

Here comes another bubble... - 1gor
http://www.youtube.com/watch?v=I6IQ_FOCE6I

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marvin
The Ford Motor Company vs. Facebook valuation point can be explained by the
fact that Ford has a debt/equity ratio of more than 23 (debt to market cap of
11, 170 billion in total debt - <http://finance.yahoo.com/q/ks?s=F>) and is,
like the rest of the US auto industry, in a downward spiral. This isn't a good
company to use as comparison, because public perception of its economic muscle
is much greater than what the stock market says. In relation to its revenue,
Ford is in serious trouble.

Facebook is grossly overvalued by any traditional measure of company value
(valuation/revenue in the region of 100), but on the other hand Facebook isn't
priced by the open market. The only thing supporting the company's valuation
is Microsoft's 250$ million investment, which was probably more politically
motivated than motivated by economics. (At a valuation like this one, which
other market players would be remotely interested in investing?)

At this point, what happens in Silicon Valley isn't a bubble. Investment is
under control. Certain companies are overvalued, but the valuations aren't
supported by any form of mass hysteria: if anyone is burned, the effects will
be local.

And don't forget that even during the IT bubble at the turn of the millennium,
many sound companies were created. There is bound to be a smaller or larger
degree of dead weight dragged along by any new breaking of ground in
technology. This isn't a new phenomenon by any measure.

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timr
_"Certain companies are overvalued, but the valuations aren't supported by any
form of mass hysteria: if anyone is burned, the effects will be local."_

Where do you think the money is coming from? There may not be an IPO market,
but Joe VC is getting his capital from individual investors and organizations
that are just as flighty and nervous as they were in 1999.

All it will take is one or two high-profile failures, and it'll be nuclear
winter in the valley again. The mechanism may be different, but the results
will be the same.

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hugh
Sure, but Joe VC's venture funds usually have a ten-year lifetime, so year-to-
year fluctuations in the skittishness of investors shouldn't be that big a
problem. Your average VC is still working to invest a big pile of money he
raised years ago, while trying to raise money he won't invest for years.

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nazgulnarsil
it's fun to watch the growing pains of a new form of communication. I bet
there were similar bubbles at the dawn of television as the modern day super-
stations formed.

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babul
old but gold.

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alyx
I managed to miss out on seeing this video 6 months ago. I think it's even
more true now that 6 more months are out of the way.

Catchy and creative!

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asmosoinio
Déjà vu, I guess this made is to the front page about 6 months ago or so?

Anyway, still a fun watch.

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andresvi
This is hella old! Hacker News should start thinking how to avoid links like
this in future (I mean the ones that have already been here once).

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volida
just enjoy it ;)

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daveambrose
Hells ya! :)

