4 ms·

Do you mind expanding on your comment as I am not sure how it pertains to the article, which actually states that we are NOT in a bubble. The idea that compani

by tnicola 15y ago

Do you mind expanding on your comment as I am not sure how it pertains to the article, which actually states that we are NOT in a bubble. The idea that companies are valued above the value of their infrastructure is not new and it has nothing to do with web based phenomena. Hennessy Cognac (as an example) was valued three of four fold above the actual value of the companies assets and the difference stems from the fact that the logo and the name are some of the highest valued in the world. (This information is about 10 years old - from my Engineering Project and Trademark Management days - but it illustrates a point). We, as people, will always value intangible assets and we did not need web to do it.

jpdoctor 15y ago
Take a look at what happened to intangible assets across periods of severe stress, such as the Great Depression or the tech collapse of 2000. The intangible values drop substantially, which should lead you to believe that intangibles are more a function of money supply than anything intrinsic. And since we are coming off of one of the largest money supply expansions in history, it should automatically ring warning bells for events that contract money supply, which is why I mention Greece and Italy. Ultimately, all asset valuations should be in equilibrium with each other. House prices went out of equilibrium with rents, and eventually that corrected (and still has a way to go.) That is an example of a very close equilibrium. If Hennessy started rivaling Exxon (say) in valuation, I would say that I don't care what kind of brand recognition it has, it is out of equilibrium and is just waiting for some event (like contraction of the money supply) to re-equilibrate. > which actually states that we are NOT in a bubble. BTW, I was disagreeing with the article. I would encourage all to make hay while the sun shines, because these valuations are not going to last.
- tnicola 15y ago
  Thank you for clarifying. The crux is, I guess, that you are making assumptions (valid at that) based on history, whereas I believe that the start-up rush is unprecedented and cannot be easily compared with anything that has happened so far. The author's analogy of land rush was, in my opinion, close, but the fact is, nobody knows. Another fact that I would like to address is that just like the oil rig you mentioned has tangible value, (engineering, ore and manufacturing), so does software (engineering, data and massive outreach), so to quote Winston Churchill, "This is not the beginning of the end. It is the end (or not even that) of the beginning."

by tnicola 15y ago

jpdoctor 15y ago

Take a look at what happened to intangible assets across periods of severe stress, such as the Great Depression or the tech collapse of 2000. The intangible values drop substantially, which should lead you to believe that intangibles are more a function of money supply than anything intrinsic. And since we are coming off of one of the largest money supply expansions in history, it should automatically ring warning bells for events that contract money supply, which is why I mention Greece and Italy. Ultimately, all asset valuations should be in equilibrium with each other. House prices went out of equilibrium with rents, and eventually that corrected (and still has a way to go.) That is an example of a very close equilibrium. If Hennessy started rivaling Exxon (say) in valuation, I would say that I don't care what kind of brand recognition it has, it is out of equilibrium and is just waiting for some event (like contraction of the money supply) to re-equilibrate. > which actually states that we are NOT in a bubble. BTW, I was disagreeing with the article. I would encourage all to make hay while the sun shines, because these valuations are not going to last.

tnicola 15y ago
Thank you for clarifying. The crux is, I guess, that you are making assumptions (valid at that) based on history, whereas I believe that the start-up rush is unprecedented and cannot be easily compared with anything that has happened so far. The author's analogy of land rush was, in my opinion, close, but the fact is, nobody knows. Another fact that I would like to address is that just like the oil rig you mentioned has tangible value, (engineering, ore and manufacturing), so does software (engineering, data and massive outreach), so to quote Winston Churchill, "This is not the beginning of the end. It is the end (or not even that) of the beginning."