4 ms·
A bubble can only be identified definitively in hindsight i.e. after it has burst. If it doesn't burst then its just industry growth. I think the lessons were
by jsmcgd 20y ago
A bubble can only be identified definitively in hindsight i.e. after it has burst. If it doesn't burst then its just industry growth.
I think the lessons were learnt the first time around and because the stakes are now comparatively very low the chances we are now currently in a bubble seem remote.
- mojuba 20y agoStill, there was one clear and strong sign of a bubble before it collapsed: most public dot-coms gave zero dividends, or actually a tiny symbolic sum close to zero. That was a signal for any smart investor to make money now and run away.
- dpapathanasiou 20y agoDividends don't mean that much: Microsoft in its dominant years (when they had 40%-plus margins and were raking in the cash) never paid a dividend (they did so only recently).
- mojuba 20y agoAs far as I know Microsoft always did pay dividends, always, and never stopped doing that. Can be checked easily.
- dpapathanasiou 20y agoNo, the first time MS ever paid a dividend was in 2003: http://seattlepi.nwsource.com/business/104643_microsoft17.shtml http://seattlepi.nwsource.com/business/104643_microsoft17.shtml Not paying a dividend is not unusual in the tech industry.
- mojuba 20y agoI was wrong, sorry.
- nostrademons 20y agoMore to the point, most public dot-coms had zero earnings, which is even more of a signal for the smart investor to take the money and run. Over the long run, stock prices track earnings. Zero earnings = zero stock price.
- mojuba 20y agoNot exactly. Dividends is what attracts investors (well, real and smart investors), while stock prices is a measure of people's desire to have shares, as well as their sympathy towards that company. In other words, stock price is a matter of auction, while dividends is a better indicator of whether your company can make money or not.
- sabat 20y agoGrowth companies do not pay dividends, as a rule. The fact that these companies were having trouble getting anywhere near profits -- that was indeed a real problem. (Also, the fact that they were public at all was a real problem for them, since public investors want profits sooner than later.)