5 ms·

Why the end is coming soon for the biggest tech bubble we’ve ever seen

18 points by WheelsAtLarge 8y ago

corodra 8y ago
I’m not a fan of marketwatch, at all, but I do agree. I’ve been noticing way too much stupid money being thrown around at tech lately. Too much hype. Too many over promises for really immature tech. Too many firms are constantly doing pr announcements of funding rounds, like bleeding money is a good thing. I’ve been thinking this for about a month on my own. I’m not smart enough to venture a forecast when, but I won’t be surprised if it happens by the end of the year. Honestly, I hope I’m wrong and it never happens. I’m not an expert either. Just bad gut feeling.
- mnky9800n 8y ago
  This comment is seen in almost every post positive or negative about the technology industry. It's mostly meaningless. You have to spend money to make money. Complaining that sometimes people spend money and don't make money is stating the obvious.
  - corodra 8y ago
    Sorry, I didn't mean just "spending money". When I mean stupid money, it's mostly there's an exorbitant amount hoping to get rich quick. Someone that researches a company, industry and the geopolitics involved and invests... let's say a billion USD, then that market crashes to oblivion, I don't consider that "stupid money". At all. Try, fail, it sucks. But they did their own legwork to verify what they're doing. They flat out knew the risks. Their research probably showed that $1b was worth it. Someone that goes, for an extreme example, "Bitcoin is going to be worth a $100,000 a coin because [insert one random article, bird sign, or because everyone else is doing it]." That's what I have a problem with. That's "stupid money" to me, chasing ambulances, etc. The first example I don't feel ever really kills markets. Because their investment will be proportional to some research in potential market growth and maturity of the individual. If Google spends $1b on a market, something is there. But they now have a large foothold. There's still market space, but Company B decides only $100m because the chances of beating Google are low and their investment may go to waste. Instead of "If Google went $1b in, we're going $1b, because reasons." Obviously, their growth speculations can be wrong. But having some sort of independent research based speculation will always force someone to be more cautionary than "Oh, he said so, thus it must be true". That cautionary action, I feel, kind of self-corrects a market by never letting it get TOO big and out of control. It's the second example I think just pumps money for no reason. Just a bunch of people trying to get rich quick because of everyone is doing it. Eventually, the mature market holders will pull when they get scared because of their research. There's only so much "real" value in a market and competitive market space. That'll drop a market significantly to the point where others follow suite, thus a burst.
itronitron 8y ago
Not necessarily a bad thing, the unicorns are privately held and all of those businesses are quite superfluous.
- sempron64 8y ago
  Uber is not superfluous. It has added a massive amount of value to the economy and created hundreds of thousands of service jobs that did not previously exist, taking a service that was previously lower quality, less desirable and less useful and improved it on all fronts. A private equity downturn/a bad IPO/tech crash puts those jobs in peril. Not to mention many of the jobs of people posting on this site.
  - tomtimtall 8y ago
    Those jobs will not be in peril. There are plenty of rideshares and the tech is trivial compared to the actual services. Uber’s valuation and capital gamble is not about ridesharing, it’s self driving taxis, and they May very Well go out of business with that gamble.
harry8 8y ago
Say what but not when and you can't be "wrong" Who will be the next myspace? the next LookSmart? The next Google? The next RedHat? Startups which have had massive growth will fail. Big established companies with decades of profitability behind them will also fail. All booms will bust this boom is not different. The fact that people say "this boom is different" is how you know it isn't. It has the "this boom is different" commentary in common with every other boom in history. Really. Rain is wet and sugar is sweet. Picking winners is hard. Timing the market is hard. The dumb strategy of getting exposure to all of it so you're fully diversified has worked for some in the past.
- buvanshak 8y ago
  > Say what but not when and you can't be "wrong" MO of Elon Musk and the likes...
- headsoup 8y ago
  A paradox? Or Irony? Every boom is the same, but every boom they say 'this boom is different,' therefore every boom must say 'this boom is different' to be the same.
joeblow9999 8y ago
The sky is falling!! (repeat until something negative happens then claim prescience. rinse and repeat)
HillaryBriss 8y ago
An end to the era of ultra-low interest rates from the Federal Reserve will also weigh on these overvalued names. As interest rates continue to rise throughout 2018, that will accelerate the unicorn slowdown.” this interest rate argument is at least somewhat realistic.
- perl4ever 8y ago
  If you look at the historical fed funds rate, it seems like they have repeatedly raised rates until markets crashed and then cranked them back in a panic. I don't understand why they don't set the rate to approximately the current target (or actual) inflation rate and stop fiddling with it constantly. The instability seems completely unnecessary, like a bus driver who can't stop pressing down and letting off the gas over and over.
  - headsoup 8y ago
    Much as CIO's every few years in-source and then out-source IT functions. There is an obvious balance that could be found, but then they must been seen to 'do something' and so levers are pulled. Et cetera.
  - HillaryBriss 8y ago
    yeah, it does kind of look that way. during the post-2008 period of low interest rates news outlets sometimes mentioned that the Fed was always looking for an excuse to raise rates so that when the next economic emergency arrived, it would be able to lower them again in response.

18 points by WheelsAtLarge 8y ago

I’m not a fan of marketwatch, at all, but I do agree. I’ve been noticing way too much stupid money being thrown around at tech lately. Too much hype. Too many over promises for really immature tech. Too many firms are constantly doing pr announcements of funding rounds, like bleeding money is a good thing. I’ve been thinking this for about a month on my own. I’m not smart enough to venture a forecast when, but I won’t be surprised if it happens by the end of the year. Honestly, I hope I’m wrong and it never happens. I’m not an expert either. Just bad gut feeling.

mnky9800n 8y ago
This comment is seen in almost every post positive or negative about the technology industry. It's mostly meaningless. You have to spend money to make money. Complaining that sometimes people spend money and don't make money is stating the obvious.
- corodra 8y ago
  Sorry, I didn't mean just "spending money". When I mean stupid money, it's mostly there's an exorbitant amount hoping to get rich quick. Someone that researches a company, industry and the geopolitics involved and invests... let's say a billion USD, then that market crashes to oblivion, I don't consider that "stupid money". At all. Try, fail, it sucks. But they did their own legwork to verify what they're doing. They flat out knew the risks. Their research probably showed that $1b was worth it. Someone that goes, for an extreme example, "Bitcoin is going to be worth a $100,000 a coin because [insert one random article, bird sign, or because everyone else is doing it]." That's what I have a problem with. That's "stupid money" to me, chasing ambulances, etc. The first example I don't feel ever really kills markets. Because their investment will be proportional to some research in potential market growth and maturity of the individual. If Google spends $1b on a market, something is there. But they now have a large foothold. There's still market space, but Company B decides only $100m because the chances of beating Google are low and their investment may go to waste. Instead of "If Google went $1b in, we're going $1b, because reasons." Obviously, their growth speculations can be wrong. But having some sort of independent research based speculation will always force someone to be more cautionary than "Oh, he said so, thus it must be true". That cautionary action, I feel, kind of self-corrects a market by never letting it get TOO big and out of control. It's the second example I think just pumps money for no reason. Just a bunch of people trying to get rich quick because of everyone is doing it. Eventually, the mature market holders will pull when they get scared because of their research. There's only so much "real" value in a market and competitive market space. That'll drop a market significantly to the point where others follow suite, thus a burst.

itronitron 8y ago

Not necessarily a bad thing, the unicorns are privately held and all of those businesses are quite superfluous.

sempron64 8y ago
Uber is not superfluous. It has added a massive amount of value to the economy and created hundreds of thousands of service jobs that did not previously exist, taking a service that was previously lower quality, less desirable and less useful and improved it on all fronts. A private equity downturn/a bad IPO/tech crash puts those jobs in peril. Not to mention many of the jobs of people posting on this site.
- tomtimtall 8y ago
  Those jobs will not be in peril. There are plenty of rideshares and the tech is trivial compared to the actual services. Uber’s valuation and capital gamble is not about ridesharing, it’s self driving taxis, and they May very Well go out of business with that gamble.

harry8 8y ago

Say what but not when and you can't be "wrong" Who will be the next myspace? the next LookSmart? The next Google? The next RedHat? Startups which have had massive growth will fail. Big established companies with decades of profitability behind them will also fail. All booms will bust this boom is not different. The fact that people say "this boom is different" is how you know it isn't. It has the "this boom is different" commentary in common with every other boom in history. Really. Rain is wet and sugar is sweet. Picking winners is hard. Timing the market is hard. The dumb strategy of getting exposure to all of it so you're fully diversified has worked for some in the past.

buvanshak 8y ago
> Say what but not when and you can't be "wrong" MO of Elon Musk and the likes...
headsoup 8y ago
A paradox? Or Irony? Every boom is the same, but every boom they say 'this boom is different,' therefore every boom must say 'this boom is different' to be the same.

joeblow9999 8y ago

The sky is falling!! (repeat until something negative happens then claim prescience. rinse and repeat)

HillaryBriss 8y ago

An end to the era of ultra-low interest rates from the Federal Reserve will also weigh on these overvalued names. As interest rates continue to rise throughout 2018, that will accelerate the unicorn slowdown.” this interest rate argument is at least somewhat realistic.

perl4ever 8y ago
If you look at the historical fed funds rate, it seems like they have repeatedly raised rates until markets crashed and then cranked them back in a panic. I don't understand why they don't set the rate to approximately the current target (or actual) inflation rate and stop fiddling with it constantly. The instability seems completely unnecessary, like a bus driver who can't stop pressing down and letting off the gas over and over.
- headsoup 8y ago
  Much as CIO's every few years in-source and then out-source IT functions. There is an obvious balance that could be found, but then they must been seen to 'do something' and so levers are pulled. Et cetera.
- HillaryBriss 8y ago
  yeah, it does kind of look that way. during the post-2008 period of low interest rates news outlets sometimes mentioned that the Fed was always looking for an excuse to raise rates so that when the next economic emergency arrived, it would be able to lower them again in response.