
When Will the Tech Bubble Burst? - cs702
https://www.nytimes.com/2017/08/05/opinion/sunday/when-will-the-tech-bubble-burst.html
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dabei
The article doesn't seem to address the question of if there is a tech bubble.
How does assigning an acronym for the top companies indicates a bubble? Yes, 7
out of top ten valuable companies are tech companies, but they are dominant
players of large and highly profitable markets. Am I delusional?

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redwood
When regular people, who normally talk to you about recent movies, are telling
you how much money they made on XYZ stock recently, that tends to be a sign
that the market is starting to get inundated by novice investors who are
essentially fueling an irrational rise. This is of course purely anecdotal but
I do believe once the mainstream media latches onto a story and you start
hearing the regular folks investing their money into that particular story
there is a problem.

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vostok
Are you saying that the novices are the cause of overly high valuations? If so
I'm rather skeptical because these novices control very small amounts of money
even in aggregate.

If you're saying that the novices are just bad investors who always buy at the
wrong time then I'd want a little more evidence of that. My base assumption is
that the novices do not have predictive power and are simply "noise traders".

Note that I'm not expressing a view on the market in this comment.

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cbanek
The big investing fad now is all about indexing. That's what everyone
recommends, including Warren Buffet.

This means that with less than $1000, you can own a representation of the
S&P500, weighted by market cap, either through ETFs or mutual funds. Weighted
by market cap means that you're putting a larger percentage of that $1000 into
the bigger companies, versus the smaller companies.

When a few companies start to dominate the market, everyone can be overweight
a few stocks in the same way, and not even know it.

[https://www.cnbc.com/2017/05/17/four-tech-heavyweights-
make-...](https://www.cnbc.com/2017/05/17/four-tech-heavyweights-make-up-a-
huge-share-of-the-sp-500.html)

~~~
kornish
Overindexing of the public market is certainly a potential issue for consumers
of investment services. That said, if and when it becomes an issue, it likely
won't be an issue for very long. Should index funds start to consistently
underperform high-management-fee actively managed portfolios, investors will
simply move funds there over time.

Of course, that's little consolation for those who lose out during the
correction period - so your point stands. But AFAIK we're well below the
danger zone for too much public market capital being passively indexed.

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cbanek
I agree we're not to over indexing in the US, but I think people really have
to keep watching the central banks, especially Japan and the BOJ [1]. While
the US federal reserve doesn't buy stocks, other central banks do, and a lot
of them use indexing/ETFs. The swiss national bank also has a fair amount of
US stock holdings.[2]

Given how the central banks act, this affects the currency markets and
interest rates.

(1) [https://asia.nikkei.com/Markets/Equities/Japan-s-central-
ban...](https://asia.nikkei.com/Markets/Equities/Japan-s-central-bank-nearly-
doubles-ETF-holdings-in-one-year)

(2) [http://www.businessinsider.com/swiss-national-bank-
owns-80-b...](http://www.businessinsider.com/swiss-national-bank-
owns-80-billion-us-stocks-2017-6)

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aphextron
This my emotional, biased opinion. But humanity has begun a fundamental shift
in the way we live due to widespread, cheap access to digital technology and
information via the internet. Whatever happened before the past 10 years of
insane growth we have seen is completely relevant. The relics of a bygone era.
People will say "yeah, everyone thinks _this_ time is different". Except it
is. We have never had anything even remotely as game changing as this before.
For the first time in human history, absolutely no one can imagine what will
come even 10 years from now.

~~~
ryanbrunner
I know you addressed this, but this literally could have been written in 1999,
and what's more, it was probably more accurate then.

Technology has continued to expand, but I'd say the last 20 years have been a
continuation of growth that's been happening since the 90's. Not all that much
is fundamentally different today than it was in the early 2000's. Yeah, we all
have smart phones and social media, and those are certainly cool and important
things, but not quite up to breathlessly heralding a new age of humanity like
you're doing.

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nopinsight
Wouldn't you say autonomous vehicles (2020-30), mass adoption of seeing robots
for manufacturing and warehouse work (2020-2030), CRISPR-based gene drive to
nearly eliminate disease-carrying mosquitoes and other organisms (2020-2030),
embryonic germline-editing for human enhancement (2025-40), and possibly
Artificial General Intelligence (2030-2050) cause changes as massive as or
more so than the rise of the Internet?

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Judgmentality
Let's see when (and if) those materialize. Flying cars have been 15 years away
for about 50 years now. And self-driving cars have already missed their
initial target.

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daxfohl
I think iPhone X or whatever will be a dud. Okay it'll rocket off the shelves
and people will think "why did I buy this?" And android phones after the
latest Samsung release will be largely stagnant. Mobile already does what we
want. I have an LG G3 and still love it. First(ish) 500+ ppi phone, I'm more
than happy, no need to upgrade.

There's going to be a thing that happens when everyone realizes, no need to
upgrade. Less money goes into tech. Tech sector has a big barf. Much of modern
economy is based on tech, so it has a big barf too. I see a modern-day medium-
term middle ages coming, just because, meh, everything is good enough.

The one light I see is autonomous cars. They could change the whole landscape.
The random thing I'm thinking now is restaurants as we know them will be
replaced. By those who specialize in exactly one dish. You order it for your
family on Tuesdays and it comes in compostable packing, you eat and enjoy. The
whole idea of going _to_ a restaurant seems outdated. They'll die. Of course
autonomous kitchen-cars (open sourced so you know exactly what you're
getting?!) is even a step further.

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yuhong
I have been thinking about the ad bubble in particular, for which Google is
not the only one responsible of course. Of course, it is all ultimately funded
by debt. I wonder what Larry and Sergey will do when it ends.

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bdcravens
What "ad bubble"? Ads are merely how other bubbles monetize.

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yuhong
Yea, that is part of why I knew that printing money using basic income would
only encourage it.

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islanderfun
What?

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sova
I believe my non native speaker friend means that UBI does not address
fundamental flaws in valuation in a Capitalistic system. Flaws thar would
amount to concentration of wealth via advertising conglomerates , although I
may be way off the mark.

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samdung
The tech bubble is always bursting in the sense that 99% of all startups do
not make any money for either the founders or the vc's.

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to_bpr
I've a casual worry that $SNAP will hit the bricks and trigger something
significant (and negative) within the industry in the near future.

Is this worry justifiable?

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lalos
It's a reasonable worry. Your average investor is not tech savvy and
definitely not the target age for most tech companies. Will an investor know
the difference between FB, Twitter and Snap? Or will he come to a sell
conclusion after seeing Snap and Twitter fumbling the ball deciding to cash
out on tech. Pretty reasonable.

