
It's 2019, but It Sure Feels a Lot Like 1998 for Stocks - paulpauper
https://www.bloomberg.com/opinion/articles/2019-11-26/2019-markets-and-economy-feel-like-1998-tech-bull-market
======
jedberg
I dropped out of college in 1998 to work in tech. The common knowledge at the
time was that you got a job at a startup, and then in four years you retired,
because they would IPO while you worked there and you'd coast your last two
years while you vested in millions in stock options.

That obviously didn't happen for me, or most anyone else that started working
in 1998.

But today doesn't feel like that. I don't see college kids being encouraged to
drop out and make a fortune in tech. In fact what I do see are people being
encouraged to graduate at the top of their class so they can get jobs at
highly profitable FAANG companies.

It does feel a little frothy, especially with all of the non-profitable tech
companies that are doing IPOs this year and next, but it feels more reserved
this time.

Also, it feels like the VCs are the one taking the majority of the damage this
time, not retail investors.

~~~
mcguire
" _I don 't see college kids being encouraged to drop out and make a fortune
in tech. In fact what I do see are people being encouraged to graduate at the
top of their class so they can get jobs at highly profitable FAANG
companies._"

Except for those encouraged to skip college entirely...

~~~
at-fates-hands
I would say that's a less than 1% of the college aged population.

My alma mater, a small midwestern college in the last five years has had
record enrollment. My two nieces just graduated and had to apply to close to a
dozen schools. On all of their visits, the tour guide consistently reported
enrollment numbers were at all time highs and how competitive it had become to
get accepted.

These were not huge Big 10 or Ivy League schools. Most of them were small
liberal arts colleges on the west coast and a handful of smaller midwestern
state universities.

Despite the narrative that kids should opt out of college, it would appear the
trend is more than likely kids are continuing to go to college and in record
numbers.

~~~
vkou
> Despite the narrative that kids should opt out of college, it would appear
> the trend is more than likely kids are continuing to go to college and in
> record numbers.

It's very difficult to drag yourself out of the 'no credentials, no good job'
hole, if you are 18 years old, don't have useful connections, luck, an
incredible work ethic, or all of the above.

Most people don't have one or all of the above, and college solves this
problem for the vast majority of enrolling students.

------
throw0101a
Investing at the peaks isn't _that_ disastrous as long as you don't bail out:

> _Meet Bob._

> _Bob is the world’s worst market timer._

> _What follows is Bob’s tale of terrible timing of his stock purchases._

* [https://awealthofcommonsense.com/2014/02/worlds-worst-market...](https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/)

Better yet, just put away a little every month and get on with life:

> _Logically, it seems like Buy the Dip can’t lose. If you know when you are
> at a bottom, you can always buy at the cheapest price relative to the all-
> time highs in that period. However, if you actually run this strategy you
> will see that Buy the Dip_ underperforms _DCA over 70% of the time. This is
> true despite the fact that you know exactly when the market will hit a
> bottom._ Even God couldn’t beat dollar-cost averaging.

* [https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...](https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/)

~~~
bryanlarsen
Meet Juergen, actually the world's worst market timer. He invested in the
German Stock exchange in 1914. In 2014 he finally broke even.

Over the last 100 years, the US has had a great run and stock market returns
have reflected that. By only looking at American returns you're cherry-picking
the best results so your model is flawed.

~~~
paulpauper
given that it lasted 100 years, how much more data does one need in order to
be convinced? That is as comprehensive of a data set as one can be expected to
find when it comes to market analysis. All the evidence such as economic data,
corporate profits, demographics, etc. suggests no reason for America's
dominance to lessen. America's superior economic and stock market performance
can probably be attributed to an economic climate exceptionally conducive to
capitalism, combined with geopolitical stability, good demographics, and the
private sector having a lot of autonomy from the public one.

~~~
danharaj
The history of the world is not ergodic.

~~~
mav3rick
But everyone is mortal.

------
imgabe
I was only in high school in 1998, but at least old enough to be aware of
things like the stock market. It doesn't feel anything like the Internet 1.0
bubble. For one thing, the companies today have actual revenues and profits.
People are not blindly throwing money at every .com IPO that comes out.

~~~
mikestew
I'm trying really hard to think of a recent IPO of a profitable company.
Companies in 1998 had "actual revenues and profits", Pets.com was just not one
of them. I worked at Microsoft during that time, and they were making money
hand-over-fist. Pretty sure Oracle was raking it in. Hell, even Sun wasn't
looking _bad_. Same deal today: MSFT is _still_ making it by the semi-load,
Apple is still making me money (and a dividend, which you weren't getting in
1998). I could go on.

But you're not wrong, there is a difference: crap like Uber doesn't shoot to
the moon on opening day. Or, as you put it, people aren't throwing money at
them, hence Uber (et. al) still sitting under IPO price. That's what I think
might save us from a repeat of early 2000s. Hair stylists aren't giving me
stock advice these days, either.

~~~
ghaff
It was Bitcoin/ICOs/etc. that really felt like Bubble 1.0 to me with
(literally) a Lyft driver I had thinking about getting into it.

And lots of people pretty sure the whole thing was a bubble but almost feeling
compelled to jump in anyway.

I'm not saying there won't be a correction at some point but you're mostly not
seeing the wild price increases in the absence of any fundamentals and, in
fact, the market seems to have mostly said "meh" to the Blue Aprons, WeWorks,
and Ubers of the world.

~~~
kurthr
Yeah, I had a strange day off (2018 presidents day?) and went to the local pub
and ran into the bartender and 2 customers talking about investing in BTC. I
was kinda intrigued, but when I figured out that they didn't even know what a
blockchain was, much less how one worked... I got pretty sad. I told them that
at least BTC was off its high, but nothing more than a gamble. At least ETH
was doing something interesting. I tried describing what a hash was and
telling stories about Fred Merkel to distract them.

------
wil421
Why is everything a Tech company? How does anyone justify WeWork as a tech
company? I heard about some tools WeWork engineering built and thought, why
didnt they just buy off the shelf products and invest in more office space or
acquire the competition?

Slack is a true tech company, Uber/Lyft and AirBnB are app tech companies but
not WeWork. Peloton is not a tech company. Zoom, Crowdstrike, and Pager Duty
are tech companies.

~~~
rollerboi
> How does anyone justify WeWork as a tech company?

Straight from the horse's mouth (We Co's S-1 Filing, pg.2):

"Technology is at the foundation of our global platform. Our purpose-built
technology and operational expertise has allowed us to scale our core WeWork
space-as-a-service offering quickly, while improving the quality of our
solutions and decreasing the cost to find, build, fill and run our spaces. We
have approximately 1,000 engineers, product designers and machine learning
scientists that are dedicated to building, integrating and automating the
complex systems we use to operate our business. As a result, we are able to
deliver a premium experience to our members at a lower price relative to
traditional alternatives."

~~~
wil421
Of course their filings make them sound like a unicorn. Their engineering was
a marketing point not a core product. I’ve got a bridge to sell you...based on
something something machine learning scientists and engineering. Did we
mentioned we are losing 2 billion and making our founder enormously rich?

~~~
rollerboi
Yup, precisely right. They marketed the business as a tech company, hoping
that future investors would overlook years of unprofitability to get in on the
next rapidly-growing tech company.

Oh don't worry about those losses, we're the next Amazon. Except bigger than
Amazon, because we're not just a company, but a "state of consciousness." btw
did I tell you our CEO is going to become the world's first trillionaire? It's
all amazing news and I hope you join our family

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c11ad1406c5e6
One. The article eats itself browsing incognito (using Brave), can't read
beyond the first few paragraphs.

Two. Now that Bloomberg is running for president, I am suspect of any doom-
and-gloom articles published by his media properties.

~~~
paulpauper
use a new chrome session or copy paste the text quickly b4 the iframe hides it

~~~
asdff
Zap the iframes with ublock origin

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zcw100
Ok, Tycho, Enron, WorldCom, Global Crossing, tell me again how the supposed
dot com crash was all about Pets.com and dozens of internet companies that
would go on to become some of the largest corporations in history?

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thathndude
Is anyone else exhausted with the lazy, comparative journalism that is
ubiquitous these days.

------
swlkr
[https://outline.com/DSmcfJ](https://outline.com/DSmcfJ)

------
mcguire
One difference: in 1998, the "tech industry" was identified by the NASDAQ 100.
In 2019, the FANG+ is 10 stocks.

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paulpauper
The post-2009 economic expansion and bull market, in spite being the longest
ever, has much further to go. A t least 8 years until the interest rate cycle
peaks [http://greyenlightenment.com/using-the-interest-rate-
cycle-t...](http://greyenlightenment.com/using-the-interest-rate-cycle-to-
predict-the-market/)

Interest rates are at just 2%, versus in the late '90s, in 2006, and the late
80s , when the were at 5-6% or higher. It may be at least 5 years before rate
bump against the upper-end of the cycle, around 5%, and then another 3 years
for the market to finally crest.

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throwaway1777
Nah, but for those who were too young to remember 98 the crypto bubble in 2017
had a very similar feel. The stock market is 2019 may be overvalued but it’s
nothing like that.

~~~
paulpauper
yes, the PE ratio for the SP500 now is low 20s versus 35 at the peak.

~~~
ksec
Not to mention the current low federal funds rate ˜1.5% Vs ˜5.5% in 1998. That
is 3.x the difference.

SP500 companies are also on average holding much more Net cash than in 1998.

Banks are also much more prepared in Asset and Cashflow due to regulation puts
into place after the 2008. Not saying they cant financially make go burst, but
at least on paper they are better.

So Apart from the Macros, Countries with much higher debt and sociality as a
whole with inequalities.. etc. Business on the whole are doing very well.

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thefujin
> The obvious similarities are that, now as then, a U.S. president faces the
> threat of impeachment against the backdrop of a strong economy and surging
> stock market. Even “Friends” is still popular today, just as it was then.

What? I guess "Friends" mention was intended as a joke here, but it surely
does not look funny considering previous sentence.

They can write such articles every year:

\- stocks are surging and there are wildfires in California, just like 20
years ago

\- market is down today and Schwarzenegger is making new Terminator, just like
30 years ago

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TurkishPoptart
Is Spotify profitable yet?

