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Why today’s tech boom isn’t like the 1990s bubble
- adventured 11y agoI've never quite understood why 1999 is the inevitable comparison. Perhaps because of the emotional reaction it gets (clicks) when you use it. 2005-2007 is the more accurate comparison. The acceleration of asset bubbles in both real estate and - to a much lesser degree - the stock market leading up to the great recession (and I'm not implying there will be a replay of the housing bubble). It involved a gradual but significant venture capital increase from the bottom years of 2002-2003, and public valuations expanded significantly. From roughly Jan 2003 to Aug 2007, the Dow went up about 75% and finally surpassed the highs made during the dotcom bubble. Companies like Google IPO'd during that run. There was also a dramatic China bubble during that era. Valuations were elevated by quite a bit, but not like 1999. Venture capital was flowing freely, but not like 1999. The stock market had gone on a huge run, but not like 1999. The downside to the currently elevated financial environment, will be tightened liquidity, harsher terms, and lower public multiples. That means, conceptually, instead of Facebook having a 90 PE ratio, they'll have a 40 PE ratio.
- glasz 11y agoof course, comparing today to 1999 does not work. but the basic issue remains: the state sold its right to create money to the banks and the banks went and still go haywire. it's all money out of air. look at fb, twitter, salesforce. their pe ratio alone tells you that things can't work out. they created money just by going public. no real value behind it.