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Why This Tech Bubble Is Worse Than 2000

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Re: Why This Tech Bubble Is Worse Than 2000

#31

Post by fredkbloggs »

valarauca1 wrote: post #28
fredkbloggs wrote: post #27

Earlier quoted context omitted.

The link between an asset's intrinsic value and its market value is elastic, and the elasticity depends on how quickly the money supply grows and the available rate of real returns elsewhere in the economy. In theory, a fiat-based monetary system can have unbounded monetary growth; in such a system, there is always a "greater fool" and the link to intrinsic value is broken entirely. Not saying this is actually happen…

Your assertion requires an unbounded number of consumers, which last time a check the population of the earth was still finite. You can fool all of the people most of the time, and you can fool some of the people all of the time, but you cannot fool all of the people all of the time - A. Lincoln

It does not. It requires only that they have an unbounded supply of money. The price of an asset can be bid up indefinitely as long as there are at least two traders with unlimited access to money.

Re: Why This Tech Bubble Is Worse Than 2000

#32

Post by valarauca1 »

fredkbloggs wrote: post #31
valarauca1 wrote: post #28

Earlier quoted context omitted.

Your assertion requires an unbounded number of consumers, which last time a check the population of the earth was still finite. You can fool all of the people most of the time, and you can fool some of the people all of the time, but you cannot fool all of the people all of the time - A. Lincoln

It does not. It requires only that they have an unbounded supply of money. The price of an asset can be bid up indefinitely as long as there are at least two traders with unlimited access to money.

So instead of an inifite number of consumers it requires 2x an inifite supply of money.

How is this more likely? If you have inifite of something it by defination has no value to you.

Re: Why This Tech Bubble Is Worse Than 2000

#33

Post by fredkbloggs »

valarauca1 wrote: post #32
fredkbloggs wrote: post #31

Earlier quoted context omitted.

It does not. It requires only that they have an unbounded supply of money. The price of an asset can be bid up indefinitely as long as there are at least two traders with unlimited access to money.

So instead of an inifite number of consumers it requires 2x an inifite supply of money. How is this more likely? If you have inifite of something it by defination has no value to you.

You don't. The way that the monetary system works in all developed economies today is that you can borrow money into existence in order to purchase an asset. The supply is not infinite, but it is always possible to create more. That's reality, not a hypothetical. The hypothetical is that this could continue without limit, regardless of asset prices. Thus far, in reality, that growth has always been restricted at some point. There is no conceptual requirement that it be so.

Re: Why This Tech Bubble Is Worse Than 2000

#34

Post by irishcoffee »

bigtunacan wrote: post #30
bigtunacan wrote: post #17

With the kind of money he has, Cuban should know that Angel investing is nothing new. I was part of a startup in the late 90s that was entirely funded by angel investments. These private investments are just business as usual. The only new thing is the organization of micro investment angels to allow investment from people with less money. Personally I think those are a bad idea and smart people would be better putti…

Not sure what I said that got me a down vote, but just on the off chance it is because I used the word "Cuban" and someone thought I was being racial... The article was authored by Mavericks owner Mark Cuban. Maybe it was something else I said, just not sure what.

People have a habit of downvoting just because they disagree with what is said, which is not the purpose of a downvote.

Re: Why This Tech Bubble Is Worse Than 2000

#35

Post by baldfat »

grey-area wrote: post #8
baldfat wrote: post #2

> Because the only thing worse than a market with collapsing valuations is a market with no valuations and no liquidity. > In the tech bubble it was Broadcast.com, AOL, Netscape, etc. Today its, Uber, Twitter, Facebook, etc. Umm I think there certainly is value in Facebook and all their apps of WhatsApp, Instagram and FaceBook. Just link bait article to me.

The value of FaceBook acquisitions like WhatsApp and Instagram is somewhat recursive though, having been set by Facebook itself when it purchased them mostly based on the value of its own stock (itself a bet on future profits).

Facebook is profitable since at least 2009 http://amigobulls.com/stocks/FB/income-statement/annual

Gross Profit

2014 - 12.47 B

2009 - 330 M

Net Profit

2014 - 2.94 B

2009 - 229 M

Re: Why This Tech Bubble Is Worse Than 2000

#36

Post by baldfat »

jawns wrote: post #21
quinnter wrote: post #3

Earlier quoted context omitted.

Yeah, how does Uber not have real value?

You misunderstand. > In a bubble there is always someone with a “great” idea pitching an investor the dream of a billion dollar payout with a comparison to an existing success story. In the tech bubble it was Broadcast.com, AOL, Netscape, etc. Today its, Uber, Twitter, Facebook, etc. He's not saying that Uber, Twitter, and Facebook have no value. He's saying that today's startups that are comparing themselves to thes…

He is says that most "Angel" investors have zero liquidity in their investments.

> Because there is ZERO liquidity for any of those investments. None. Zero. Zip.

Re: Why This Tech Bubble Is Worse Than 2000

#37

Post by grey-area »

baldfat wrote: post #35
grey-area wrote: post #8

Earlier quoted context omitted.

The value of FaceBook acquisitions like WhatsApp and Instagram is somewhat recursive though, having been set by Facebook itself when it purchased them mostly based on the value of its own stock (itself a bet on future profits).

Facebook is profitable since at least 2009 http://amigobulls.com/stocks/FB/income-statement/annual Gross Profit 2014 - 12.47 B 2009 - 330 M Net Profit 2014 - 2.94 B 2009 - 229 M

The valuation is about 100 of those years of profit, which is a bit high IMO.

Re: Why This Tech Bubble Is Worse Than 2000

#38

Post by mapgrep »

shkkmo wrote: post #26

This guy has no idea what is he talking about: > there is no reason to believe that the SEC will be smart enough to create some form of liquidity for all those widows and orphans who will put their $5k into the dream only to realize they can’t get any cash back when they need money to fix their car The current requirements for equity crowd funding include either 1 Million in non-residential assets, or a reliable 200k…

>The current requirements for equity crowd funding include either 1 Million in non-residential assets, or a reliable 200k annual income (based on 2 years of income, and it's 300k if you have a spouse).

Actually that's not the case under equity crowdfunding. You're citing the definition of "accredited investor" in Regulation D of the Securities Act of 1933 (as amended in 1982); offerings to such investors have long had certain exemptions from standard registration requirements (VCs generally use Reg D exemptions, though obviously there were VCs long before Reg D).

You may be confused because title II of the JOBS Act pertained only to accredited investors (it allowed "general solicitation" to such investors).

The whole point (arguably) of titles III and IV of the JOBS Act — the so called "equity crowdfunding" titles — is that they allow investment by unaccredited investors in certain offerings. Hence "crowd."

Re: Why This Tech Bubble Is Worse Than 2000

#39

Post by shkkmo »

mapgrep wrote: post #38
shkkmo wrote: post #26

This guy has no idea what is he talking about: > there is no reason to believe that the SEC will be smart enough to create some form of liquidity for all those widows and orphans who will put their $5k into the dream only to realize they can’t get any cash back when they need money to fix their car The current requirements for equity crowd funding include either 1 Million in non-residential assets, or a reliable 200k…

>The current requirements for equity crowd funding include either 1 Million in non-residential assets, or a reliable 200k annual income (based on 2 years of income, and it's 300k if you have a spouse). Actually that's not the case under equity crowdfunding. You're citing the definition of "accredited investor" in Regulation D of the Securities Act of 1933 (as amended in 1982); offerings to such investors have long ha…

Ah, your are correct. I need to educate myself further.

I still maintain that this is a piece of fearmongering since I don't think "widows and orphans" will have the 100k of annual income needed to invest 5k via equity crowd funding. The author points the finger at the SEC without going into any of the details about how the equity crowdfunding works.

I was confused because all of the crowd funding sites doing equity investing that I have looked at still require accredited investor status. Are you aware of any that are allowing investing under the new model?

Re: Why This Tech Bubble Is Worse Than 2000

#40

Post by rwhitman »

I find it curious that this is from a guy that stars in the world's most popular reality TV show about angel investing. On one hand Mark Cuban is introducing huge numbers of people to the world of angel investing, and on the other... he's lamenting the follies of angel investors? Strange

But I think this post is more about Mark Cuban's not-so-hidden agenda with the SEC. After making so many publicly awful Shark Tank investments, there's no doubt he'd want tools for making more of them liquid

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