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Businesses The Almighty Buck Technology

No Tech Bubble Here, Says CNN: "This Time It's Different." 252

ErichTheRed writes I saw this on the Money page of CNN today. Apparently, various stock analysts have declared that this run-up in stock prices is different than the 1999 version. OK, we don't have the pets.com sock puppet, Webvan or theglobe.com anymore, but when Uber is given a valuation of $40 billion, can a crash be far behind?
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No Tech Bubble Here, Says CNN: "This Time It's Different."

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  • by Anonymous Coward on Friday February 20, 2015 @09:18PM (#49098511)

    ...Fool me twice, shame on me.

    This is wise advice when discussing the Wall Street crowd.

    • by MrBigInThePants ( 624986 ) on Friday February 20, 2015 @09:42PM (#49098627)
      If the "fools" with money realized this then there would be no bubble. But it is easy to make a call when you do not stand to gain or lose from any of it since you are not in the market at all, isn't it?

      If you invested in the "bubbling" Uber earlier and sold out now you would be anything other than poor or stupid. As long as you get out before the burst, you win.

      Also remember the fools with money are often not the ones making the decisions and giving the advice.
      The finance industry is funded on churn and stock fluctuations. They win on the way up AND often on the way down (overall, I am not talking about individual traders or trades).
      It is highly possible that Goldman Ballsacks will be investing people's money heavily into these stocks while betting against the stocks with other money as the bubble goes - just like they did during the last one.

      But the question is NEVER what HAS happened, it is always what is going to happen in the future and roughly when. Most people fail HARD at this and should really just STFU because they have no idea what they are talking about.

      Just waving your hand about predicting doom "sometime" hardly counts as insight in this sort of market.
      • The tricky thing about bubbles is that they can be difficult to spot, even by seasoned investors.

        Though to be brutally honest, I think Facebook is more "overvalued" than Uber. Unlike Uber, they don't have any actual paying customers besides ad revenue. Being an ad revenue only company is what got a lot of the dot com companies in trouble in the 90's.

        • Depends on the bubble.

          The thing with investment is not what you should NOT do with your money, there are always a million of those, it is what you SHOULD be doing.

          And any advice must always be compared to WHAT ELSE you could be doing with said money.

          So you are going to bury your money in gold because your paranoid? Congrats, you are now possibly losing the 5+% interest you could have been making in the meantime.

          Do that for a year and you are a big loser also.

          Bubbles can be a FANTASTIC time to make money. Bo
          • So you are going to bury your money in gold because your paranoid? Congrats, you are now possibly losing the 5+% interest you could have been making in the meantime.

            Even shitty investors know that gold is a shitty investment. The only people that make serious money on gold are the ones who pay people minimum wage to spin those "we buy gold/compramos oro" signs, melt jewelry/false teeth/unwanted bullion into other bullion, and then sell it on those gold pimping commercials. And those people only sell it to A) old people B) people who are convinced that the world could very well end any day now and need it "just in case" only to later sell it at basement price.

      • If you invested in the "bubbling" Uber earlier and sold out now you would be anything other than poor or stupid.

        So your strategy is to buy things that are going to go up in price? That's a really good one. Let me write that down.

        Anybody can look back and see what they should have done. That's not a difficult skill to master. The hard part is doing it going forward. That's really hard.

        <Cue the anecdotes from people who bought Uber early. That's not data.>

        • no one ever lost money faithfully following that advice

          • no one ever lost money faithfully following that advice

            Becuase faithfully following it is not possible.

            You don't know what will go up in price, you can only make more or less educated guesses. If those guesses are right you make money, if your guesses are wrong you lose money.

      • Re: (Score:2, Informative)

        by lucm ( 889690 )

        If you invested in the "bubbling" Uber earlier and sold out now you would be anything other than poor or stupid. As long as you get out before the burst, you win.

        Get out of what? Uber is not publicly traded. Unless you happen to run a VC operation from your basement (which would require millions) there is no way you could have made money with that company.

        Most people fail HARD at this and should really just STFU because they have no idea what they are talking about.

        Exactly.

    • Wait, we did fool them twice. Once with the dotcom bubble and then again with the Housing crash. Technically we fooled them several times if you take into consideration penny stocks and the federal savings and loan scandal as well. So maybe its more like 'fool me a couple dozen times, shame on my investors'
    • Say it with me Beavis:

      Uber, crash, heh heh

    • ...Fool me twice, shame on...uhhhh...we won't get fooled again.

    • by jafac ( 1449 )

      no. More like
      "There's a sucker born every minute" - David Hannum

  • it's not (Score:5, Funny)

    by Lehk228 ( 705449 ) on Friday February 20, 2015 @09:19PM (#49098517) Journal
    it's not different at all is it steve?
    • I dont know, I think we should ask bennett
    • by aliquis ( 678370 ) on Friday February 20, 2015 @09:45PM (#49098645)

      In that the companies make money this time?

      Google seem to be traded at P/E 26 (Google finance, assume that's on actual profits and not ideas for the future) which is pretty reasonable. The interest environment is shit and Google at least have an urge to do new products. Whatever they will always be the search and information gathering giant I guess one could question.

      Facebook mean-while is valued at P/E 75 which is way higher.
      Do I trust or care Facebook even remotely as much as Google?
      No I don't.
      I don't care for Facebook at all. So do their social platform deserve that? Then again at least they have made more money than before.

      Something like Microsoft is 17.7 so whetever. H&M is 30 as comparison. Sure there's a bigger market to sell clothes to but there's a bigger one for Microsoft products too :).

      • Today I decided I finally had enough of Google's spying and changed my default search engine to DuckDuckGo. It took about 5 seconds. Yeah, it will take some getting used to having different results and all but I feel incredibly free after having made the switch. If I change my email from Gmail then I will have completely severed myself from Google. So how solid, really, is Google's position? It's an ad company. An increasingly evil ad company. I've got one leg out of their cage and only need to pull
        • I thought about this as well and switched to Yandex which has a similar interface as gmail. I'd never thought I'd go to the Russians for privacy but they seem less likely to be subpenaed by the feds. That said, using a Russian email probably already brings it's own extra attention to me.

          I thought of setting up my own server but decided it really wasn't worth the bother. Most of my friends and family use gmail, so gmail still gets their profile one me regardless of what I do.

          • If your primary security concern is a federal subpoena, and you're using unencrypted email (the main kind the subpoena would matter for) then you're hosed anyways. Using a Russian server guarantees that when the feds want your data, they can get it from existing government databases; potentially without bothering with that pesky subpoena paperwork.

            It doesn't really seem like there is a use case. If you're happier with the service, great. More power to you. But it is basically impossible that you've increase

        • by Aighearach ( 97333 ) on Friday February 20, 2015 @11:30PM (#49098921)

          There is sure a lot of hate. And I can understand it to a certain extent; I've been running ad-blockers consistently since the 90s. I used to have doubleclick in my hosts file to reduce the filter load, too.

          But google is the only ad company that doesn't sell your info. I hear a lot of people just shouting randomly that they are "evil," but without any real reasons. They discontinue services that I used to rely on, which is their right, and as a result I'm unlikely to adopt new services. But there is nothing evil about that, it is a straightforwards application of their own prerogatives.

          All the other ad companies sell information about you. All of them. Google is the only one with the reach to even try to offer what they do, which is a system where the advertisers can target ads without any information about the targets. They are clearly way less evil than the other ad companies.

          If you're going to host and run your own email, then obviously you can have more power over it. But using another corporate email provider will rarely protect any data, since you're already with the company that doesn't sell data about you. Just about everybody else does sell data, including companies that don't sell advertising. Even my mechanic leaked my phone number to some random company so they could send a TXT spam.

          Just wave your hands shouting "evil" while you switch to companies that sell their data on you. That'll teach `em!

          • But google is the only ad company that doesn't sell your info.

            Never heard of Google analytics? What exactly do you think they are doing?

        • ive been using ddg for a while now as my delfault and I really like it. I would LOVE a ddg email service. noahhaders@duck.co, how cool would that be!

  • by BoRegardless ( 721219 ) on Friday February 20, 2015 @09:20PM (#49098525)

    ALL bubbles end badly as they are doomed to burst from day one.

    Booms work on psychology of crowds until some unseen actor "flips the switch."

    • by trout007 ( 975317 ) on Friday February 20, 2015 @09:46PM (#49098649)

      Nope. Booms work when the Fed floods Wall St with cash. It has to go somewhere? It ends when the realization hits and the 40:1 leveraged accounts go bust.

      Then it's time for the tax payers to bail them out and start over.

      • by gewalker ( 57809 )

        It is not just the Feds cash flood, it is the zero-rate interest. People chasing returns are practically forced into the stock market to try and get returns.

      • Was the Fed flooding the market with cash in 2007-08? I think it was the private banks that were creating liquidity (money) with those weird investment vehicles and loans. What the Fed failed at was not withdrawing money from the economy and running up interest rates to cool things down, but nobody wants an economic party pooper and they would have been savagely criticized for ending the good times.

        • by Mashiki ( 184564 )

          The feds are still flooding the market with cash, it hasn't stopped under Obama. Remember that last major dump in trade numbers by 200-400 points a month or two back? Yeah, that was on the fear that the feds were going to stop pumping in cash.

        • Was the Fed flooding the market with cash in 2007-08? I think it was the private banks that were creating liquidity (money) with those weird investment vehicles and loans. What the Fed failed at was not withdrawing money from the economy and running up interest rates to cool things down, but nobody wants an economic party pooper and they would have been savagely criticized for ending the good times.

          Yes, and they still are. The interest rate is below inflation which means it is profitable for banks to loan money backed in random crap, because random crap appreciates at the rate of inflation. That is what subprime morgages was, and what is still happening because they are still allowed to loan under inflation.

    • ALL bubbles end badly as they are doomed to burst from day one.

      Booms work on psychology of crowds until some unseen actor "flips the switch."

      Sounds like sour grapes from somebody who didn't get out in time.

      I agree it doesn't always work out well for the crowd, especially in the short term. But if it ends badly depends on where you are standing at the end. If it was ending badly for your unseen actor, he wouldn't flip the switch yet.

  • by Dunbal ( 464142 ) * on Friday February 20, 2015 @09:22PM (#49098535)
    Stocks go up, stocks go down. If the market doesn't crash I'll make money. If the market crashes I'll make even more money.
    • by lucm ( 889690 )

      The stock market is not a video game. For a stock to be sold there must be a real buyer. And guess what happens when a market is crashing? Lots of sellers, and no buyers. That's how you can tell that the market is crashing.

      So how does your foolproof plan works? You will somehow know just before the market crash so you can sell everything, then buy it back at a huge discount because the market is dead? That's pure genius, you should send your resume to JP Morgan right away.

      • by Dunbal ( 464142 ) *

        "So how does your foolproof plan works?"

        Buy low and sell high. The rest is up to you to research. As for "sending my resume" why should I work for someone else when I'm perfectly happy working for myself?

      • by hodet ( 620484 )

        By having a long term investing horizon and rebalancing periodically

  • I mean basically we have $1 trillion worth of funny money from QE1-42 that has to be burned sooner or later anyway. If no actual real money is spent, is it really a valuation? Is it really a bubble?

  • what, Uber? (Score:5, Interesting)

    by ihtoit ( 3393327 ) on Friday February 20, 2015 @09:26PM (#49098555)

    That ridesharing thing that's getting sued ten ways from Sunday for butthurting established taxi firms?

    Something's definitely up if they're getting valued at $40 billion! That's 4 times the UK's annual agricultural output!

  • perhaps there will be an uber crash

  • Round and round. (Score:5, Insightful)

    by MouseTheLuckyDog ( 2752443 ) on Friday February 20, 2015 @09:33PM (#49098589)

    I remember in 1998 hearing the experts all say "This time it's different we won't crash."

    • Yeah, but you had the old guard saying that they didn't understand it - Warren Buffet comes to mind. And then with the housing crash you had someone as big as Goldman Sachs pulling back in 2007. This time you hear a little bit of head scratching, but it's hard to find someone with a lot of respect holding back. There was a LOT of money printed recently - this could help explain at least part of the run-up. Plus, any company that survived the market crash is probably a pretty strong company, so you have some

    • And they were right, it was different. By 2001 they had cashed out. In `98 there was a clear understanding that the bubble would still grow further, because people were investing in batshit crazy stuff and the rate of investment was still accelerating.

      Nobody knew exactly when the crash would come, but there were signs that the top had been reached. The only people "surprised" by the crash where people who were predicting a downward slope. It was already visibly at least near the top for months ahead. VC mon

    • by jafac ( 1449 )

      yes; it was called the "New Economy". A term that should be remembered for generations, in infamy. Like Hitler.

      Yet - people still refer to the "New Economy" as a thing; instead of as a grim reminder of how we create buzzwords to fool ourselves into believing that "it really is different this time, and we are really a special flower."

  • No bubble? (Score:5, Interesting)

    by msauve ( 701917 ) on Friday February 20, 2015 @09:41PM (#49098623)
    If you think Uber is worth $40B, or Instagram worth $33B, I've got some tulip bulbs [wikipedia.org] to sell you.
  • by kimanaw ( 795600 ) on Friday February 20, 2015 @09:47PM (#49098655)
    I recall watching CNBC (yes I know, bad choice) circa early 2006 and watching some real estate manipulator say (paraphrased), "Of course there's no real estate bubble, there's an infinite demand for housing!".

    I also figured out when the 2000 tech bubble was about to burst: I was at the local grocery store and overheard the following conversation between the clerk and bag boy as I was checking out:

    <clerk>: "The manager said you don't need to come in to work tomorrow."

    <bagboy>: "*chuckle* Hehe thats ok, I'll just stay home and day trade..."

    I literally went home and cashed out 90% of my mutual funds after that. Unfortunately, my judgement failed me a couple months later, when I bought back in...and lost most of it...

    • Counter anecdote: During the Enron Scandal (October 2001) NPR brought on an analyst who talked about it, but warned that the housing bubble was the real risk that people should be talking about, not Enron.

      I believed him, I just wish I hadn't. There were many years of profiteering to be had before the bust. I was shocked that it kept rising after 2004.

      • by jafac ( 1449 )

        It kept rising after 2004, because Greenspan stimulated the economy with a low FED rate. When it became obvious that the rates needed to be raised in 2004, they kept them low - likely to continue funding the war; which was not paid for by tax hikes or bonds, but but was paid for with debt. This overstimulated the economy (exactly what Keynes said NOT to do with stimulus spending), which is what really created the bubble. Irresponsible manipulation of monetary policy by the Bush administration. This is w

    • by jafac ( 1449 ) on Saturday February 21, 2015 @01:55AM (#49099347) Homepage

      Oh I remember this, too; in 2007; and I kept imagining that housing demand will always go up, because we're always adding more people, right?

      I was naive enough that I could never conceive that we'd get to a point in this nation where vacant, foreclosed houses outnumbered homeless people 4:1. I never dreamed that our trusted financial institutions and ratings agencies would sell their credibility and AAA ratings like a crackwhore sells her virtue. Yet, post 2008 - the banks were willing to sit on empty, depreciating inventory, rather than let their fellow americans sleep indoors under a roof. Disgusting. I learned a lot since 2007.

      But I'm pretty sure that when the next crash comes, everybody's going to act all surprised like they didn't see it coming, and though it could never happen like that again.

  • by the eric conspiracy ( 20178 ) on Friday February 20, 2015 @10:17PM (#49098741)

    Come on man. UBER isn't even a stock. The so-called 'valuation' is somebody's pipe dream that hasn't been exposed to the marketplace.

    ALSO there will ALWAYS be stocks that are over hyped and overvalued. Cherry picking individual issues and using them to characterize the market is a fools game.

    March 10 2000 the NASDAQ hit 5132.

    Now the NASDAQ is still well below the 2000 high on an inflation corrected basis. Even more so considering the burgeoning size of the tech economy over 15 years.

    Maybe there is an argument that things are overwrought, especially in Vulture Capitalist Fantasy Land. But bubble? Nah.

    • Uber is a stock - It is just privately traded. So it is not exposed to the vigor that a second by second tick that stock market has - it is just ever so often - once or twice a year. But it has exposure to the market place.

    • I was really talking up Ballard Power back in 2002.

      A friend's relative made a significant investment about the same time. I'm just glad that purchase was made before I even met him, and not on my recommendation.

      We both thought it was a post-bubble fire-sale steal-of-a-deal at $25. It is at currently at $2.43, which is still up somewhat compared to most of the last 10 years. Negative earnings, but they're somehow still in business.

      http://finance.yahoo.com/echar... [yahoo.com]

  • one rule of thumb we were told in both my finance and economics units:
    as soon as "experts", particularly media experts, start saying "no bubble" you can be pretty damn sure there is a bubble
  • It's not a bubble if the money is real. Here is the graph you need to look at [slashdot.org]. Notice that the p/e ratio of the NASDAQ was around 200 before the crash. When you have a p/e ratio like that, your income needs to jump 2000% to justify the stock price.

    It might be argued that it is a little high now, but it's not anything near to what it was before (and if it is high, it's probably due to monetary inflation rather than irrational exuberance in stock prices).
    • by prefec2 ( 875483 )

      Money is always a loan of someone. Presently, a lot came from the central banks. If they rise the price for money or reduce the size of lended money it will go bust. Money is not a real thing. It has no fixed value. Same applies to gold or any other thing you use to describe wealth. However, as long as the intrest rates are higher in the US. A lot of European money is transferred to the US, lowering the Euro which makes products from there cheaper. This allows the Germans to sell more stuff in the US increa

  • Shadow bubble? Of course, that doesn't mean a bubble won't eventually form in tech stocks, or that one isn't already being inflated elsewhere in world of technology.

    This comes at the end of TFA.

  • Nope (Score:4, Interesting)

    by rsilvergun ( 571051 ) on Friday February 20, 2015 @11:30PM (#49098917)
    The difference here is that Uber has a product. A vile, rent-seeking product built on the corpse of the American Middle Class, but a product nontheless. What companies like Uber and Amazon are doing is bringing the Wal-Mart model to the rest of the workforce. Driving down wages and benefits and skimming off the top of just about every transaction. The money there is huge, especially once you're entrenched. That's why they're valued so high. Real money is in ownership, not petty things like making products and providing services. That stuff's for the plebs.
    • by starless ( 60879 )

      The difference here is that Uber has a product. A vile, rent-seeking product built on the corpse of the American Middle Class, but a product nontheless. .

      I'm finding Uber increasingly useful, as so do an increasing number of people I know who live in cities.
      The drivers also seem pretty happy when you talk to them.
      So, I think you're overstating how bad Uber is overall. And they may even (with luck)
      have a positive role to play in making cities easier to get around and so reducing the
      need for cars.

      • Re:Nope (Score:5, Interesting)

        by rsilvergun ( 571051 ) on Saturday February 21, 2015 @12:07AM (#49099037)
        The drivers are happy because they're healthy. They're making about $12 bucks an hour after the cost of driving is factored in. That's not enough to buy health care but it is enough to disqualify most from the subsidies. At those wages their paycheck to paycheck, and a car wreck with an uninsured driver away from disaster. Speaking of insurance those drivers aren't anywhere near as well insured as a traditional taxicab driver, which is another reason they can out compete taxis.

        But there's another nasty side of Uber we haven't seen yet, which is that as work becomes more and more scarce you're going to see more and more people turning to it to pay rent. It's not so much the sharing economy as the desperation economy. That's the rub. Right now there are some drivers doing OK because $12/hour seems like a lot as long as nothing goes wrong, and there's plenty to replace them when it does. But it's a larger part of the race to the bottom that the modern world's caught up in...
  • Uber has something the others don't... customers. It could be argued that the government created the market for them.
    • I thought Uber just had a server, or a bunch of servers, and a highly fluid 'work force' that could go away in a matter of days if conditions got bad.

      You're saying they have an actual product they sell and they're not just standing in the middle on a deal?

  • When investors can't earn almost anything on fixed income, they pile on stocks.
    In essence, if interest rates=2%, stocks=x, if interest rates=1%, stocks=2x (apreciate so they give back the same rate of return), but then there's the other way around, when interest rates starts to rise, the stock market could crash predicting the revaluing of assets.
    The math isn't exactly 2%, x, 1%, 2x, there are other factors, but the basic idea is still true.
    A bubble is what happened before 2008, the market was overvalued by

  • I predict that the future is not predictable.

  • by bkmoore ( 1910118 ) on Saturday February 21, 2015 @04:29AM (#49099621)
    When thinking about tech stocks, I like to use a "Boeing" rule as a measuring stick. The globe.com is valuing Uber at 40 Bn (1/3 of Boeing). Boeing had 90.8 Bn in revenue for 2014. Uber claims to be able to generate 10 Bn "soon" Business Insider [businessinsider.com], but conservative estimates are closer to 2 Bn. So revenue is somewhere between 1/45 and 1/9 of Boeing. I know the comparison is a bit apples (not the computer) to oranges, but Uber's overvalued IMHO. Especially considering that Uber has almost no physical assets and Uber is a privately held company with no public numbers.
  • by Livius ( 318358 ) on Saturday February 21, 2015 @07:56AM (#49099949)

    People fail to understand is that bubbles are not bad for the people who are lucky enough to get out in time. (And, yes, it's usually simply a matter of luck.) They are only bad for everyone else.

    Financial analysts are the last people with an incentive to tell people about a bubble if they suspect one.

  • Then I'll be able to pick up major universities for about $1K each.

  • by Chris Mattern ( 191822 ) on Saturday February 21, 2015 @09:35AM (#49100243)

    "This time it's different."

The more they over-think the plumbing the easier it is to stop up the drain.

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