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I think a bubble implies that the industry was overvalued compared to its long term fundamental value. Having a dip and then a return to growth and exceeding t
by mlyle 1y ago
I think a bubble implies that the industry was overvalued compared to its long term fundamental value.
Having a dip and then a return to growth and exceeding the previous peak size isn't exactly a bubble. The internet and tech sector has grown to dominate the global economy. What happened was more of a cyclical correction, or a dip and rebound.
- johnnyanmac 1y ago>Having a dip and then a return to growth and exceeding the previous peak size isn't exactly a bubble. That's exactly what a bubble is. You blow too fast and you get nothing but soap. You blow slow, controlled breaths balancing speed and accuracy and you get a big, sustainable bubble. No one's saying you can't blow a new bubble, just that this current one isn't long for this world. It's just that the way investments work is that the first bubble popping will scare off a lot of the biggest investors who just want a quick turnaround.
- mlyle 1y agoA bubble's when values inflate well beyond intrinsic valuations. You can have a crash without this having happened.
- johnnyanmac 1y agoYes, indeed. Thought I'd change "intrinsic valuations" to "rapid change in valuations". If you deflate over time slowly (or simply slow growth expectations) you can prevent a pop. That doesn't tend to be what historically happens, though.
- mlyle 1y ago> to "rapid change in valuations". Yes. This seems to be what you're doing-- carrying the metaphor too far. I believe the common use relates the asset prices to intrinsic or fundamental values.