Are we in another dot-com bubble? | Hacker News Reader

Are we in another dot-com bubble?

17 pointsShaneCurran10 comments

Lately there have been a number of acquisitions with preposterous valuations (e.g. WhatsApp's $19b procurement).

It seems that anyone with a website and a business name meets the criteria of a company worth purchasing.

All of this leads me to think we are currently in another dot-com bubble.

Are we? When do you think it will burst, if ever?

"Whether a particular instance is a bubble will never be objective; we will always have disagreement ex ante and even ex post. But to have content, the term bubble should indicate a price that no reasonable future outcome can jus- tify. I believe that tech stocks in early 2000 fit this description. I don’t think there were assumptions— short of them owning the GDP of the Earth—that justified their valuations. However, in the wake of 1999–2000 and 2007–2008 and with the prevalence of the use of the word “bubble” to describe these two instances, we have dumbed the word down and now use it too much. An asset or a security is often declared to be in a bubble when it is more accurate to describe it as “expensive” or possess- ing a “lower than normal expected return.” The descriptions “lower than normal expected return” and “bubble” are not the same thing."

http://www.cfapubs.org/doi/pdf/10.2469/faj.v70.n1.2

There is probably some over-valuation going on, but it's nothing compared to what was going on in the dot-com bubble.

In the dot-com bubble, companies were getting huge valuations without even having revenue. This time around, they at least have some revenue. They might not be making a profit, and they might not have enough revenue to justify the huge valuation, but at least they aren't completely disconnected from reality like they were back in 2000.

Yeah, the $3T the FED printed is accomplishing its purpose of keeping asset values inflated. That being said, remember when everybody said Facebook was overvalued, every time they had a funding round? Well, they never really traded above ~17 times 12 months forward revenue (Not including secondary market trades or Microsoft's strategic investment).

2004: $100,000 line of credit from Dad when accounts were frozen. 2004: 10x. Seed. 1st ads in May generated ~$2,400 revenue. In June, Thiel invests at $5M valuation; 2005: 17x. A. $6M rev at a $100m valuation; 2006: 10x. B. $52M run rate on $525 pre money; 2007: 100x.C. $150M revenue at $15B valuation; 2009: 13x. D. $750M revenue at $10B valuation; 2010: 17x. E. $2b revenue at $35B valuation; 2011: 30x. F $3.3B run rate on a $100B valuation; 2012: 23x. IPO $4.2B revenue on $100B IPO valuation; 2012 17x Post IPO $4.2B revenue on $68B market cap at sale; 2012 6x Post IPO $7B (2013) Revenue on $40.7B market cap;

*Note: Not including Microsoft's strategic investment, and Secondary market trades

Bubbles burst. When bubbles burst there are bag holders. Real bubbles leave people like your aunt Tillie with $2 a share stock that she bought a year prior for $80 dollars, or your local restaurant's dishwasher with a $640,000 mortgage. This looks like a bunch of rich people's money sloshing around.

We certainly might be heading into a bubble, but so far the effects have been limited.

WhatsApp isn't very indicative of a bubble, same with instagram, snapchat, etc. because it's the same company (FB) making single bidder offers. That hardly a bubble makes.

The rest of the market isn't necessarily in a bubble because for the most part companies going public are either making money or have demonstrated that they can be making money if they stopped growing.

Link to previous discussion: https://news.ycombinator.com/item?id=3867059

And https://news.ycombinator.com/item?id=7497688

For the OP: maybe log this as a poll?

Is the Triffin Dilemma unfolding?

In the wake of the financial crisis of 2007–2008, the governor of the People's Bank of China explicitly named the Triffin Dilemma as the root cause of the economic disorder, in a speech titled Reform the International Monetary System.

http://en.wikipedia.org/wiki/Triffin_dilemma

No.

I think the whole market is in a bubble... :-/

The global economy is doomed and there will be a hard reset.

http://www.usdebtclock.org/ http://www.zerohedge.com/

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