As always, when things crash it's the best time to read the comments
Tech bubbles are bursting all over the place
151–160 of 774 posts
Re: Tech bubbles are bursting all over the place
#152I think companies with Schiller P/E price to earnings greater than 15 will get hit. Exponential growth till hit a linear reality and higher interest rates.
https://en.wikipedia.org/wiki/Cyclically_adjusted_price-to-e...
Plus some will call on tech startups not generating real organic revenue growth with realistic valuations.
Re: Tech bubbles are bursting all over the place
#153This has been a long time coming. Back in the day, there was an inherent understanding that a stock price is supposed to reflect "the fundamentals" - present value of the company + future earnings. And of course there was some amount of speculation around future earnings, but for the most part companies at least tried to be profitable. But if you look at the share price of like, Tesla - it's completely insane. There…
I don’t understand finance. But with tech I can often see from a mile if something might happen, I don’t have ideas, but I understand „this solves a problem“ or „this is high quality“ versus „this is made up“ or „someone else will do this better“.
In my opinion the issue with the stock market is that it is often finance driven and too drawn away from the actual work that is being done and the actual needs and problems potential buyers have. And this problem is specifically worse in tech.
Re: Tech bubbles are bursting all over the place
#154Earlier quoted context omitted.
This is also a central banking fail in so far that there's that much liquidity in the market that can't find a productive outlet. There's a lot of money, but also not enough concentrated in one spot to do really useful ventures like large infrastructure projects. So instead the money is distorting everything. Imagine if lending was less cheap for home owners but it was still cheap for governments or really large comp…
Central banks have one hammer really: interest rates. Everything is a nail.
Governments as a whole have a lot of different hammers for monetary policy. It's just that every other one depends on the Congress understanding the problem and cooperating.
Re: Tech bubbles are bursting all over the place
#155I remember people were talking about Coinbase doted out $750K package to engineers with less than 2 years of experience (or new grad? I can't remember exactly). I had to wonder: what can a newly minted engineer do to generate so much value to Coinbase?
Re: Tech bubbles are bursting all over the place
#156Earlier quoted context omitted.
Margin loans for house purchases isn't as insane as it might sound - assuming your financials are there. Margin interest is deductible against investment gains, house interest may not be for many earners. But not refinancing afterwards into a low fixed rate may come back to bite them, and soon.
>> Margin loans for house purchases isn't as insane as it might sound I understand the tax logic you are speaking about, but I think tax benefits are sometimes oversold to convince people to buy things (like homes and investments). You aren't a corporation, your liability isn't limited. Trying to shave a bit off taxes may have less benefit to you than the peace of mind of not having to juggle debt. You seem like you…
> I think tax benefits are sometimes oversold to convince people to buy things
People will pay more for diamonds that are less likely to have human rights abuses in their supply chain.
People will pay more for eggs if you don't keep the chickens in cages.
People will pay more for money if the government gets a smaller cut.
Re: Tech bubbles are bursting all over the place
#157Earlier quoted context omitted.
the fact that you stopped to ask those questions makes me think that you're at minimum, an above average developer. caring about the business and its fundamentals is important beyond just slinging code.
Interestingly, I've heard many instances where interviewees asked startups about their revenues and the startups just wouldn't tell them, saying that it's growing, or some other vague nonsense. Even in the case of inquiring about the amount of equity one gets, many startups would not tell them the actual percentage of the company they'd get, instead opting to tell them the number of shares, without actually telling t…
One time I had a CFO yell at me for asking questions like you mention. I obviously passed on the job. The hiring manager called me soon after and said he respected my professionalism and understood my decline of their offer. They were out of business < 6 months later.
Re: Tech bubbles are bursting all over the place
#158A lot of these companies have very reasonable P/E ratios now. Microsoft is sitting at around 27, Apple 25, and Facebook 15. None of those strike me as "inflated". Those are normal values for the stock market (20-25). Are investors just panicking?
Out of those I think Microsoft is the only one that isn’t sort of inflated. If Facebook disappears the world will hardly notice. If Apple does it’ll be hard to find a good laptop that can keep battery for 9 million years and it’ll be hard to find a “tech works out of the box so well that if you buy your grandmother/mother an iPad you’ll never need to do tech support again”, but still, it’s just a luxury brand.
If Microsoft disappeared the entire European public sector and most Enterprise companies in the world would cease to function. That being said, I would be some what comfortable owning Apple stock through the coming crash because they are likely to bounce back. I wouldn’t buy them at current market prices, but that goes for Microsoft as well. But I mainly put my investments into green energy on long term plans that tend to 4-6x the money over 7-10 years. Which isn’t where people who’d risk it with things like tech company stock are likely to gamble.
All three companies make healthy money though, as you point out, and that makes them pretty solid as far as this topic goes. I don’t even think Facebook/Meta is “inflated” in the bubble sense, I just don’t think it has a good future because legislation is coming after them big time; and unlike Microsoft and Apple, Facebook isn’t very diversified in its business models.
Re: Tech bubbles are bursting all over the place
#159This has been a long time coming. Back in the day, there was an inherent understanding that a stock price is supposed to reflect "the fundamentals" - present value of the company + future earnings. And of course there was some amount of speculation around future earnings, but for the most part companies at least tried to be profitable. But if you look at the share price of like, Tesla - it's completely insane. There…
Over a long enough time frame the stock market and even the whole economy behaves like a pyramid scheme as it is dependent on new generations to be more people than the previous one.
Only if there is no productivity growth.
Re: Tech bubbles are bursting all over the place
#160I almost got offer from DoorDash, with obviously RSU as one of the compensation. Eventually didn't get the offer because they said I didn't pass leadership interview. Apparently I was interviewing at one level above I thought I was interviewing (the recruiter messed up). Anyway, I accepted an offer from a hedge fund, comparatively similar, but all cash. Now I feel that I am glad I accepted the hedge fund offer. I don…
Why not ask your friends at work?
Yeah this would be my first question too. Even beyond that, many (most?) hedge funds have an employee investment scheme where employees have a special vehicle via which they can invest into the fund performance without having to meet the often egregious criteria (e.g. not everyone has $100mln lying around in cash to meet minimum investment thresholds).