn't lose because the market plunges.
The average person has little money in the market.

They lose because themselves, friends, family and neighbors lose their jobs.

~~~
scarface74
It depends, the dot com bust didn’t have a widespread affect for most people -
not even tech people who were working for profitable companies.

~~~
pessimizer
The dot com bust had a massive effect, and still represents the historical
peak of black wealth in the US. It was mitigated for some people by an
immediate bubble in housing, but that bubble only benefited people who owned
houses when it started, meaning none of the people who were wiped out by dot
com. Black wealth steadily decreased during the entire housing bubble.

Black wealth is interesting in and of itself, but it's also interesting as an
isolated population who we know had virtually no family wealth 100 years ago.
If you want to know if an economy is only benefiting the already wealthy, look
at black people.

~~~
adventured
> If you want to know if an economy is only benefiting the already wealthy,
> look at black people.

Why not look at hispanic households?

The vast majority of the current US hispanic population didn't exist in the US
just 30-40 years ago. Their wealth started from almost nothing. Most hispanic
immigration to the US has been low skill labor, from extremely poor nations.
In four decades, hispanics have become the second largest demographic and have
become richer than black households.

From 2013 to 2016, the median hispanic household net wealth soared 45%, versus
18% for white households, and 30% for black households. As the larger
demographic, I'd argue hispanic households are a better representation of if
the economy is only benefiting the already wealthy. Hispanics (75% under 54
years old) are also a far younger demographic than whites (majority over 55
years old), and a moderately younger demographic than blacks. As a far younger
demographic hispanics are less likely to have age-accumulated wealth. So that
also gives you an excellent indicator on new wealth creation.

Finally, hispanics are far less likely to have a high school level education.
36% of hispanics in the US do not, versus 17% for blacks and 8% for whites.
That's another item in favor of hispanic households being a stronger indicator
to watch for your premise.

~~~
zbyte64
Those are compelling reasons to take a larger look. I found charts tracking
median household income by race, skip to part 3:

[https://apps.urban.org/features/wealth-inequality-
charts/](https://apps.urban.org/features/wealth-inequality-charts/)

Seems hispanic and black families are both experiencing below average gains.

~~~
scarface74
That’s in large part because of the housing crisis. While home values have for
the most part recovered, they haven’t recovered in majority minority
neighborhoods - even accounting for size, school quality, etc.

------
pontifier
Wiley Coyote can run across a gap if he just refuses to look down.

There's probably a game theory explanation for what's going on. Nobody wants
to be the first to look down... If the train is running you want to stay
aboard. On the other hand, you certainly don't want to be left holding the
bag.

------
sytelus
One of the interesting phenomena is that this boom is more specific to US and
if you go in rest of the world people will often tell you how their economy
sucks and things are in in down trend. In US, the stock prices have indeed
grown in same order as earnings which is surprising because how are all these
companies magically show such huge growth for almost a decade now but
elsewhere this is not the case. One possibility is that lots of US growth come
from winning market share abroad.

------
olivermarks
This reads eerily like the articles about endless money right before the
massive dot com crash

------
munificent
_> More broadly, the tech dura-bubble has coincided with a continued boom in
corporate profits that has lifted valuations and increased the sums spent on
mergers and acquisitions throughout the whole economy._

How much of this is because of tax changes? In other words, how much of this
essentially represents a wholesale migration of wealth to corporations and the
rich at the expense of reduced services for the poor?

------
debug_op
I'd like to hear everyone's thoughts on this...

Over the last 10 years there has been a massive increase in the money supply
and a huge inflation in financial assets, but not much inflation in the sorts
of goods and services that average people spend their money on.

So, riffing on these results, what if the treasury printed enough money to
wipe away the debt of every US citizen, either paying off loans on people's
behalf or just giving money to people and encouraging them to pay off their
loans?

Because loans are quoted in nominal dollar amounts this would eliminate
everyone's loan balances. The money used to pay off the loans would then be
invested, because creditors are generally institutions and institutions tend
to invest in financial assets.

The net result would be an elimination of the debt of all citizens, inflation
in financial assets, but steady consumer goods and services prices.

The downside of this is that income inequality increases, with institutions
and holders of financial assets getting a massive transfer of wealth, but the
upside is that we get rid of everyone's debt.

What am I missing?

~~~
jacques_chester
It would set up incredible moral hazard. Folks would take on enormous debts
and then lobby for another round of that debt repayment. Having set the
precedent and given how incredibly popular it would be politically, it would
likely happen again.

The net effect would be a spiral of inflation.

------
Animats
Be afraid. Be very afraid. When you see articles like this, it's time to
worry.

“Stock prices have reached what looks like a permanently high plateau,” -
Prof. Irving Fisher, economist at Yale, October 16, 1929.

"The Federal Reserve is not currently forecasting a recession." \- Ben
Bernanke, Federal Reserve chair, Jan. 10, 2008.

~~~
bagacrap
Fwiw I don't think the fed chairman should ever say "we're about to enter a
massive recession," do you?

~~~
Animats
The job of the Federal Reserve, is "to take away the punch bowl just as the
party gets going." \- William Martin, head of the Fed in the 1960s.

------
pwinnski
Will this article be remembered like the book Dow 36,000[0]? Only time will
tell, but I would be nervous about suggesting a bubble had "disappeared"
rather than the media losing focus on it.

[0]
[https://en.wikipedia.org/wiki/Dow_36,000](https://en.wikipedia.org/wiki/Dow_36,000)

------
swalsh
I wonder if being aware of the bubble also led to changes. From what I
understand, it's just not normal today for companies to get funding without
any real proof of a market. The juicero's, and magic leap's of the world
aren't the norm, they're true unicorns of their own. The average tech company
today needs to show real users, and revenue before they can reasonably expect
investment. That's not even to mention that startups seem different today then
they did in 2010. Back then it seemed like people would say "what if we took
this new tech, and combined it with this existing industry". All those
combinatrics have been tried, so I think a very large number of new businesses
are not necessary "new" but rather "better". Which is kind of easier to do
since the market already exists. It narrows the number of unknown unknowns.

~~~
galkk
Look at Zume Pizza. Their fund raising seems insane.

~~~
nradov
Softbank seems to be just throwing money away lately.

[https://www.crunchbase.com/organization/zume-
pizza#section-f...](https://www.crunchbase.com/organization/zume-
pizza#section-funding-rounds)

According to reviews the pizza isn't even that great.

~~~
01100011
I tried it. Slightly better than frozen. Also, while I was excited to hear
about their new, eco-friendly pizza box, my pizza arrived inside a single-use,
large mylar bubble wrap sleeve. It would take a lot for me to try them again.

------
sytelus
One insight in the article is the financial sources that keep the startup
scene in sillicon valley going. These are investors from China, sovereign
funds and massive entities like SoftBank In addition big tech with their
growing war chest have ever more reasons to buy startups. All these financial
sources have prevented bubble burst like in 2000 when revenues were expected
post IPOs. Now you can just keep going with ever higher valuations for years.

It occurs to me that these financial sources are also why it’s so hard to
duplicate SV elsewhere: this massive niagras of funding don’t exist in Paris
or Austin or even London at the scale they do in SV.

------
dredds
"Being a giant sponge for salable personal information makes for good
business, it turns out."

That's the real backstory here; anonymity, tor, silkroad, and the darkweb,
were thus widely demonized 'cos they're explicitly bad for mass-harvesting of
people's private information for advertisers and other nefarious causes. Bulk
info that proved very profitable in the wrong hands. A huge tech-bubble built
upon enforced transparency of people's real identities, private interests, and
personal activity.

------
dv_dt
With both the Fed and ECB considering interest rate cuts due to slowing
economy indicators it seems an odd time to declare that bubble is ok.

------
atemerev
OK, when there are articles like that, it’s finally time to sell. :)

~~~
01100011
I exited most of my US ETFs and mutual funds about 3 weeks ago. Bad timing, I
think...

------
chachachoney
The digital economy is predicated on actual users and actual ad impressions
--- the growth and effectiveness of both have proven to be grossly
misrepresented.

That's the bubble which is in imminent danger of popping, and at some point,
it will.

------
notadoc
There's still plenty of time for a burst, but it'll reach far beyond tech.
Super low interest rates have created a ton of speculation globally in
virtually all asset markets.

This time is probably not different.

------
m3kw9
It won’t burst unless there is an Extraordinary cascading event that triggers
a waves and waves of selling. Like lots and lots of nasty financial news

------
Alex3917
I don't understand the argument that the tech industry is becoming mature and
is just being propped up by foreign investment. Right now 3 of the 5 biggest
tech companies are basically: high school yearbooks, blockbuster, and taxis.

Do we really think these are the most valuable industries in the world, and
not just the things that happened to be easy to make with the tech that
existed 10 - 20 years ago?

~~~
mdorazio
"High school yearbooks" is really "social engagement", "blockbuster" is really
"film and television distribution", and "taxis" is really "personal
transportation". Each of those industries is absolutely massive, so the
dominant player in each industry, regardless of technology or decade, is going
to be a financial juggernaut.

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starchild_3001
Something is a bubble if its future discounted cash flows cannot cover its
current valuation. Can the author please make a rigorous case by looking at
actual numbers (e.g. her predicted valuation 5-10 years ago vs now.. or
analyze a few companies today). Or can she please refrain from writing such
general, alarmist and meaningless articles?

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bawana
The fed is holding down inflation rates because wages have stagnated. Can you
imagine what would happen in this country if there was inflation in the face
of the corporate abuse we are suffering with wages that are effectively the
same as 1970?

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the_watcher
> Facebook spent $20 billion on WhatsApp and Instagram; Microsoft spent $26
> billion on LinkedIn and $7.5 billion on GitHub. Deals such as these were
> possible only because those acquiring companies were themselves so very
> profitable.

Instagram had $0 revenue when acquired. WhatsApp had some revenue, but was not
profitable IIRC.

EDIT: misread the line, above comment rescinded.

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howlingfantods
"acquiring companies" not "acquired companies"

~~~
the_watcher
Oops, misread the line.

