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I'm calling this Bubble 2.0, and it's ready to burst

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Re: I'm calling this Bubble 2.0, and it's ready to burst

#14
post #5

Unfortunately I'm starting to agree with the bubble 2.0. Last year I didn't believe it that much, but this year I'm starting to see crazy company evaluations, highly inflated that don't generate any revenue at all, so I don't know how can they be worth billions of dollars, but I know math and little about economics. But if bursts, it's a good thing. It brings perspective, a thing that's missing a lot these days, wher…

Seems to me like each of these overblown evaluations is a bubble onto itself. Perhaps there is a general trend but such a thing cant lead to a crash. What would a crash involve?

Re: I'm calling this Bubble 2.0, and it's ready to burst

#15
post #11

Says the guy who sells books. I suppose that's a few rungs up from shoe-shine boy, innit? (Don't get me wrong, I love his books. But are we really looking to SF authors for market guidance now? Just because he cites one failed business model?)

He's an ex-developer for a payment processor. Might have a little bit of knowledge...

Re: I'm calling this Bubble 2.0, and it's ready to burst

#17
post #5

Unfortunately I'm starting to agree with the bubble 2.0. Last year I didn't believe it that much, but this year I'm starting to see crazy company evaluations, highly inflated that don't generate any revenue at all, so I don't know how can they be worth billions of dollars, but I know math and little about economics. But if bursts, it's a good thing. It brings perspective, a thing that's missing a lot these days, wher…

Seems to me like each of these overblown evaluations is a bubble onto itself. Perhaps there is a general trend but such a thing cant lead to a crash. What would a crash involve?

Investors realizing that they can't make their money back. Right now even if they pay $10 billion for a photo app, they're still expecting other investors will buy their shares at a $20 billion valuation or more later on. All investments are made on speculation right now, rather than based on true value and potential for making money.

But if that doesn't come true, and everyone realizes this, then there will be a crash. Valuations will fall, and the initial investors won't be able to make their money back because those photo apps weren't making any revenue, let alone profits.

Re: I'm calling this Bubble 2.0, and it's ready to burst

#18
post #5

Unfortunately I'm starting to agree with the bubble 2.0. Last year I didn't believe it that much, but this year I'm starting to see crazy company evaluations, highly inflated that don't generate any revenue at all, so I don't know how can they be worth billions of dollars, but I know math and little about economics. But if bursts, it's a good thing. It brings perspective, a thing that's missing a lot these days, wher…

Seems to me like each of these overblown evaluations is a bubble onto itself. Perhaps there is a general trend but such a thing cant lead to a crash. What would a crash involve?

What happens in a crash is a rapid collapse of a single market (say the social segment of online businesses) then then the markets supported by that market follow suit until the momentum threatens the economy as a whole. Financial markets can react fast to this causing a "crash."

Re: I'm calling this Bubble 2.0, and it's ready to burst

#19
post #5

Unfortunately I'm starting to agree with the bubble 2.0. Last year I didn't believe it that much, but this year I'm starting to see crazy company evaluations, highly inflated that don't generate any revenue at all, so I don't know how can they be worth billions of dollars, but I know math and little about economics. But if bursts, it's a good thing. It brings perspective, a thing that's missing a lot these days, wher…

We're 12 years past the .com bubble. A large portion of the people who're creating and moving money today are in their twenties, they didn't experience 1999 in an economic point of view so there are no signals for them.

Having said that, let's not forget that a lot of the uncharted terrain from 1999 is now thoroughly explored with a microscope. If you're talking about a bubble, don't forget to mention which subset of the internet you're referring to. Yes, social thingies are the new buzz but they are such a small part of the online ecosystem. A lot of the social stuff was created as an add-on to existing stuff - take it out of the equation and very little value is lost.

Re: I'm calling this Bubble 2.0, and it's ready to burst

#20

Earlier quoted context omitted.

Seems to me like each of these overblown evaluations is a bubble onto itself. Perhaps there is a general trend but such a thing cant lead to a crash. What would a crash involve?

Investors realizing that they can't make their money back. Right now even if they pay $10 billion for a photo app, they're still expecting other investors will buy their shares at a $20 billion valuation or more later on. All investments are made on speculation right now, rather than based on true value and potential for making money. But if that doesn't come true, and everyone realizes this, then there will be a cra…

That doesn't seem like a crash though; I'd wager the investor class and the general populace are quite disjoint sets, e.g. there's not a mass of pension funds involved in IT venture capital. What we might see is a "return to senses" and a shortfall of capital for a while, but not a crash.
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