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Last Time It Was This Crazy, the Stock Market Crashed

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Re: Last Time It Was This Crazy, the Stock Market Crashed

#31

Post by rtpg »

tonyedgecombe wrote: post #20
bhouston wrote: post #17

Earlier quoted context omitted.

I have not read a good analysis as to the end game of quantitative easing. What does the end of that era fortell in terms of US macroeconomics and how does quantitative easing feed into the VC ecosystem? Or is quantitative easing here to stay and we will just have a related long term slow devaluation of the USD?

When western governments hold so much debt the only realistic way of dealing with it is inflation, hence QE.

The really interesting thing about QE is that we haven't really gotten inflation associated with it, at least not in any form bigger than pre-QE days.

My pet theory is that money supply and inflation no longer have much of a correlation. In fact, they might never have.

Re: Last Time It Was This Crazy, the Stock Market Crashed

#32

Post by paganel »

fidotron wrote: post #22

What's often missing in these discussions is that a lot of the value of the companies is based on the threat they present to actual profitable companies, like Google and Facebook, and has nothing to do with whatever revenue they currently have. The real reason WhatsApp were worth so much is they started to look like an existential threat to Facebook. Similarly for Instagram and SnapChat. Uber will in the long run to…

> The real reason WhatsApp were worth so much is they started to look like an existential threat to Facebook.

I know it's anecdotal, but the thing that makes WhatsApp so great for me it's that "it just works". I have it installed on my iPhone 4, and compared to Facebook's app is hundreds of miles ahead. Until 6-months or so ago the FB app needed 2-3 or minutes to actually open and redirect me to the private messages window, after I had received a notification. In one case it took 5 minutes (or even more) for the messages I was writing in the FB app to reach the person I was talking to, making for a very awkward conversation. And forget about trying to send images. In the meantime they decided to force the use the Facebook Messenger app, which cannot be installed on my phone's OS. I'm probably supposed to buy a new, expensive phone, which I would have if apps like WhatsApp hadn't existed.

Re: Last Time It Was This Crazy, the Stock Market Crashed

#33

Post by smt88 »

bello wrote: post #21
marcus_holmes wrote: post #7

I remember the dot-com bubble and how it all went really bad really quick. I still haven't heard any convincing reason why "this time it's different".

It's different because this time it's VC money, not people's savings. When a company is listed, the stock price better reflect the actual market value of the company (otherwise a dot-com bubble happens). However, if rich VCs like to bet on startups, that's expected to be a high-risk investment.

If VCs lose all their money, it won't be anything new. Only a tiny fraction of VCs provide a return, after you take out the managers' fees. Large firms pump money into VCs almost charitably or as a PR thing -- they rarely expect much out of it, and their portfolios certainly aren't made or broken by their VC bets.

Re: Last Time It Was This Crazy, the Stock Market Crashed

#34

Post by smt88 »

melvinmt wrote: post #26
notastartup wrote: post #9

I'm very worried about the property bubble collapse in China that will happen in the near future. I'm seeing the same patterns. People from said country buying up expensive property overseas, people lose fortune when property bubble explodes. It happened with Japan (remember when Japanese yakuza were buying up property in West coast). It surely to happen with China (buying up property in west coast like crazy).

Can you explain why a collapse in China would affect the West Coast?

Seems s/he's saying that wealthy Chinese people are buying property on the West Coast of the US.

If their market crashes and individual wealth drops, they wouldn't be able to pay their mortgages, which I guess would be a problem for lenders in the US?

Lots of leaps here, but I can see a connection if his/her facts are right.

Re: Last Time It Was This Crazy, the Stock Market Crashed

#35

Post by bhouston »

smt88 wrote: post #30
fidotron wrote: post #22

What's often missing in these discussions is that a lot of the value of the companies is based on the threat they present to actual profitable companies, like Google and Facebook, and has nothing to do with whatever revenue they currently have. The real reason WhatsApp were worth so much is they started to look like an existential threat to Facebook. Similarly for Instagram and SnapChat. Uber will in the long run to…

I disagree with your premises as well as your argument. WhatsApp, Instagram, and SnapChat are valuable because they have users. There are a million ways to monetize users once you have them, but it's hard to get them. Google, Facebook, and others are large, humming machines that squeeze money out of users, but WhatsApp, Instagram, and SnapChat are not. The latter three companies are valuable because they can be fed i…

All self-driving cars are a threat to Uber, but it will be a really long time for fully self-driving cars to reach significant penetration, as much as I love them. I think for the next 10 years we will be in the era of smart assisted driving.

Re: Last Time It Was This Crazy, the Stock Market Crashed

#36

Post by bhouston »

rtpg wrote: post #31
tonyedgecombe wrote: post #20

Earlier quoted context omitted.

When western governments hold so much debt the only realistic way of dealing with it is inflation, hence QE.

The really interesting thing about QE is that we haven't really gotten inflation associated with it, at least not in any form bigger than pre-QE days. My pet theory is that money supply and inflation no longer have much of a correlation. In fact, they might never have.

> My pet theory is that money supply and inflation no longer have much of a correlation. In fact, they might never have.

They have stronger correlations in small country economies. The US economy is sort of uniquely positioned in the world and that makes its exception and more complex. I think that with the US economy is that the repercussions of actions are delayed because the interconnections slow reactions down -- although this also lets things get unsustainable before the correction actually takes place.

Re: Last Time It Was This Crazy, the Stock Market Crashed

#37

Post by lotsofmangos »

1945 wrote: post #6

The market has the capacity to stay irrational. I would not start shorting after a 3-4% pullback..

I think most people have that saying the wrong way round. 'The market can temporarily look like it is rational', would seem more accurate.

Re: Last Time It Was This Crazy, the Stock Market Crashed

#38

Post by smt88 »

bhouston wrote: post #35
smt88 wrote: post #30

Earlier quoted context omitted.

I disagree with your premises as well as your argument. WhatsApp, Instagram, and SnapChat are valuable because they have users. There are a million ways to monetize users once you have them, but it's hard to get them. Google, Facebook, and others are large, humming machines that squeeze money out of users, but WhatsApp, Instagram, and SnapChat are not. The latter three companies are valuable because they can be fed i…

All self-driving cars are a threat to Uber, but it will be a really long time for fully self-driving cars to reach significant penetration, as much as I love them. I think for the next 10 years we will be in the era of smart assisted driving.

1) I actually think self-driving cars are moving faster than expected. Ten years is still a pretty reasonable guess, considering the pace of governments and the auto industry, but we're closer than I thought we'd be by now.

2) Uber will use self-driving cars, probably exclusively as soon as it's legal.

Uber wants to be the internet of the physical world. With the internet, information could travel anywhere with the tap of a finger. Uber wants the same reduction of friction for objects and people.

The problem for Uber is it's already easy to poach drivers from Uber. Drivers don't care if they drive for Lyft or Uber because the payouts are pretty similar. I've met drivers who switched between both.

When cars drive themselves, Uber will have to become even more competitive to stay on top. The cost of building an Uber-like fleet will be no more than buying the hardware.

Remember how hosting companies proliferated in the 90s and early 00s? Until AWS and similar PaaS options, the hosting space was incredibly fragmented, and the margins were awful. That's what Uber has on the horizon.

Re: Last Time It Was This Crazy, the Stock Market Crashed

#39

Post by notastartup »

melvinmt wrote: post #26
notastartup wrote: post #9

I'm very worried about the property bubble collapse in China that will happen in the near future. I'm seeing the same patterns. People from said country buying up expensive property overseas, people lose fortune when property bubble explodes. It happened with Japan (remember when Japanese yakuza were buying up property in West coast). It surely to happen with China (buying up property in west coast like crazy).

Can you explain why a collapse in China would affect the West Coast?

high valuation comes from people paying high prices, mainly from China. if these people were to default or sell mode it would push the real estate valuation down significantly.

Re: Last Time It Was This Crazy, the Stock Market Crashed

#40

Post by gizmo »

qwerta wrote: post #11

It is all related to quantitative easing, there are not savings, but easy money around. Totally different dynamics compared to last stock bubble.

Only related insofar there is a common cause. QE isn't the cause of the easy money in SV. Demand in the economy is still low, which means there is no sensible place for people to park their money. So SV looks more attractive because startups aren't affected much by the general state of economy. The low interest rates and QE certainly don't hurt, though.
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