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It is unlikely that those who stand to profit from a bubble would acknowledge it....up until the housing market came crashing down there was a continuous stream

by Edmond 13y ago

It is unlikely that those who stand to profit from a bubble would acknowledge it....up until the housing market came crashing down there was a continuous stream of people on CNBC talking up the market....the same happened in the first dot com bubble, you can expect the same now. The new excuse is that even if there is a bubble it will be contained. It does seem an entire bubble economy has been created in SV where bogus companies provide bogus products and services for other bogus companies. Maybe in this case any collapse would be contained, but I guess we'll have to wait and see. As the expression goes: Anything that can't go on will stop.

ritchiea 13y ago
Isn't the crazy thing that it can go on? There's enough money at the top of the economy that the rich can keep investing in startups as an asset class and not really feel the losses even though they seem huge to those of us who get by on a salary from a job. The real question is: will the investments keep coming? My guess is it continues. Hedge funds as a whole also perform below market but see continued investment because of the promise that they will have tremendous returns when a firm succeeds. Startups get money from the same sort of investors. People who are only investing a portion of their portfolio, chasing big returns and mostly unconcerned about losing some money along the way.
- waterlesscloud 13y ago
  So it's a new paradigm and it's different this time?
  - ritchiea 13y ago
    I don't think I said anything like that. All I said is there is a culture that embraces the sort of risky investment that VCs make & that hedge funds are comparable investments. Let's take a reasonable definition of a bubble: when the price of an asset has risen much higher than what is justified by the market. By that definition I don't think we're in a bubble, I believe investors are logical and they know they are taking risks chasing a large return. I also believe investors will continue to chase big returns from tech companies and that there is precedent for this behavior in other types of investments.

by Edmond 13y ago

ritchiea 13y ago

Isn't the crazy thing that it can go on? There's enough money at the top of the economy that the rich can keep investing in startups as an asset class and not really feel the losses even though they seem huge to those of us who get by on a salary from a job. The real question is: will the investments keep coming? My guess is it continues. Hedge funds as a whole also perform below market but see continued investment because of the promise that they will have tremendous returns when a firm succeeds. Startups get money from the same sort of investors. People who are only investing a portion of their portfolio, chasing big returns and mostly unconcerned about losing some money along the way.

waterlesscloud 13y ago
So it's a new paradigm and it's different this time?
- ritchiea 13y ago
  I don't think I said anything like that. All I said is there is a culture that embraces the sort of risky investment that VCs make & that hedge funds are comparable investments. Let's take a reasonable definition of a bubble: when the price of an asset has risen much higher than what is justified by the market. By that definition I don't think we're in a bubble, I believe investors are logical and they know they are taking risks chasing a large return. I also believe investors will continue to chase big returns from tech companies and that there is precedent for this behavior in other types of investments.