back to article 10 signs you're in a tech bubble

From Wall St to Silicon Valley, experienced finanical types and entrepreneurs are privately conceding the obvious: we're in a tech bubble. The only doubts are over whether we are in 1998 or 1999 again. Certainly, we're in the middle of one the longest running bull markets for sometime. Just three of the past 15 bull markets …

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  1. Kevin Hall

    Excellent article

    Great comments - the bullshit days of the dot-com bubble have only changed shape not gone away. I really don't see the sequence of waves and peaks stopping any time soon.

  2. Anonymous Coward
    Anonymous Coward

    'peddle'?

    Did you by any chance mean 'pedal'?

  3. Dunstan Vavasour

    Some things are the same, some are different

    What's different this time is that, while in 1999 the tech bubble was driving the whole economy, this time it is emerging economies which are driving the economy, and the tech bubble is a bit of a sideshow.

    Don't get me wrong, I've moved my pension out of the technology sector into emerging economies, natural resources and bonds, but the tech bubble isn't as all consuming as in 1999, and the bust will be moderated by the rest of the economy.

  4. tidalwade

    Just wondering about market P/Es?

    To me, the term 'tech bubble', or simply 'bubble', refers to the fact that a market is overpriced. I'm just wondering, is the current stock market (as a whole) overpriced, in terms of P/E or some other measure, when compared to the late 90's? I'd don't know the answer, I'm just wondering...

    Also, if the bubble is occurring in the private equity arena this time around, as the article partly suggests, then average investors may have less to worry about when compared to 2000.

  5. De Zeurkous

    Not very suprising...

    ...since this is the result of people being unable to cope with techonology this advanced (and we're still in the childhood (if not infant) stage of computing, even). Computing technology is not the wonder it was 20 or even 10 years ago; now people don't know what to do with the ``infinite possibilities'' and go mad.

    Also, our technology is advancing to the point where manufacturing of physical items is trivial, and most companies can't cope with that fact, either. We're slowly, but steadily, transforming into a post-scarcity society, and purely commercial businesses can't survive in that climate for very long. When put under enough pressure, people go mad, and make the same mistakes over and over again until they've succumbed to it.

  6. Joe Futrelle

    "post-scarcity"? sorry

    > We're slowly, but steadily, transforming into a post-scarcity society

    Uh, no. If you look at the commodities markets, particularly for energy commodities like oil and natural gas, the idea that we're in a "post-scarcity society" is completely unsupportable. Global oil production *is peaking now* and the only near-term-deployable substitutes are neither renewable nor carbon-neutral. At the same time demand for energy continues to grow. We're looking at massive energy scarcity, starting now.

    And it's not just energy commodities either. If you consume silver or gold, which the IT industry does on a significant scale, you'll notice that there's been a rapid run-up in the prices of those commodities in the last few of years and they're running at or around all-time records.

    If you have capital and want to make money, you could do pretty well with commodities futures right now. Hell, if there was a futures market for US postage stamps, futures contracts for the new "forever stamps" would be selling like hotcakes, given that the price of postage is more or less pegged to fuel prices.

    Global warming is not a "trivial" issue either--Australia is experiencing crippling drought (that's an entire *continent* we're talking about) as are numerous other regions, like Italy whose water and hydroelectric power are so compromised by the lack of snowmelt from the alps that a state of emergency has been declared IIRC.

    We don't need more "long boom" rhetoric to figure out how to address these serious issues. We need honest analysis of *real* data from our *actual* economy.

  7. De Zeurkous

    RE: "post-scarcity"? sorry

    ``and the only near-term-deployable substitutes are neither renewable nor carbon-neutral.''

    Both photovoltaic and wind power statisfy those conditions, to name a few commodity technologies. Also, the raw energy (i.e., energy not embodied as finished products) market you're talking about will probably be one of the last ones to switch, after mass-production of generators for said types of power reaches the triviality stage.

    ``If you consume silver or gold''

    Silver and gold are /not/ goods that are ``consumed'', since at product EOL they are recycled. However, to prevent ultimate shortage, we need to make molecular (or similar) assemblers a viable technology. Again, it will take some time, albeit not as long as the reformation of the raw energy market.

    ``given that the price of postage is more or less pegged to fuel prices.''

    When technology improves, many goods will be available locally at a far lower cost and do not need to be shipped. Also, alternative propulsion methods (such as Ion Drive technology, to name a rather prominent example in the ``deployed world'') will become more viable for aircraft to use. And heck, if we can build space 'vators, why can't we build tunnels linking all continents, as well? It's just a matter of time.

    ``Global warming is not a "trivial" issue either''

    Self-Quote(TM): ``our technology is advancing to the point'' Again, we're not entirely there yet, but there are plentiful solutions. See also first paragraph of this reply.

    ``we need honest analysis of *real* data from our *actual* economy.''

    Don't you see? Our economy *IS* heading the way I described. There is no such thing as an ``actual'' economy -- it's a complex, dynamic system that's constantly changing on the level you describe. When looked upon as a whole, however, certain patterns become noticable -- hence my rants about the subject.

  8. Chad H.

    didnt YouTube prove we're in a bubble?

    I think it was google buying youtube that proved the bubble was alive and well. Millions of dollars to buy...... A money black hole with not only no revenue stream, but the threat of litigation only being helf back by it having no money for the litigants to take.

    We thought we shook em in the ,bust, but it would appear the "tubes" are back, with a vengence.

  9. Jim

    RE: RE: "post-scarcity"? sorry

    "Both photovoltaic and wind power statisfy those conditions, to name a few commodity technologies."

    In theory yes but not in practice. With regard to raw energy production, these technologies are only viable if there is a significant mindset change from large centralised generation to a more distributed generation. This ideology does not sit well with incumbent power distributors, who refuse to allow domestic generators to 'sell' excess power back onto the electricty network.

    "we need to make molecular (or similar) assemblers a viable technology"

    That would be fantastic, how is this line of research coming along? You make it sound like it is a just a few years away.

    "When technology improves, many goods will be available locally at a far lower cost and do not need to be shipped."

    And that is just they way that the world is moving... oh no, I forgot, exactly the opposite is happening. Technology is being eschewed in favour of cheap (foreign to us) labour.

    This is the sort of techno-utopian propaganda I expect to hear coming from the mouths of esteemed politicians such as Our Tony or Junior. The old "yet to be invented technology will magically arrive soon and save the day". The hybrid car was a viable concept, ie prototyped, when I started my PhD in '92, how long did that take for a viable concept to become a consumer reality?

  10. Anonymous Coward
    Anonymous Coward

    RE: RE: RE: "post-scarcity"? sorry

    If I recall correctly, the idea of "post-scarcity" probably originates with Eric S Raymond, that and his "gift culture." Personally I think it's a load of crap. Even if we haven't hit peak-oil yet, there can be no argument that the Earth's resources are strictly finite and this planet is defined by scarcity, not abundance. Where ever you go there are shortages of the most basic kind, be it of water, food or energy. Any consumerist based society, by very definition, will never be "post scarcity" because there are physical and absolute limits of what this beautiful blue planet can give us.

    Actually gold and silver are consumed. There are many processes which metals, precious or not, cannot be practically or economically recovered. The second law of thermodynamics tells us that in trying to recycle almost anything manufactured you will probably expend more energy in recovery than that you will gain, this catch-22 pervades almost every step in the recycling chain. We can only partially mitigate this by consuming less.

    The "when technology improves" gambit is that simple headed bullshit no one with a brain should pay any attention to. As a way of solving practical problems you'd have more luck with faith healing, crystals and astrology. No can solve a problem with a solution that hasn't been invented yet. You can't even offer this as a potential solution because it is entirely ephemeral. At the minute there is no technology that can replace a shortage of base metals oil or coal - or any other tangible commodity. What are we waiting for - some kind of Star Trek inspired fantasy about "replicators" which is simply ludicrous nonsense of the worst kind.

    There is no evidence to support any suggestion that goods will travel less; in fact all the evidence supports the opposite. The air miles of food and manufactured goods is truly shocking and an environmental problem in itself. There are no serious technical solution to global warming; the causes are basic and remedial action is basic if dramatic. There is nothing to mitigate the effects of our fossil-fuel driven economy other than burning less oil/coal and polluting less.

    I'm afraid there really is such a thing as an economy and right now it's laissez-faire capitalism. It's all tied together because of the single objective of making money. To me De Zeurkous sounds like the kind of crap that comes out of free-market propaganda companies like the Cato Institute where they still try to peddle the infantile fantasy that the market will solve all of our problems. Jim said it best above in that we can't be our future on the idea that yet to be invented technology will save the day. That's just intellectually dishonest.

  11. Marc Hanlon

    Great article

    This is a really well thought out article. When you think about the amounts of money that Bebo and YouTube burn through without a proper revenue stream, their extraordinary value was probably a strong indication that there was another bubble. I firmly believe that the same mindset (oh its IT, its gotta be making money) is causing non-tech people to put money into companies without a proper business plan.

  12. Anonymous Coward
    Anonymous Coward

    Hybrid cars are *ancient*

    "The old "yet to be invented technology will magically arrive soon and save the day". The hybrid car was a viable concept, ie prototyped, when I started my PhD in '92, how long did that take for a viable concept to become a consumer reality?"

    Add at least a decade to that. Lucas Aerospace Shop Stewards Combine had a hybrid demonstrator when I was at college (mid-late 1970s); they knew that there was a change on the way, and believed that Lucas had the technology to deliver. Lucas were also testing the water for electric vehicles, together with Chloride they had an almost-production electric version of the Bedford CF (think Transit) van, but the sodium-sulphur battery it used had a few practical problems.

    Also at the same time, the UK government was funding an organisation called the Energy Technology Support Unit (which was initially part of UKAEA at Harwell) which was looking into things which were then called "alternative energy" (wave power etc), as well as subjects like the economic and practical realities of things like heat pumps/heat recovery, combined heat and power,etc.

    Even some of the more forward-looking "building services" companies were doing near-market stuff along some of the same lines as the ETSU, focusing on practical worthwhile demand-reduction stuff like mid-scale CHP and heat recovery for offices, shopping centres, etc not the current daftness of low energy light bulbs for the home, and consumer electronic stuff that has no "standby" option.

    This was all in the mid/late 1970s (pre-Internet so you may not be lucky trying to google it, you may need one of those librarian things to help you find dead-tree-based information). How do I know/remember this? 'Cos I applied for jobs at all of them on the 'milk round' :)

    What happened to all that lot?

    Oh I remember, it was something to do with that Thatcher woman and her disciples. Although she wisely said "No generation has a freehold on this earth. All we have is a life tenancy -- with full repairing lease. ", at the same time her cronies were encouraging the markets (people, companies, organisations) to act now and not worry about any impact today's behaviour might have on tomorrow's world. And boy did they succeed.

  13. Anonymous Coward
    Anonymous Coward

    11th sign you're in a tech bubble

    11. Pundits start telling us that this bubble is fundamentally different from previous bubbles. Yep, we're there...

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  16. John Miles

    Re 11th sign you're in a tech bubble

    Now why does that sound famliar - oh yes the UK Housing market, which appears to have a few bubble problems looming (the most significant is buy to let rent issues - if these people start bailing out )

  17. DrFix

    Bubble, bubble, toil and trouble...!

    The real estate market in the US is, albeit quite silently - and for obvious reasons, going down the tubes as we speak. Sales are down nationwide over last year... and in significant, though hushed up , numbers. Manufacturing is anemic. The US dollar is a fiction supported by mere faith, and thats fading daily, too. On top, or along with, you pick your poison, the hubris of people thinking that things will be "different" this time around because they "really really really" learned their lesson the last time. Not going to happen.

    People are incredibly stupid and follow a herd mentality almost by instinct. Thats how conditioned they are to accept the "illusions" presented to them daily through the various Ministry of Truth venues such as TeeVee/entertainment-as-fact. Think about it. For the amount of money spent in Mesopotamia on a lie just how many refineries could have been built to take the load off the currently stretched worldwide system and provide enough energy to meet current and future needs for at least the near term? Answer: many! And all without having to bomb and maim anyone. The result would be a lowering of fuel expense, but mysteriously that point is never brought up. Why?

    Certainly we can wean ourselves from a dependence on oil for "transportation use", I'm all for that, but don't fool yourselves into thinking that oil is all about automobiles and it can be done overnight. Global warming? Peak oil? All fear-mongering by vested interestes in keeping you poor and dependent on their hand outs. Just follow the money. Notice that its politicians - those that live and die by the sweat of others and never their own - are telling you how its going to be. All reasons enough to say its a lie.

    There are smart people out there, especially in IT, so why not shut off the incessant lies of politicians, and money sucking corporate welfare recipients, and truly innovate something better than yet another version of Windows? Make a real difference and invent something useful for gods sake! Build something that brings true freedom rather than hand over the reins to your future to those who would put another political, and by extension economic, noose about your neck. Unless, of course, you like being a slave to "fate".

    And, so to close the circle and not meander endlessly on an environmental "walkabout", the article is dead on in that we're at the verge of yet another bubble burst. Get ready for it.

  18. Enno

    reminds me of that old joke...

    The only problem is that 2nd paragraph, "Just three of the past 15 bull markets..." reminds me too much of that old joke about economists having "sucessfully forecast 15 of the last 3 recessions...". ;-)

    The other obvious difference is that last time round with publically traded stocks a lot of the unwashed got burned by unscrupulous companies. This time round its private capital thats out there buying and then raping and pillaging corporate assets. Often their acquisitions are saddled with the debt they incurred borrowing to buy the companies in the first place (allowing the private capital to extract itself from its debts along with a 'modest' profit) and many it seems may never recover from these acts.

    Not sure how the bubble plays out in this circumstance but I suspect as ever it will be best to be observing from some distance away with your assets safe in a bunker with you. Hopefully you don't depend on the companies thus 'invested' in or the economy they support... oh wait.

  19. Colorado Bill

    You forgot the most important sign!

    Without this, it just ain't a bubble.

    Everyone has to be saying,

    "The old rules don't apply any more!"

  20. Michael Joyce

    Re: 'peddle'?

    No peddle is the correct term

  21. Peter

    If you laid all the economists in the world, end to end....

    They still wouldn't reach a conclusion

    (arf)

  22. Anonymous Coward
    Anonymous Coward

    Be kind to Americans...

    pedal (verb):

    to work or use the pedals, as in playing an organ or propelling a bicycle.

    peddle (verb):

    1. to carry (small articles, goods, wares, etc.) from place to place for sale at retail; hawk.

    2. to deal out, distribute, or dispense, esp. in small quantities: to peddle radical ideas.

    3. to sell (drugs) illicitly

  23. Anonymous Coward
    Anonymous Coward

    municipal free wireless

    'nuff said.

  24. foxyshadis

    Unsavory trading

    Insider trading is probably just the tip of the iceberg - the really horrifying practices won't come out until the correction is in full swing and companies are collapsing left and right, whenever that actually starts. I'd hardly even be bothered to mention this; isn't insider trading a perennial problem with unscrupulous executives in every industry and era? (Admittedly the presence of unscrupulous execs en masse generally points to a bubbling or unregulated industry.)

  25. Remy Redert

    re: Post scarcity

    "Also, alternative propulsion methods (such as Ion Drive technology, to name a rather prominent example in the ``deployed world'') will become more viable for aircraft to use."

    Please, do your homework before randomly suggesting technologies. Ion drives are high velocity, very low thrust drives. Ion drives will never become a viable technology for aircraft, hydrogen fuel is the most immediate successor to kerosene that I'm aware of, along with some biofuels probably. After that, electric flight or fusion-heated jets will have to take their place, in a century, perhaps 2. If we haven't all died out from an ice age or global warming by then.

  26. Michael Corkery

    RE: RE: "post-scarcity"? sorry

    Both photovoltaic and wind power statisfy those conditions, to name a few commodity technologies. Also, the raw energy (i.e., energy not embodied as finished products) market you're talking about will probably be one of the last ones to switch, after mass-production of generators for said types of power reaches the triviality stage.

    Rubbish. Photovoltaic has more scope for growth, as it's relatively easier to predict, but national grids (such as the Irish one) can end up refusing to take power from wind, as it's tremendously unstable; surged are unpredictable, and when it's needed it can drop off. People don't realise that most grids are under pressure to supply and are at or near capacity more than we'd like - and managing the power on the grid is critical to meeting that supply. Countries would have to spend tens to hundreds of billions on redesigning their grids entirely, and even then the instability of wind makes it a hard option to use.

    I agree that renewables should be the solution - the trick is finding a way to make them usable!!!

    Silver and gold are /not/ goods that are ``consumed'', since at product EOL they are recycled. However, to prevent ultimate shortage, we need to make molecular (or similar) assemblers a viable technology. Again, it will take some time, albeit not as long as the reformation of the raw energy market.

    Rubbish. They are consumed in manufacture, and as it costs too much the majority of chips, cards, motherboards, etc are NOT environmentally recycled. Instead toxic chemicals leach into landfills, while silver and gold price up.

    When technology improves, many goods will be available locally at a far lower cost and do not need to be shipped. Also, alternative propulsion methods (such as Ion Drive technology, to name a rather prominent example in the ``deployed world'') will become more viable for aircraft to use. And heck, if we can build space 'vators, why can't we build tunnels linking all continents, as well? It's just a matter of time.

    You're living in star trek, buddy. Replicators? Ion Drives? And no, noone is building a space elevator right now. The technology isn't ready, the cost is astronomical (no pun intended), the ROI isn't there at all, and (not to sound liek an american) there's a real target for you - what mass wouldn't spin off into space after a severance due to explosion or whatever would come carshing back down leeward of rotation, devestating anything it hits.

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