I'd say we are. One definition of a bubble that my colleges use is an external force that artificially props up values, or put another way a force that if it w

I'd say we are. One definition of a bubble that my colleges use is an external force that artificially props up values, or put another way a force that if it was removed would see prices crash. Now consider silicon valley, what happens when a 2001 scenario happens and venture capital money dries up. Ask your self the question, if there was no vc money tomorrow would valuations remain the same, probably not. Now that's not entirely fair as vc money won't just all go away, but then ask is there more vc money now that before, the answer is yes to to tune of about 5x-10x(estimates differ) more than there was in 1999. So a more realistic question would be to ask what happens if we removed 5x-10x the funding that we currently have, would prices go down? The startup market looks alot like the junk bond market in the Milken days. Junk bonds are very risky bonds but they can pay out alot and as long as there is money to roll the debt over into new debt everyone is happy. However, if the market gets jitters then suddenly you go from a scenario where everyone can roll their debt to a scenario where almost no one except for hte "best" junk bonds can get rolled( similar to getting vc in 2001-2004). ie a bubble doesn't go down gradually, it goes down hard. Another scary thing for valuations that doesn't get enough air time is the percentage of gains made when a company is private vs when its public. I saw a great tweet when Larry Ellison retired that said something to the effect of final score Oracle shares up 32,000% since it when public. It will be hard for a facebook to return that kind of return to investors over the next 25 years. It used to be the case that the public markets got alot more of the stock gains than they are getting now. This should scare people as its the public markets that give companies their valuations. If the public markets find that stocks aren't going to have the 20 year gains that they used to have, then money, being like water, will flow to where it can make better gains, which will depress public market prices, which in turn, will push down private market valuations. This isnt' a short term trend but one to watch, over the next 10 years. I know of a few macro based funds that are very concerned about this. BONUS off the cuff prediction We will see a private company start to pay dividends rather than go public in the next 3 years. TL/DR - private markets value growth, public markets value profits. You've hit a bubble when you have the largest private companies not being able to produce profits that the public markets expect. Once that happens everything gets "messed up" with the chain of: - the largest private companies can't go public at their expected valuations leading to - lower valuations for private companies, leading to - existing companies not being able to get teh vc capital they were expecting, leading to - private companies going out of business, leading to - vc losses, leading to less vc money in the system, leading to - a "virtuous" cycle that deflates the bubble.