Comment by nostrademons | Hacker News Reader

Comment by nostrademons | Hacker News Reader

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Let's see what happens first. The 2008 crash was orderly too up until Lehman Brothers went bankrupt in Sept 2008:

https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...

Market topped in Oct 2007, and then there was a bunch of debate over whether we were or weren't in a recession through the first half of 2008. Bear Sterns went bust in March 2008, everybody was like "Well duh, they should have known it was coming", people thought it was the end of it, and the market recovered. AIG went bankrupt in Aug 2008, Lehman brothers in Sept 2008, and that's when everybody panicked. TARP passed in Q4 2008.

The dot-com bubble burst actually was pretty orderly - basically the starry-eyed buyers for tech stocks ran out, and companies couldn't get money on the public markets. Consequences were limited mostly to the people who had invested and the founders & employees of those companies. The road downward was actually more gradual than the road upward had been.

https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...

I think what Kin is saying before in 2008 and dot-com there were fundamental reasons for a bubble to burst which had an navigate reprecussions on the economy(recession/increased unemployment).

dotcom - shell companies, with no revenue or profits. 2008 - excessive/unsustainable leverage both by corporations and individuals.

This time around multiple QE cycles resulted in decreased treasury and bond yeilds. People\funds with captial went to invest other assets classes e.g. equity markets seeking high yeilds and as a result increased the price multiples/valuations while the intrinic businesses valuation and growth remained the same.

Now people are starting to realize that multiples(what you pay for a company and what its actually worth) are too high and started taking money out of equity markets. While the fundamentals of the business has stayed the same.

Hence this bubble bursting or "significant price correction" wont have the same impact on mainstreet as the other two bubbles because the business are still sustainable but the prices weren't.

Prices are not proxy for revenue/profits/growth or value. So unless someone can give actual facts that the fundamentals of the underlying businesses are/will be impacted on a systematic basis I agree with kin.

That's like saying the housing crash would have never happened because real estate always has inherent value.

A bubble's a bubble. This isn't a simple "correction". When your stock's PE is above 1000x, it's a bubble. Overvaluation IS the definition of a bubble, not a lack of "fundamentals".

Amazon and Yahoo had revenue in 2000 and still crashed.

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