Comment by d4vlx | Hacker News Reader

Comment by d4vlx | Hacker News Reader

I was in university during the late 90's .com boom and the current situation does not feel the same. While some of the high prices being paid for startups and talent in silicon valley point to some possible over heating it does not seem to be affecting the wider tech world in the way that .com boom did.

In 1999 and early 2000 every investing show on TV would constantly be talking about the new highs that Microsoft, Cisco, Nortel hit or the latest up and comers and the massive amounts of money being poured into it all. It wasn't the normal speal, it was like watching a cheer leading squad cheer on the the never ending boom. I don't know quite how to describe it, it was kind of eerie and surreal. And it wasn't just the investing shows that were doing it, it was being talked about all over the place, even outlets that would not normally talk about anything money or stock related.

The current situation does not seem much like that to me. Sure there are several cases of companies with sky high valuations and questionable future revenue but it's not industry wide like 1999.

The eternal claim of bubble-deniers is “This time it’s different!”

This does not prove or disprove anything, of course. But it does make “This time it’s different!” an insufficient proof of something not being a bubble.

And that is in turn the eternal claim of bubble believers, usually delivered as reflexively as above.

https://www.hnsearch.com/search#request/comments&q=%22this+t...

Is d4vlx mistaken? If so tell us how.

I do not claim to have some proof towards either “side” of bubblism or non-bubblism. I was merely trying to point out that d4vlx’s comment essentially only said “This time it’s different!”, and I wanted to explain that this does not prove it’s not a bubble, since every bubble is different than the last one.

My comment does not show that it is a bubble, nor was I trying to do so. The most that could be claimed is that I was trying to show that the possibility that it is a bubble still exists.

You aren't doing justice to d4vlx’s comment. What he said is that this bubble has not permeated the community outside of tech, whereas the .com bubble did (and I would add the housing bubble, and the per-depression bubble). A larger bubble is always producing a larger bust, with non-linear effect.

"This time is different" is normally referring to "tech is changing the world, we don't need he profits, it will grow forever, this time it's different" or "they don't make any more land, housing prices will grow forever, this time it's different". It's not at all the same things to point out that the scale of the bubble is much smaller. Lumping the two together produces a strong impression that your comment is disingenuous.

So, this could simply be a smaller bubble. “This time it’s smaller!” is an equally non-persuasive argument.

What is the difference between a "market correction" and a "bubble"? Do you think there is a risk of the entire web industry imploding like it did in 2000?

The risk of anything happening very much like the last time is always low.

For what it's worth some of my take aways for why it's different are:

1) I don't see it effecting the tech industry as a whole to the level it did then.

2) It's not leaking out of the tech industry into the media, other industries, the financial world or popular perception to the same extent.

3) The amount of money flowing into tech and especially startups is significantly less now (proportionally).

4) There are many established business models that use the internet now while in 1999 there was much more speculation and few proven models.

I agree that basically all I am saying is "This time it’s different". That is my interpretation of the situation, take it for what you will. I am not trying to prove anything and do not believe in predicting the markets in general.

This time it is different.

I'm not denying it mind, but I too was there in the 90s. It was a crazy time. You would get in a taxi and the driver would be talking about stocks, giving out tips, talking about his portfolio. It was everywhere. Nowadays not so much. And outside Silly Valley, allowing for inflation tech wages have been basically flat since '01. A few years later it was the housing bubble, and everybody, everywhere was talking about property, buying, selling, renovating, letting. Now, if you put your ear to the ground, it doesn't sound like before.

But then as now, money is too cheap and money cannot stand still, it has to go somewhere, then a bit later it just evaporates. So it's bubble, but a different kind of bubble.

This time it's the bubble of a massive capital glut. There's nowhere for the money to be used productively right now except for high tech.

I would agree - from the perspective of someone who isn't an insider but follows stock news - that there's a cash glut in the market (AAPL's the well known one here). Where to put that cash? Just maybe it's reasonable to stuff it in startups as part of a diversification strategy; use it as part of a "Black Swan Farming" approach.

At any rate, there's a lot of, shall we say, underperforming froth in the tech startup world at the moment. Stuff that doesn't appear to have a direct connection of value to what's being offered. Whether it constitutes a broad marker of the tech market being in a systemic bubble is debatable, but certainly some of the ridiculousness of a bubble is visible if you watch the news float by.

It's my opinion that we don't have a broad bubble in tech. The stock market is probably getting close to a bear market. That's true enough, we've had a long bull run. But it might (I bet it's more likely) be the case that there's a "Startup" + VC/angel market inflation.

So if its different from the .com boom, what does that mean? Does that mean it won't crash ... or that it will crash in a different way?

In essence I was saying that I am not seeing as many or as sever warning signs. That is just my interpretation based on the very limited information that I have now and had then. I am not trying to make any predictions, I do believe in predicting the market.

There is too much money, and it has nowhere to go. Even the property bubble is starting up again. It won't be "the value of tech stocks" that crashes, it will be "the value of money". Which means inflation, and anything imported will become more expensive.

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