3 ms·

As long as there is a wariness of a bubble, there will be no bubble. When everyone throws caution to the wind because they feel like they'd miss out, that's whe

by iamwil 15y ago

As long as there is a wariness of a bubble, there will be no bubble. When everyone throws caution to the wind because they feel like they'd miss out, that's when it happens.

ChuckMcM 15y ago
I think this was the reasoning in the article and it seems pretty supportable. Basically when a company is 'new' its value proposition is unknown, it can fluctuate a lot. Once its known the value rationalizes. The side point that tech stocks are suffering a general malaise because of the fear however should not be missed either. When Sun Micro was young (I started 2 weeks after it went public) I recall being annoyed that IBM (then the dominant 'computer' player) would have a bad quarter and people would sell Sun stock (and it would sink in price). While the whole time Sun was doing great business, growing really quickly, and taking money away from IBM left and right. My financial adviser and I discussed it and I got to learn about what it meant to be part of the 'data processing sector' even if you were the up and coming dominant force in that sector. I agree with Ben that the pendulum is pretty hard over in the 'fear' side, hints of 'bubble' and people flee tech stocks. But solid companies get painted with the same brush just because they are part of the 'tech sector'. One of the things that bolsters Ben's point is that there have not been a lot of individual investors trying to pile on to the IPOs. This is a good sign that they are standing on the sidelines. If you're an investor, you might be watching the tech sector to see when the swing back to the 'greed' side starts and try to jump on and ride it over.
trotsky 15y ago
Lots and lots of people in the valley and elsewhere were wary of a bubble '97-'00. We used to talk about it all the time. That didn't stop it from happening. Mr. Horowitz needs to ensure that in the next few years he can sell on the public market stock they've been paying increasingly higher premiums for privately. It's clearly in his best interests to dismiss any bubble talk.
- emmett 15y ago
  This is a purely ad hominem argument. His arguments can be assessed on their merits, you shouldn't dismiss them because of who he is. And his central point seems to me to be pretty good: in a bubble like the 97-00 bubble, you'd expect newly IPO'd tech stocks to be soaring, not sinking. It doesn't appear that's happening. There's a different question which is whether two or three specific companies (Facebook, LinkedIn, Twitter) are overvalued right now. But even if they are, that's not really evidence of a tech bubble unless tech stocks in general are overvalued.
  - adw 15y ago
    Also: early stage investments are more aggressive than ever right now. The sums of money are relatively small, as are the number of market participants, so the risk of contagion isn't big in a macro sense, but it's potentially a real thing...

by iamwil 15y ago

As long as there is a wariness of a bubble, there will be no bubble. When everyone throws caution to the wind because they feel like they'd miss out, that's when it happens.

ChuckMcM 15y ago

I think this was the reasoning in the article and it seems pretty supportable. Basically when a company is 'new' its value proposition is unknown, it can fluctuate a lot. Once its known the value rationalizes. The side point that tech stocks are suffering a general malaise because of the fear however should not be missed either. When Sun Micro was young (I started 2 weeks after it went public) I recall being annoyed that IBM (then the dominant 'computer' player) would have a bad quarter and people would sell Sun stock (and it would sink in price). While the whole time Sun was doing great business, growing really quickly, and taking money away from IBM left and right. My financial adviser and I discussed it and I got to learn about what it meant to be part of the 'data processing sector' even if you were the up and coming dominant force in that sector. I agree with Ben that the pendulum is pretty hard over in the 'fear' side, hints of 'bubble' and people flee tech stocks. But solid companies get painted with the same brush just because they are part of the 'tech sector'. One of the things that bolsters Ben's point is that there have not been a lot of individual investors trying to pile on to the IPOs. This is a good sign that they are standing on the sidelines. If you're an investor, you might be watching the tech sector to see when the swing back to the 'greed' side starts and try to jump on and ride it over.

trotsky 15y ago

Lots and lots of people in the valley and elsewhere were wary of a bubble '97-'00. We used to talk about it all the time. That didn't stop it from happening. Mr. Horowitz needs to ensure that in the next few years he can sell on the public market stock they've been paying increasingly higher premiums for privately. It's clearly in his best interests to dismiss any bubble talk.

emmett 15y ago
This is a purely ad hominem argument. His arguments can be assessed on their merits, you shouldn't dismiss them because of who he is. And his central point seems to me to be pretty good: in a bubble like the 97-00 bubble, you'd expect newly IPO'd tech stocks to be soaring, not sinking. It doesn't appear that's happening. There's a different question which is whether two or three specific companies (Facebook, LinkedIn, Twitter) are overvalued right now. But even if they are, that's not really evidence of a tech bubble unless tech stocks in general are overvalued.
- adw 15y ago
  Also: early stage investments are more aggressive than ever right now. The sums of money are relatively small, as are the number of market participants, so the risk of contagion isn't big in a macro sense, but it's potentially a real thing...