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Examining the New Bubble 186

Posted by Zonk
from the don't-pop-it dept.
abb_road writes "Whether or not we're in the midst of another boom-bust cycle in technology is a matter of fierce debate. BusinessWeek discusses what constituted that last bubble and looks at current trends to see if we're on the verge of a new one. From the article: 'The Great Bubble of the late '90s shaped a generation of Internet entrepreneurs and investors much as the Great Depression shaped a generation of economizers in the mid-20th century. 'The bubble generation is much more attuned to the fact that things can get really out of hand,' says Bill Burnham, a former partner at Mobius Venture Capital. 'There's a level of caution that has been ingrained.'"
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Examining the New Bubble

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  • by Otter (3800) on Friday May 12, 2006 @10:35AM (#15318018) Journal
    The last boom was based on the principle that all stock prices were justified, regardless of whether any of them were profitable. The new boom is based on the principle that all stock prices are justified as long as Google makes some profit. Totally different reasoning.

    Boy, people sure were stupid in the 90's, huh?

  • by bogie (31020) on Friday May 12, 2006 @10:36AM (#15318025) Journal
    I gotta fire my broker. Should I still be holding on to my Pets.com stock?
    • Should I still be holding on to my Pets.com stock?

      As long as you've got the certificates in hand, then hell yeah! Those suckers are probably collectors items. Especially if Pets.com did them up cute with the reporter puppy on them.

      Think I'm joking? Think again. [ecommercetimes.com]
      • As long as you've got the certificates in hand, then hell yeah! Those suckers are probably collectors items. Especially if Pets.com did them up cute with the reporter puppy on them.

        You know what's funny? I saw someone using the pets.com sock puppet to sell insurance. I guess that's okay, since the original trademark holder is so much burning dog food.

    • After the dot com fiasco, the bubble transferred to real estate. Now that that bubble's ending, it's moved over to commodities. (Gold, oil, and other precious metals are exploding.)

      Personally, it feels like something's got to give. I'm not as well versed in economics/macro-economic history as some others here likely are, so I pose this question: have there been times of such bubbles? Yes, I know there have been bubbles in the past - tulip mania, the stock market in the late 1920s/late 1990s, SoCal real esta

      • by kiatoa (66945) on Friday May 12, 2006 @11:45AM (#15318769) Homepage
        Personally, it feels like something's got to give.

        Maybe. However since bubbles are really a sort of cross between a pyramid scheme and a lottery the only people who are hurt are those who are not paying attention. Case in point: we sold our house at or near the peak and we are now renting. There is a pretty good chance that when we buy at the bottom we will have made 30% or more. Only people who are buying right now when all indicators suggest that prices haven't reached the bottom will be hurt. I.e. paying attention pays off! Look at basic forces. House values historically grow at 1-2% a year over the long term. If prices grow faster than that there had better be a very strong driving force or - its a bubble. Now, if you detect a bubble early and can afford the risk by all means take advantage of the idiots but be aware that what you are doing requires impecable timing or you can be severly burned!

        The house bubble was created by FED policy (follow the links at http://www.patrick.net/housing/crash.html#links [patrick.net]) but I think there is a deeper problem. Our taxation methodolgy is fundamentally broken. The solution (IMHO) - the Georgist "one tax". NOTE: That is NOT a flat tax.
        • However since bubbles are really a sort of cross between a pyramid scheme and a lottery the only people who are hurt are those who are not paying attention.

          Ahem. Tell that to those who lost their jobs because they worked for the companies that went bust (or took it on the chin) in the dot com fiasco. Or those whose retirement savings lost half their value. Tell that to the construction/realtors/appraisers/mortgage brokers who are edging closer to being jobless. I'm not saying that there's no personal respo

          • Thats a good point and I retract my statement. It is easy to forget about the indirectly affected people. If the dismalists are right the fallout from the housing bubble bursting will be very painful for a lot of people and not just those who played the game.
          • I was in a position to find a new job when I moved out here, and had quite a few competing offers, but I settled on a teaching job at the local community college... it paid only (roughly) 75% of the salary that the competing private employers paid, but the benefits were far higher overall and it allowed me to ride out the dot-but very nicely. (In fact I got to love working there, but a RIF hit in 2005 and I had the least seniority, so it was time to get back out into it all - still nicely timed, IMHO).

            If

        • Case in point: we sold our house at or near the peak and we are now renting. There is a pretty good chance that when we buy at the bottom we will have made 30% or more. Only people who are buying right now when all indicators suggest that prices haven't reached the bottom will be hurt. I.e. paying attention pays off! Look at basic forces.

          That's what my dad thought when he moved our family out of San Jose in 1979, after several years of solid appreciation.

          Do you really think there will be a big housing b

        • There are two fools when it comes to the market. First fool thinks that his/her stock will never go down OR if it goes down, it will comeback. Second fool thinks that he/she can perfectly time the tops and bottoms of the cycle. Only sure thing is that both fools will lose money one way or the other. Nobody is a psychic. It is impossible to time the market (even for the experts). Anybody who tries is a fool. You may get lucky, but that was because of dumb luck, not because your were prescient.
    • Should I still be holding on to my Pets.com stock?

      Why I'm holding on to my Pets.com sock right now! Someday this puppet will be worth a fortune.

      Oh, you said STOCK. My bad. If you've run out of TP you know where to go.
  • Mobius Venture Capital, eh? Suddenly it all makes sense

    Anyway, not that I'm an expert or particularly knowledgable about any of this stuff, but it seems to me that a big difference is that this time around, the companies receiving the funding tend to be much smaller and more focused. Sure, many don't have a valid business plan, but at least there are only 10-15 people running the entire show, as opposed to some of the companies last time around that felt they needed to employ a hundred to be taken serious
    • by Moraelin (679338) on Friday May 12, 2006 @11:34AM (#15318663) Journal
      Thing is, the last bubble was a lot more complex than pure stupidity. A lot of it was dishonesty, and a lot of the rest is that special kind of stupidity-from-pure-greed that makes people "invest" in pyramid schemes and the like. The knowledge that, yes, it can't possibly go on for ever, but hoping that it would last just long enough for _you_ to get your pay-off at the expense of others.

      E.g., for the greed part, don't assume that all investors were unable to learn that those "internet companies" tend not to last. But that was ok. They didn't plan to hold onto that stock for ever. They planned to buy some "my_cat_photos.com" site at cents per share, hype it to insane values, then sell right before the company crashes and burns and let someone else take the loss.

      (And those in the most profitable position were the stock analysts, some of which had no remorse in telling their clients "buy!" while they told their own agents "sell!" I.e., they were in a position to _create_ a bubble around a company, and profit from it.)

      A lot of the hyping dot-com stock you may have read fell basically in this category, and partially in the dishonesty one. It's not that those people were too stupid to see that a company without income can't survive. They were hoping _you_ would be stupid enough to believe them and help them pump up the share price. When they proclaimed an income-less and busines-plan-less new economy, well, the money making part of that economy was actually very present in their mind: it was the stock market. Namely hoping that some other dolt would buy the pumped up shares before they crash and burn.

      And a lot of the posing, posturing and seemigly illogical behaviour of the dot-coms actually fit that hype-and-dump pattern. Now _some_ of the company owners may have blown money on gazillions of employees, Ferraris and buying football teams just out of stupidity. ("Look, ma! I'm someone! I can throw money out the window just like the rich guys!") But for a lot of them and for some VCs this simply constituted a kind of behaviour they could pump before they dump. It could be hyped as a young, dynamic, fast-growing company that's poised to take over the world. At the rate they're growing, they'll soon be the next Microsoft, and you'll be sorry that you didn't buy their shares when they were cheap! The fact that the only "fast growing" part were the expenses, well, they hoped you wouldn't notice that.

      E.g., for the dishonesty part, one of the things that started the bubble was... advertising money. See, in the early day of the Internet web sites had maybe one ad banner on the main page, and some of us even clicked on them. And ad rates were based on this in more than one way. I.e., not only did the advertiser only count on paying for 10,000 or 100,000 views of that ad, but they also counted on the relatively high return on that investment, since people hadn't been yet buried in obnoxious ads and desensitized to them.

      But in true "tragedy of the commons" fashion, someone figured that they could rake in twice the money if they put two ads on their site. Or 10x the money if they put an ad banner on each page. Some went as far as to imagine a site which would have a tiny content frame in the middle, while the rest of the screen would be filled by wall-to-wall ads. I know I've actually worked for one.

      Some were even less honest than that, and also generously inflated their page view statistics. If you believed them, some sites had millions of pages (and thus ad views) served per month, even though they were barely more than someone's blog site. And not even the blog site of someone famous.

      So basically what started the bubble was the idea that "hey, looky, we can make a bunch of cash by defrauding the advertisers!" Except that in the resulting 3-way con-war between websites, ad providers, and the companies paying for the ads (with the ad providers trying hard to cheat _both_ the webmasters and the paying customers), the prices per ad dropped like a rock, making that gold mine a
      • So basically when you look at it, it wasn't just blind stupidity, but a lot of dishonesty and a lot of greed.

        In order for dishonesty and greed to work, you need stupidity.

        Over on the other thread, we're talking about how SOX may be more trouble than it's worth.

        SOX was created, partially as a reaction to the dishonesty and greed of the dotcom bubble (after all, Enron was a dotcom - not necessarily a computer or IT company, but their business was Energy Trading. Via the internet. Their scam was surfing on t
  • by TheSHAD0W (258774) on Friday May 12, 2006 @10:38AM (#15318041) Homepage
    I've been following the stock market, and in my opinion we're not seeing a bubble. We're not even seeing a rise. In my opinion the value of the stock market has been reflecting inflation in the US dollar and in other currencies around the world. We aren't seeing all of it in the stores - yet - but it's coming. The prices of precious metals [kitco.com] are a good indicator of what's going on.
    • by lucabrasi999 (585141) on Friday May 12, 2006 @10:46AM (#15318130) Journal
      I've been following the stock market, and in my opinion we're not seeing a bubble. We're not even seeing a rise.

      We are NOT seeing a rise? Huh?

      DJIA http://www.marketwatch.com/tools/quotes/intchart.a sp?symb=26099400&sid=1643&freq=1&time=8&siteid=mkt w [marketwatch.com]
      NASDAQ http://www.marketwatch.com/tools/quotes/intchart.a sp?symb=COMP&sid=3291&freq=1&time=8&siteid=mktw [marketwatch.com]
      NYSE Composite http://www.marketwatch.com/tools/quotes/intchart.a sp?symb=NYA&sid=3277&freq=1&time=8&siteid=mktw [marketwatch.com]

      Each chart includes the last 12 months. While whether or not this data is a bubble is indeed debatable, the fact is that the market has been on a strong long-term rise for at least the last year.

      • by Dr. Evil (3501)

        http://finance.yahoo.com/q/bc?s=USDCAD=X&t=1y

        The dollar's just falling.

        • Canada has it's own currency? I thought it was the 51st state.....
          • Re:Nope (Score:3, Insightful)

            by khallow (566160)
            Pretty smarmy way to admit that he has a point, maybe even is right. Still that's part of the problem with interpreting the price of commodities and investments. The US Dollar has declined significantly against most currencies. So it's to be expected that investments that are somewhat resistant to inflation like real estate or stock would go up in value.
            • Real estate isn't going up because the dollar is cheap and foreigners are buying; it's going up because interest/mortage rates are low and people can therefore afford to borrow more money - more buying power is increasing demand.

              As soon as mortage rates rise, then watch out. A modest 3% rise from 6% to 9% would mean that your monthly mortage payments have increased by 50%, which will force panic selling by those without fixed rated mortages, and will drastically reduce the number of people who can afford ho
              • Real estate isn't going up because the dollar is cheap and foreigners are buying; it's going up because interest/mortage rates are low and people can therefore afford to borrow more money

                What country do you live in???
      • We are NOT seeing a rise? Huh?

        Click on 5y insted of 1y. We're still *down* even though we're trending up.
      • i n f l a t i o n ? (Score:5, Informative)

        by ElephanTS (624421) on Friday May 12, 2006 @11:41AM (#15318730)
        Um, no, the dollars are worth less - that's all that's happening.

        http://finance.yahoo.com/q/bc?s=MSFT&t=1y&l=off&z= m&q=l&c=gld [yahoo.com]

        That's the price of gold compared to MSFT (just out of interest) for the last year. Gold is traditionally a very good (if not excellent) hedge against inflation and shows the devalueing dollar situation pretty well right now.

        • Just as "Real estate is the safest investment you can make" is no longer true, gold its self is in a bubble. There is absolutely no reason gold has doubled in price in the past few years. For those who didn't click the link, gold is now going for OVER $700 AN OUNCE. That's insane.

          Just like everything else in the world, the price of gold is regulated by supply, demand, and risk factors. Gold is getting pricey because there's lots of demand, because people listen to people like you, who say "gold is the e
          • by ElephanTS (624421)
            Although I understand what you say and I agree with some of it, I don't believe this is a gold bubble that will dissappear over night. The last 'bubble' in gold took place in 1980 where it touched $850 for a moment. If you adjust that $850 to 2006 dollars you'll get a top of about $3000. The Fed has abolished the M3 - I'm sure you know - which doesn't say anything good about the future of inflation or the dollar. It's obvious they're going to print, print, print. I'm guessing that we'll see $1000/oz by the
        • Gold is traditionally a very good (if not excellent) hedge against inflation

          Not when it's priced the way it is lately, based on pure speculation. Gold prices will revert to the mean soon enough (drop like a rock), while the value of the dollar will continue to drop gradually.
          • Or maybe gold will remain high while the dollar plummets like a rock. Why doesn't the rest of the world yet realize that the US produces little to no value? When that realization hits, so does the massive dollar inflation. Right now, China and others are doing what they can to prevent a catastrophic dollar collapse, but it will come. My four signs of the apocalypse are: 1) China floats the yuan, 2) gold skyrockets, 3) petrodollars become petro-euros, 4) US defaults on foreign debt. 2 is happening now
    • I agree - what we are seeing is a return of super inflation running at double digit rates.
    • We aren't seeing all of it in the stores - yet - but it's coming. The prices of precious metals [kitco.com] are a good indicator of what's going on.

      One can only assume the second sentence is meant to mean "a good indicator of what's about to happen", in light of the first sentence. Which is still wrong.

      Look, think about where gold prices were five years ago and imagine the worst possible inflation one could reasonably expect this decade based on past trends. The increase in the price of gold isn't just a re

  • Oh, puh-*leese*! (Score:5, Insightful)

    by RobertB-DC (622190) * on Friday May 12, 2006 @10:39AM (#15318061) Homepage Journal
    The Great Bubble of the late '90s shaped a generation of Internet entrepreneurs and investors much as the Great Depression shaped a generation of economizers in the mid-20th century.

    Since my own existence only dates back some 40 years, I can't claim firsthand experience of the Great Depression, but comparisons between the Dot-Com Bust and the Great Depression are so overblown that it ain't even funny. From the usual suspects [wikipedia.org]:

    Almost all countries were affected; the worst hit were the most industrialized, including the United States, Germany, Britain, France, Canada, Australia, and Japan. Cities around the world were hit hard, especially those based on heavy industry. Construction virtually halted in many countries. Farmers and rural areas suffered as prices for crops fell by 40-60%. Mining and lumbering areas were perhaps the hardest hit because demand fell sharply and there was little alternative economic activity.

    I guess it's to be expected, though. We're supposedly in this War on Terror [gp.org], but so far, I haven't been asked to participate in a single Meatless Tuesday [rice.edu]. Where do I go to get my ration cards [oldchesterpa.com], anyway?
    • The Great Depression was clearly enormously more significant and widespread. But I don't think that the article's actual claim, that the Dot-Com Bust's effect on policy decisions of one group is similar to the Great Depression's effect of policy decisions of a different group, is wrong. The human cost of the fallout from bad policies is a completely separate matter from how people change in response to it. It's fair to say that Hurricane Katrina and the mine disaster in West Virginia had similar effects on
    • The Dotcom Bubble was one of the larger implosions of wealth since the Great Depression. But the scales just don't match. While we saw a drop of around a third in the face value of publically traded companies, this drop wasn't echoed in other assets like real estate and bonds. OTOH, the much greater drop in the stock market during the Great Depression was coupled with a decline in these other assets and massive unemployment as well as an aggressive, activist US government under FDR (President Franklin Roose
  • by Anonymous Coward
    I read that as, "Examining the New Bible". Almost thought I had missed the second coming of Jesus in my drunken stupor last night...
  • by syphax (189065) on Friday May 12, 2006 @10:41AM (#15318077) Journal
    I didn't RTFA yet, but I had to react to:

    'The bubble generation is much more attuned to the fact that things can get really out of hand,'

    If this is true, it'll last another 5-10 years before we forget all lessons learned (correct or not) and return to business as usual. Our species is really good at self-deception, group-think, extrapolation forecasting, and greed, with varying results. We deluded ourselves regarding tulips, electronics, radio, the internet, and who knows how many other bubbles; we will do so again.

    For a couple very good talks on the self-deception issue (somewhat OT), listen to Robert Trivers [itconversations.com] and Nassim Taleb [itconversations.com]
    • by Ugmo (36922) on Friday May 12, 2006 @11:20AM (#15318506)
      Our species is really good at self-deception, group-think, extrapolation forecasting, and greed, with varying results.

      I'd say we are best at greed. I remember in 1998-1999 myself and other people saying that it was a bubble and there would be a major correction or crash and I am no financial genius. What happened was that people who were financial geniuses knew it was a bubble but figured they could get out at the last minute and still make a killing. Meanwhile, they kept telling everyone else it wasn't a bubble in order to get everyone else to put their money in the market and sustain the bubble a little longer. They managed to keep things going for years after it was obvious that it was unsustainable. A lot of those financial geniuses came out smelling like roses while us schlubs lost money.

      What is worse than the people losing money is that the market is in a sort of exhausted state with no direction. People have no where to put their money except into real estate, driving those prices up into another bubble. A real estate bubble was the last phase of Japan's economy after it's boom in the 1970's and 1980's before it went into the never ending slide/doldrums that it is in today. There needs to be investment into something that creates new ideas, new wealth and new real growth not new McMansions and impotence cures for aging baby boomers.

      Fields where investment would be nice but probably won't happen:
      Alternate fuels, Safe nuclear fission power plants or practical fusion.

      Something else that won't happen:
      Reorganize our entire suburban sprawl into small tightly integrated cities with housing next to workplace and markets. This would limit the need for cars to go everywhere. If people walked more we would have less need for a hydrogen car, or electric car or any kind of car. It would probably also help with the obesity epidemic, asthma epidemic caused by air pollution and all the health problems that go with it.

      Really pie in the sky would be:
      Cheap space flight, space elevator, asteroid mining and orbital solar power plants.

      These would not be bubbles because something that would be productive and self sustaining would come from the investment, not a burst of activity and spending that leads nowhere.
      • Fields where investment would be nice but probably won't happen:
        Alternate fuels, Safe nuclear fission power plants or practical fusion.


        There is a lot more private sector money going into alternate fuels right now. Probably not nearly enough, but an increasing amount. My impression is that 'safe nuclear fission' technologies have come along way; the main obstructions there are political (which may be a good thing, on balance- I'm on the fence re: nukes right now, myself). On the fusion front, there's been
        • I'm all for it but you're talking about long timescales and either really innovative, forward-looking thought leadership from government, or heavy-handed restrictions of the types of freedoms that many of us enjoy.

          Did you write this with a straight face? Forward-looking leadership? In a government? While I am not in favor of a crackerbox city existence in big cement buildings like 50s communist Russia I do belive there are some very basic foundational things that can be done in growning communities to
  • by Rahga (13479) on Friday May 12, 2006 @10:42AM (#15318090) Homepage Journal
    "'The bubble generation is much more attuned to the fact that things can get really out of hand,' says Bill Burnham, a former partner at Mobius Venture Capital. 'There's a level of caution that has been ingrained.'"

    Let's see... Energy and home prices skyrocketing. Low unemployment, but virtually no improvement in salaries. The new bubble? It's healthcare, baby. Every market is targeting the baby boomers and milking them for as much money as possible, and when you combine that with a generation of people who have been saying "I deserve the best care no matter what the cost." forever while sitting on their lethargic hinds 24/7, we've got the current recipie for disaster.

    Caution? Bah. It's top-heavy protectionism.
    • The new bubble? It's healthcare, baby.

      Is that really a bubble though? Health care hasn't reached absurd levels because of positive-feedback of speculation. Pending disaster? Milking a demographic for everything you can (wait, since when is this NOT the norm)? Sure, but I don't think that's a bubble.
      • I think the best reason to say it's a bubble is that the Baby Boomers will all run out of money once their bodies start to break down and they can no longer work. They are saving nothing for retirement and the government doesn't have anything for them either.

        Perhaps the government will try to divert even more cash from the younger generations, but there is a limit to that.
    • I know. Let's just import a bunch of androids from Korea and Japan to wipe their ass. It's great health care, and they can talk to them as much as they like.

      Trust me. When they get really old, they can't tell what's real and what isn't anyways. :P
    • Sky rocketing home prices? hmm, it is definately news to me.
  • Bad Time? (Score:2, Insightful)

    by mkw87 (860289)
    "It's a bad time to start a company,"

    I don't necessarily agree with that statement either, but not for the same reasons many others probably don't. It might be a bad time to try to start a long term company online, but if you have a one-two year get rich quick idea that will most likely work what do you have to lose?

  • by i_want_you_to_throw_ (559379) on Friday May 12, 2006 @10:55AM (#15318242) Journal
    to a degree. I was involved in 14 IPOs during the last bubble and had a policy to sell out 90 days after buying no matter where the stock price was. I made out pretty good.
    Regarding the stock market, historically, whenever a new technology/infatuation arrives on the scene, tons of money get thrown in, the market gets irrationally exuberant, stock prics go way up and then implosion. Stock prices get corrected and after the dust settles the new golden age begins from whoever is left standing. In this case that's eBay, Amazon, Yahoo.

    No one "loses" money either. If you invested 10K in the market and your investment rises to 100K and then drops back down to 8K, you only lost 2K and only then if you decide to cash in and take the loss. For all those people who "lost" money, hedge funds made a ton so it's more of a redistrbution from the hands of the many to those of the few as opposed to a "loss"

    What screws people is no exit strategy. The stock buying public is always right during the trend but never are they right at the top or bottom. Can't be satisfied with a 300% percent gain...
  • by Anonymous Coward
    Like uncontrolled immigration and corporate controlled indentured labor via H1-B visas?

  • No, it's a major Real Estate Bubble.
  • Stocks are reasonably priced, salaries are reasonable, VCs aren't throwing money around in big fist fulls of $100 bills. I'd say that maybe things are maturing this time.
  • The IT industry (Score:3, Insightful)

    by Turn-X Alphonse (789240) on Friday May 12, 2006 @11:04AM (#15318328) Journal
    The IT industry will repeatedly bubble untill it's replaced. In the 80s people started to get really greedy and as we got into the 90s most industries became so refined that they can't really go any where. They'll just keep making the same stuff over and over again with slight improvements here and there.

    Where as the IT industry just started to come of age. It started to mature in leaps and bounds, this won't stop untill we hit the peak where any more power is just pointless (photorealism all round). It's more or less like the old steam engines. A lot of people saw "improvements" all the time and went "Wow this has got to keep going! It'll never stop and I'll become super rich!" The same is happening now, and will continue to do so forever.

    Greed will make a bubble in every industry that shows any majror improvements, right now IT is the favoured thing. Tomorrow it maybe nano technology, whatever it is the same pattern will repeat. Idiots won't listen, they'll do the same shit they always do and they'll get lucky once or twice and assume they will do it again.
  • by Animats (122034) on Friday May 12, 2006 @11:10AM (#15318393) Homepage
    Business Week is late on this one. We've already had the new Internet bubble, and are now starting the new Internet bubble collapse. Tribe [tribe.net] just had a layoff. The dating-service business has consolidated; most of the remaining sites are fronts for a few back-end companies. The "blog" scene is cluttered to the point of near-uselessness. Most of the "Web 2.0" startups are me-too operations.

    The real problem is that all these players are chasing the same pot of ad revenue. Most of them are bottom-feeders off Google AdWords or something similar. They're not selling anything themselves. There's no new product.

    • The difference, I think, is that all these bottom feeders and me too operations are not taking in large amounts of venture capital. So when they fail, it won't be spetacular. There'll just be a few more IT people looking for jobs.

      -matthew
  • In the '90s, venture captialists were handing out money to thousands of middle managers who wrote a 10 page summary of a an idea for a business and the stock market was insanely over-valued because folks figured sound business foundations were totally irrelevant in the internet age.

    VCs were burned badly and they examine companies far more closely than before. The money is flowing again, but it's targeted much more towards real innovation and practical business models - not vague ideas and businesses built t
  • Gold is now going up because gold is going up.

    Yet people are piling on -- even tho it has little more intrinsic value than osterich eggs did in the 90's.

    People are scared, then cautious, then risky, and finally greedy.

    Then they get hammered- a whole lot of people lose a lot of money, and then they are back to being scared.

    I'm up 32% over the last 24 months and I'm down to 50% exposure to this market.
  • by googisgod (855166) on Friday May 12, 2006 @11:25AM (#15318576)
    Read a story yesterday that said Google employees sold more insider stock than the total sold by the next 199 largest companies in silicon valley, COMBINED.

    Google selling also pushed up California's income tax receipts by 12 percent in 2005.

    Things are getting a little out of hand, dont you think?

    Google insiders are now selling twice as much pet year as Microsoft employees, even though Google has less than 1/10th the profit as MSFT.

  • I've noticed... (Score:3, Interesting)

    by misleb (129952) on Friday May 12, 2006 @11:37AM (#15318694)
    I don't really know much about the stock market, but I do know a bit about technology. And something that I have noticed which is similar to the late 90's bubble is an irrational belief in hype. This time around the hype is about anything that carries the label "Web 2.0." More specifically, anything that uses "AJAX." Far too many people seem to think that traditional software vendors are going to be put out of business by any schmuck who can manage to immitate a desktop application (or more laughably, an OS) in a browser. I've noticed a general unwillingness to stop and seriously consider whether or not anyone would actually WANT to run an office suite in a web browser, for example.

    Fortunately, I don't see nearly the same kind of money changing hands as in the last bubble. Most of it seems to be "grass roots" kind of stuff. So perhaps the hype will just die down with fewer bankruptsies when the dust settles.

    Just my $3.

    -matthew
  • Bubbles (Score:2, Insightful)

    Tech won't really be in a bubble unless there's a mindset of irrational exuberance in the general public. There would have to be large groups of insanely bullish people who flat out deny the mere possibility of a bubble. If you want to see a real bubble in action right now in 2006, look at the real estate market. We're just reaching the top of the sine curve there.
    • Re:Bubbles (Score:3, Funny)

      by misleb (129952)
      Tech won't really be in a bubble unless there's a mindset of irrational exuberance in the general public.

      Right, and in this current climate, the irrational exuberance seems to be limited to web developers (web 2.0, ajax, etc). So there isn't too much to worry about. Just a lot of smart people wasting their time trying to immitate desktop applications in a browser.

      -matthew
  • Web 2.0 (Score:2, Informative)

    by chrisbeach (887853)
    The article notes "Web 2.0" is an ambiguous term, but uses it nonetheless. I'm curious - what exactly is Web 2.0? Is there an RFC for it? Do the W3C have anything to do with it? Can you get a job as a Web 2.0 developer? I suspect the answer to all of these questions is "no," and that we're looking at another media mountain born of a technology molehill.

    One press article (http://www.businessweek.com/technology/content/ma r2006/tc20060313_860688.htm?campaign_id=topStories _ssi_5) talks about Web 2.0 as a coll
  • by jafac (1449) on Friday May 12, 2006 @11:47AM (#15318803) Homepage
    I don't know about the rest of y'all, but in the last bubble, there was such a high labor demand, that if a person could switch on a computer, they could get a salary of $70k/yr. If you were more competent, you could get more. And the icing on the cake was that they were handing out stock options like candy, to everyone, even the janitors. And NASDAQ was doing so well - frankly, I bought a house I would never have had a chance at getting into otherwise (though I totally screwed up how I structured my stock sales, so I got fucked by the IRS, and wasn't able to really take advantage of what would have been about $1 million worth of options).

    Many techies were seriously debating whether there was any point to higher education because of this tight labor situation.

    Nowadays, it's very different. Most of us feel lucky just to have jobs. My salary has finally caught up with what it was in 1998. Only now, I'm not getting stock options.

    We're most certainly not in the midst of another tech bubble. My take on this is that most likely, the reason for recent higher earnings has been due to the NSA buying lots of hard drives. When they've got enough, we'll be right back in the 2000-2003 toilet.
  • According to this article Baby boom and bust [economist.com] stocks and shares are looking like a poor long term investment as the baby boomer generation works itself out of the system. The Bboomers will sell their retirement plans to pay for their old age which will cause a drop in share prices of maybe 50%. The salvation may be a new breed of investors from the developing world - although not if the US blocks the sale of American companies to China.

    Of course this is slightly tangential as to whether there is a tech sto

  • prayer (Score:4, Funny)

    by denidoom (865832) on Friday May 12, 2006 @12:15PM (#15319101) Journal
    "The bubble generation is much more attuned to the fact that things can get really out of hand," says Bill Burnham, a former partner at Mobius Venture Capital. "There's a level of caution that has been ingrained."

    As I look out into the parking lot at the sea of import luxury cars and eat my free bagel on Free Bagel Friday, I say to myself,

    I sure hope so dude. I sure hope so.

  • No bubble in tech (Score:5, Informative)

    by retro128 (318602) on Friday May 12, 2006 @12:22PM (#15319195)
    I just don't see a bubble in tech. Yeah, there's some crazy money being thrown around, but it's not from investors as in the 90's, it's coming through aquisitions. By the late 90's everyone and their mother was a stock speculator. People saw these crazy returns and jumped in to get themselves a piece of the pie. Naturally, this phenomenon fed on itself and everything became overvalued incredibly quickly. When the big stock holders and VCs started selling off their stakes, all that money evaporated and so we have a crash. Right now I don't see anybody blindly investing in whatever tech stock they can to exploit returns that are way higher than they should be.

    Where I DO see it is in commodities and certain housing markets. Metals - Particularly gold and silver - are going crazy right now. ETF [yahoo.com] stocks have opened up so you can buy "shares" in metals, and when you do, the ETF buys physical metal to store in a vault (it's just gold and silver now, AFAIK. Cheaper metals would cost too much to store) The rise of these ETFs allow any joe to buy gold and silver on a whim, thus creating a large potential of making them overvalued. Compounding the problem is that a lot of countries are getting scared by the inflating dollar and hedging their investments with gold, further driving up the price. The rise of the price due to this activity is a lot of the reason the gold & silver ETFs were created in the first place - The price activity has the attention of the public.

    Don't get me started on housing in the US. I have seen this coming for three years. In the US, places in the midwest and south are going for what they should be, maybe even below - You can pick up a nice 3 bedroom 2 bath house with 1700 sq ft of living space and a good sized lot for the low $100's. These markets are safe from the bubble. But the same place out here in the SoCal city where I live will cost you at least $550,000, and that's with practically no lot. Even in the High Desert, which is on the other side of the mountains and 80 miles from LA, it will cost you $300,000 to get in the same house. Two years ago the same house was $160,000. It's ridiculous. The rise in prices is mostly due to the same mentality that caused the stock crash of the late 90's - People saw their homeowner friends building massive equity (and cashing it out to buy nice toys) and wanted to get in the game before it was too late. So they all started jumping out of the rental market and buying houses, which reduced inventory and thus drove prices up. The banks noticed the meteoric rise in equity, and they started loosening their credit criteria - They'll still make a ton of money even if the place forecloses. Pretty soon anyone who could breathe was qualifying for a home loan. Many of them could not afford a standard 30 year fixed rate loan, and so took out an ARM (adjustable rate mortgage, for those of you with no home buying experience) loan instead. So they were given a really low initial interest rate that would stay fixed for the first 5 years and then the banks would be allowed to increase it with the market.

    Then came the "creative" loans. When people could no longer afford 30 year fixed or standard ARMs, banks started pushing "interest only" loans. This is basically an ARM loan except you don't have to pay principal on the loan during the fixed period (again, usually 5 years). What's in the fine print is that after the 5 year period is up, you must start paying the principal you weren't paying during the fixed period. Coupled with increasing interest rates, a homeowner could be looking at significatly higher payments.

    But it gets better. Then came the "partial interest" loans. So now, not only are you in an ARM and not paying any principal, but you are also only paying a fraction of the interest every month. This is how a lot of people making $40,000 a year are buying houses that they would ordinarily need to be making $130,000 a year to afford. These are also called "negative am
  • Lesson learned (Score:3, Insightful)

    by Arandir (19206) on Friday May 12, 2006 @12:25PM (#15319220) Homepage Journal
    There's a level of caution that has been ingrained

    Of course. When you're suddenly half a million dollars in debt because you leveraged options from a company whose only product was a website, you tend to learn the lesson.

You see but you do not observe. Sir Arthur Conan Doyle, in "The Memoirs of Sherlock Holmes"

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