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Why This Tech Bubble is Worse Than the Tech Bubble of 2000

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Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#11

Post by zenogais »

deeviant wrote: post #5

So the argument here is that the SEC should lessen investment restrictions so that VC's can pawn off their junk stock to the unsuspecting John Q. Public as soon as they see (and hopefully for them right before) the bubble pops?

That's what's really going on, it's a great way to make some quick money. But if you were to ask the standard free-market ideology side of it can always be mustered - "we're just trying to get the pesky and inefficient government out of markets so they can 'function better'", despite the efficacy such claims proving incredibly dubious over the last few decades and even more doubtful when empirically tested [1].

[1] http://www.amazon.com/The-Misbehavior-Markets-Financial-Turb...

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#12

Post by ChuckMcM »

adventured wrote: post #3

Over the last three years Cuban has consistently, publicly said he doesn't see a bubble. Now he's seeing one derived from crowd funding? I'm not sure whether to think he's on to something, or whether he dislikes the idea of having vastly more competition for the sort of angel deals he frequently does. These new crowd funding sites are pushing up his cost to get into early rounds on good companies. There's no chance h…

That confused me too. Almost as confusing as wealthy people complaining that seed rounds are "ridiculously overpriced". I share his concerns about "Crowd Funded Equity" because I think it creates an opportunity for fraud which are infeasible to preemptively defend against.

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#13

Post by jeffreyrogers »

encoderer wrote: post #4

> Broadcast.com, AOL, Netscape, etc. Today its, Uber, Twitter, Facebook Even mentioning his company in the same breath as Uber, Twitter and Facebook shows how out of touch he is IMO. Broadcast.com was hardly a business! Those companies have BILLIONS of dollars of real revenue.

You're cherry picking the quote:

> 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.

In context, what he's saying makes a lot of sense.

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#14

Post by CatDevURandom »

Heaven forbid you read the comments section before the actual article. His point:

>The bubble today comes from private investors who are investing in apps and small tech companies. ... >Why ? Because there is ZERO liquidity for any of those investments. None. Zero. Zip.

Is he wrong?

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#15

Post by edwinespinosa09 »

karmacondon wrote: post #9

This is why most angels have to be accredited investors, meaning that they need to have $1MM in assets. Millionaires investing in new ideas aren't exactly naive widows and orphans (though they could be). With public stocks there is indeed high liquidity, but there was also strikingly high volatility during the tech bubble. It's good to be able to sell your shares, but less so if the price can drop 80% in a day. That'…

I think he was just pointing out a fact we might all know, that there is a sort of "investor bubble" that keeps getting feed by the good/big payouts.

Then goes into a better model for inexperienced/new investors by "crowdfunding"

Maybe he should have used another title :/

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#16

Post by im2w1l »

>If stock in a company is worth what somebody will pay for it, what is the stock of a company worth when there is no place to sell it ?

A stock that is personal and non-transferable once bought, should probably be valued using discounted future dividends. Or discounted buy-out price.

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#18

Post by datashovel »

I get a sour taste in my mouth every time I hear wealthy people "looking out for" the small-time investor who may end up needing the money to fix their car after they've invested it.

I would take a poor, but well-educated and well-informed investor in a transparent marketplace light years before I would blindly accept an arbitrary rule that states you can't invest your money where you want to just because you don't have enough.

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#19

Post by warfangle »

ChuckMcM wrote: post #12
adventured wrote: post #3

Over the last three years Cuban has consistently, publicly said he doesn't see a bubble. Now he's seeing one derived from crowd funding? I'm not sure whether to think he's on to something, or whether he dislikes the idea of having vastly more competition for the sort of angel deals he frequently does. These new crowd funding sites are pushing up his cost to get into early rounds on good companies. There's no chance h…

That confused me too. Almost as confusing as wealthy people complaining that seed rounds are "ridiculously overpriced". I share his concerns about "Crowd Funded Equity" because I think it creates an opportunity for fraud which are infeasible to preemptively defend against.

> I share his concerns about "Crowd Funded Equity" because I think it creates an opportunity for fraud which are infeasible to preemptively defend against.

Like penny stocks?

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#20

Post by adventured »

CatDevURandom wrote: post #14

Heaven forbid you read the comments section before the actual article. His point: >The bubble today comes from private investors who are investing in apps and small tech companies. ... >Why ? Because there is ZERO liquidity for any of those investments. None. Zero. Zip. Is he wrong?

Yeah I think he just might be wrong.

There wasn't previously a very good market for small and medium size investors to get near investing into early stage tech companies nationally. It has been a locked-away market. I know lots of people with single digit million dollar net-worths, none of them have a clue how to get close to interesting tech start-ups for investing purposes.

How does a person from Nebraska, worth $5 million, invest into interesting tech start-ups in Seattle? Until now, that has been extraordinarily difficult, if not impossible.

So now that there is a market for doing just that, why wouldn't prices rise on those investments? It makes perfect sense that they would, and should. Those valuations have been artificially repressed by government regulation.

What Cuban is claiming is a bubble, is more likely in fact a market being unleashed where it was previously forbidden to exist by regulation.

We're a long ways from the next Dr. Koop billion dollar valuation, with a $50+ million round of financing, coming out of crowd equity funding sites.

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