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Largely disagree. The stock market indices have always been highly correlated with the tech sector. http://chart.finance.yahoo.com/z?s=XLK&t=5y&q=l&l=on&z=l&c=

by dxbydt 15y ago

Largely disagree. The stock market indices have always been highly correlated with the tech sector. http://chart.finance.yahoo.com/z?s=XLK&t=5y&q=l&l=on&z=l&c=^GSPC http://chart.finance.yahoo.com/z?s=XLK&t=5y&q=l&... The actual asset correlation between the tech sector ( say the XLF spider ) and the broad stock market ( say SPY ) over a decent timeline say 1 decade is upwards of 85%. ( You can run the exact numbers here, use XLF vs SPY on 10 year http://www.assetcorrelation.com/user/enter_time_corr http://www.assetcorrelation.com/user/enter_time_corr ) The rest of your narrative is wishful thinking. Yes, splosky & pg write great essays, bootstrapped slow organic growth may be nicer than fast VC-backed explosive growth etc. But such slow growing startups generally yield slow growing revenue streams. If that's what you want, you are better off parking your assets in a Vanguard etf. The Greater Fools theory may be derisive but it's what propels every twitter, facebook, groupon, yc backed startups, non-yc backed ones and all the ones in between, for the past 20 years and out into the next 20.

mapgrep 15y ago
Facebook and Google have very real revenues and very strong growth. I have a hard time seeing how you can be correct that they somehow need Greater Fools to "propel" them. Consider: Those companies could produce a very strong return for their investors if the stock market never existed. Because they make loads of profits they could pay out to owners. Anyway -- Generally, our points are orthogonal. I am talking about the way things Should Be, based on my subjective opinions of what makes for sustainable business growth. I think this boom bust bubble pattern is Bad (capital b to signify squishy concept) for the tech sector. You, on the other hand, are talking about What Is. (Aside from the Google/Facebook misfire.) You have here a four year chart showing tech sector/stock market correlation. I do not dispute that. In fact, my whole point is that maybe not much has changed on the financial side tech industry in the last 10 years. For all the smart people in tech it is still as vulnerable to bubble meltdowns (the crater in your chart) as anyone else. I think that's too bad - tech should be above it.

by dxbydt 15y ago

mapgrep 15y ago

Facebook and Google have very real revenues and very strong growth. I have a hard time seeing how you can be correct that they somehow need Greater Fools to "propel" them. Consider: Those companies could produce a very strong return for their investors if the stock market never existed. Because they make loads of profits they could pay out to owners. Anyway -- Generally, our points are orthogonal. I am talking about the way things Should Be, based on my subjective opinions of what makes for sustainable business growth. I think this boom bust bubble pattern is Bad (capital b to signify squishy concept) for the tech sector. You, on the other hand, are talking about What Is. (Aside from the Google/Facebook misfire.) You have here a four year chart showing tech sector/stock market correlation. I do not dispute that. In fact, my whole point is that maybe not much has changed on the financial side tech industry in the last 10 years. For all the smart people in tech it is still as vulnerable to bubble meltdowns (the crater in your chart) as anyone else. I think that's too bad - tech should be above it.