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I can tell you from my own observation that these "tech bubble" articles are becoming more and more frequent. TechCrunch, Bloomberg, BI, others. Correlation, pe
by joeax 11y ago
I can tell you from my own observation that these "tech bubble" articles are becoming more and more frequent. TechCrunch, Bloomberg, BI, others. Correlation, perhaps, but something to consider.
To your second point - on the surface these two "bubbles" would appear different, but dig deeper and they are fundamentally more similar. With the housing bubble it was fueled on the backend by foreign and institutional investors buying up MBS (mortgage backed securities) like mad, causing the frontend (banks and lenders) to issue credit to anyone with a pulse (and some without as I've heard dead people got approved also). Similarly with the tech bubble, hedge fund investors and others are jumping into the foray joining VCs and making deals at sky high valuations. To me, the willingness of investors to take smaller stakes in companies for more cash amounts to "cheap credit".
Bottom line, if there is a bubble, what will happen is funding will dry up, and any startups trying to raise capital will be out of luck. Even the so called unicorns will be under pressure to turn a profit once they realize they have nowhere to turn for more capital. The end result will be mass layoffs and a glut of out of work tech workers. Believe me this is the last thing I want, being a software engineer myself. But I already went through it once in 2001-2002, so I figure better be somewhat prepared than deny a bubble even exists.