20 Years After Dot-Com Peak, Tech Dominance Keeps Investors on Edge (reuters.com) 39
As Wall Street approaches the 20th anniversary of the piercing of the dot-com bubble, today's decade-old rally led by a few small players shows some similarities that cautious investors are keeping an eye on. From a report: March 11, 2000 marked the beginning of a crash of overly-inflated stocks that would last over two years, lead to the failure of investor favorites including Worldcom and Pets.com and take over 13 years for Wall Street to recover from. That bust ended a 1,000% decade-long Nasdaq .IXIC rally that had been fueled by low interest rates and a rush to invest in the emerging World Wide Web, often at any cost. Now, after hitting a record high on Feb. 13, the Nasdaq has reached over 9,700 points, almost double its high point in 2000 and about eight times the level of its trough in 2002. Among the so-called "Four Horsemen" of tech stocks that fueled much of the 1990s tech rally, only Microsoft's stock price has recovered from the dot-com bust. Intel and Cisco Systems remain below their 2000 highs, while Dell, the fourth member, has since been taken private and then relisted on the stock market.
Microsoft is dueling with Apple for the title of Wall Street's most valuable publicly listed company, with its stock quadrupling since CEO Satya Nadella took over as chief in 2014 and refocused the maker of Windows on cloud computing, a technology central to the current rally in Silicon Valley stocks. With a market capitalization of $1.4 trillion, Microsoft is now trading at over 30 times expected earnings, its highest valuation since 2002, but still less than half of the highest PE it reached during the dot-com era. Intel and Cisco, no longer among Wall Street's most-favored tech stocks after investors refocused on software, are trading at PEs in line with recent years. Further reading: NYU Professor Scott Galloway adds: In the last 13 months Apple and Amazon have added Disney, AT&T/Time Warner, Fox, Netflix, Comcast, Viacom, MGM, Discovery, and Lionsgate to their market capitalization.
Microsoft is dueling with Apple for the title of Wall Street's most valuable publicly listed company, with its stock quadrupling since CEO Satya Nadella took over as chief in 2014 and refocused the maker of Windows on cloud computing, a technology central to the current rally in Silicon Valley stocks. With a market capitalization of $1.4 trillion, Microsoft is now trading at over 30 times expected earnings, its highest valuation since 2002, but still less than half of the highest PE it reached during the dot-com era. Intel and Cisco, no longer among Wall Street's most-favored tech stocks after investors refocused on software, are trading at PEs in line with recent years. Further reading: NYU Professor Scott Galloway adds: In the last 13 months Apple and Amazon have added Disney, AT&T/Time Warner, Fox, Netflix, Comcast, Viacom, MGM, Discovery, and Lionsgate to their market capitalization.
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In the event of apocalypse, why do you think gold will be sought after?
I think if I were the warlord of future-earth, I would prize other things far more than gold.
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If I really thought that society would fall soon, I would spend a moderate amount on some weaponry and a lot more on antibiotics, amphetamines, cocaine and opiates
You would be amazed at the things you can get people to do for dope
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If I really thought that society would fall soon, I would spend a moderate amount on some weaponry and a lot more on antibiotics, amphetamines, cocaine and opiates
Prioritize weaponry and ammo.
You would be amazed at the things addicts will do to you for dope
FTFY, to validate my first point.
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Common mistake, put too much money into weaponry and you are either just starving looking at guns, or become a raider yourself, which has a decidedly short lifespan.
True that a handgun and a box of ammo won't stop many people, but a few crates of 5.56 and a couple of converted semi-autos can impress thousands of people to stop in their tracks
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Dried foodstuffs like beans and pasta, for example. I'd keep salt, peppercorns, and sugar. Seeds, metal tools, 19th century handbooks, cloth, sewing needles, thread, high-power air rifle with lots of ammo and spare parts.
Hammer, screwdriver, nails, screws.
Candles, shovels, canned water.
Basic electrical equipment like wiring, cutters, solder, terminals, transistors, resistors, capacitors, and inductors. The ARRL handbook from the 1960s.
Basic first aid handbook. Alcohol.
I don't know, there are many things I'd
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So basically the scenario in Jericho.
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In the event of apocalypse, why do you think gold will be sought after?
I think if I were the warlord of future-earth, I would prize other things far more than gold.
Regardless of what is truly valued in future-earth, if we see a 90% fall in the US stock market, what makes you think the USD will even retain value?
That is probably the larger concern when diversifying. Sure it may sound insane to be worried about a USD crash, but there were very few who got obscenely rich off the 2008 financial meltdown. The other 99.9999% of the world didn't exactly see that coming.
I thought the tech boom to tech bomb (Score:4, Insightful)
was caused by investors who threw tons of money at anything on the internet, in hopes it would stick, until they finally realized it wouldn't. (Not that there is any similarity at all to venture capitalists and private equity companies in 2020 /s)
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HEY LOOK AT ME! I'm using my ::Cue::Cat to spend my Flooz atPets.com! </Zippy2000>
As opposed to the utterly brainless idiot with a YouTube channel being thrown tons of money for acting like a brainless idiot in front of a camera?
Clicks and Likes are the 21st Century currency. A Cue Cat looks like a brilliant product by comparison.
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Indeed!
1999: Dot-Com: "This is different, since it's all on the Internet"
2006: Mortgage Bubble: "This is different, it's physical property, not cyber-land."
2020: "This time is different, they are big and growing companies, not startups." (Note the self-fulfilling prophecy here.)
The poppage may be nasty since the US deficit is too big for a real stimulus. Save up!
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I thought the tech boom to tech bomb was caused ...
It was caused by whatever I can think of that makes me the most money while writing this article.
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Rich people have too much cash chasing after too few good ideas. It used to be that one invested extra money in new factories or new physical stores, but those are not money-makers in the USA anymore. The alternatives are foreign factories, tech co's, or real-estate; which is why real-estate is sky high. Tax them more and lot of these problems will shrink. If I'm wrong, we can always go back to being a plutocracy.
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History repeats itself! It's 1999 again. (Score:3)
I think the major difference between now and 1999 is just the lower direct involvement of small-time investors. Back when I went through this the first time, pets.com founders and similar were on CNBC every day hyping their stock and how they were going to change how people buy dog food over the Internet. ANY company with a "dotcom" angle was pumped up to the stratosphere by analysts. Some people quit their jobs to day trade, back when the market went slow enough that humans could reliably make money doing that.
These days, it's mainly institutional investors and VCs paying the bills for all these Second Dotcom Bubble companies. Too much money is chasing too few good investments, so hedge funds (for example) are willing to dump a few billion here and a few billion there in hopes they'll get something. Look how much SoftBank just flushed down the toilet on WeWork, including giving the CEO a massive payout to just go away. Just like anything "dotcom" was a winner back in '99, anything you can spin into a "tech company"
What I think is going to happen is not a crash, but a slow deflation. All these copycat companies (the 5 meal kit services, the 10 million subscription-box services, the AIMLBlockchain people, etc. are all "born in the cloud" so the VC's credit cards are paying the cloud bills. It's not like they had to raise $100 million for a worldwide data center network, etc. Too bad, because back around 2001 there was a huge market for bankruptcy sale equipment from failed dotcoms...not this time.
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Errrmmm... you're right.
I would have thought more people own stocks today than in 2000 because the decline of pensions pretty much forces everybody into the market. But apparently not:
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I suspect the number under report some. A lot of people have very very depressing levels of financial understanding / literacy. They might know that their 401k is a retirement account they contribute to but only a tiny faction of them probably can tell you anything about the underlying investments that comprise it.
Heck I'd be at least a double digit percentage of the adult population could not offer you a basic definition of a mutual fund or explain why you might prefer one over individual stocks. Ask peopl
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Not surprising when nothing about it is taught in schools. Everything I know about stocks is from asking my investment adviser when I see him twice a year.
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Creative destruction (Score:1)
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This isn't normal. Money is flowing to tech companies who are hopelessly in debt and could not possible pay even a fraction of it off, even if they made a profit at some point. If interest rates rise, it will be game over.
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What you missing is that the fundamentals of investing for the big guys have changed. With near zero interest rates (if you have access to those because say you are investment bank or big enough hedge fund). There is no cost to losing money.
Lets say you pump 100K into widgets.com that you borrowed at nearly 0%.
First, you can afford to let it ride forever because there is no carry cost, you just hold the equity unil they either become a unicorn or it goes to 0. Its not like in the old days where you were ca
It's land, not gold (Score:1)
Cloud (Score:2)
The cloud means you would no longer own things. They do. Software is moving to a rental model. You canâ(TM)t even purchase software like Photoshop outright. You have to pay a monthly fee instead for as long as you use it. And I think it is only a matter of time before hardware forces you into the rental model too. I mean itâ(TM)s not widely known, but itâ(TM)s already an option for the iPhone that you subscribe to the latest iPhone by paying a monthly fee. It wonâ(TM)t take much to force
Stop Classifing them as Tech Companies. (Score:2)
I had this issue back in the 1990's Pets.COM was a mail order pet supply company. Not a Tech Company. During the 1990's Amazon.com was a book store.
While they not be brick and mortar stores, there were number of equivalent companies working nearly the same way as these company's worked.
Amazon with the exception of the AWS services still isn't a tech company.
Google with the exception of Android is an Advertising company...
A tech company creates technology for other people to buy. Microsoft, IBM, Red Hat, D
Re:Stop Classifing them as Tech Companies. (Score:4, Interesting)
Android isn't an exception. The only reason Google ever bothered with Android is because it wanted to have a standard platform on cheap mobile phones (of which there are millions) to serve ads to.
Why do you think Google ever bothered with self-driving cars? Because if the car is driving you around, then you don't have to pay attention to the road. And if you don't have to pay attention to the road, then you can pay attention to a screen. And on said screen, Google can serve you ads.
Everything Google (Alphabet) does is ultimately to serve ads. Everything.
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It is and it isn't. It is tech they are selling to you but its also just a means to an end. The end of course being ads because Google is an ad company.
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Amazon with the exception of the AWS services still isn't a tech company.
Disagree with you there. Amazon is very much a tech company in that they have does a lot tech innovation in the logistics and warehousing space and bought a lot of tech innovators in that space as well. So you call them a logistics company if you want but really it is about the tech. Their model is all about driving the cost of order fulfillment down below what anyone else can do.
Cheap hardware! (Score:2)
Hell yeah eBay will be full of cheap enterprise grade hardware again. Except now it will be lame Dell and HP gear instead of Sun and SGI like last time.
No More Moore's Law (Score:2)
Without any majorly speedy from generation to generation, most computers from 2011 run "good enough" for most home users (non-gamers) and businesses that just use Office.
Give us something exciting to spec race against and the Tech Boom might happen again.