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Tech bubbles are bursting all over the place

economist.com

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Re: Tech bubbles are bursting all over the place

#331

Post by corrral »

otterley wrote: post #323
corrral wrote: post #309

Earlier quoted context omitted.

> At that point, I'd bail, because the appraiser is raising a red flag. The point is, in a lot of markets, if you bailed on offers over this in the last couple years, you wouldn't be winning any bids in the first place, and wouldn't have been able to buy a house at all. The winning bids include guarantees that the buyer will cover the difference. If you won't do that, you'll lose to an all-cash offer from someone who…

Something seems a bit off, then, because if the market is appreciating, then the appraisers should be taking that into account. As another commenter said, they were certainly doing that in hot West Coast markets like SF and Seattle. Both houses I purchased (each in those locations) appraised at the contract price, and I bought them both within the last 7 years.

They do, but it lags. If prices are going up fast enough, given the way these things are determined, it can easily be the case that damn near every house isn't appraising at what it sells for.

The "solution" to this, in the run up to the '08 crisis, was for appraisers to "help out" by fudging their figure to make it match the sale price. I know this because a real estate agent whose husband was a loan officer, told me so. "I know they were just trying to help out with these new regulations, but it's had the unintended consequence that appraisers can't fudge their numbers slightly higher to match an offer that's only a couple percent above the natural appraisal, like they used to". LOL, yeah, the exact thing they were trying to accomplish was an "unintended consequence". Talk about not being able to understand something because your paycheck depends on it.

Possibly some appraisers in at least some markets have figured out ways around this, and are back to fudging numbers. I dunno.

Re: Tech bubbles are bursting all over the place

#332

Post by photochemsyn »

chinchilla2020 wrote: post #128
avgDev wrote: post #2

I work for non-tech generating 100million+ in revenue. Cushy job, fully remote, good pay and full autonomy with flexible hours working as an IC. I recently talked to a startup, similar pay, culture would be a better fit since it was mostly techies and I'm a nerd by nature.....but things just got awkward as soon as I asked about their revenue....they were bleeding money and I was told they were being acquired by a big…

Management people have built careers and fortunes in tech running sinking companies. Even within FAANG, many people build careers while working on sinking products (Most products in Google are revenue negative...)

According to the article, FAANG is an obsolete acronym, it's now MAMAA...

Re: Tech bubbles are bursting all over the place

#333

Post by jerf »

epgui wrote: post #17
qeternity wrote: post #11

Earlier quoted context omitted.

> Those are normal values for the stock market (20-25). Presuming your experience in equities markets is within the last decade... Historical average is more like 15 for SPX.

If you're doing any fundamental analysis, you're going to end up doing one form or another of a DCF model. The expected rate of growth has a very big influence on your final estimated valuation, and it's normal for companies with a higher expected rate of growth to be valued at higher multiples. Whether the rate of growth will be as high as expected, that is the real question, and it is not a simple one or one you ca…

This has been what has been confusing me about the market for the past quite-a-while with regard to the tech stocks. Were some of them doing well? Sure. Were some of them basically money fountains that needed just a slight turn to prioritizing profits over growth to make lots of money? Sure.

But a lot of the tech giants were priced as if they had not already expanded into well over half the market, but as if they still had 99% of their market still in front of them and no competition in sight.

As of this time last year, it is not plausible that Facebook is extremely likely to continue growth like crazy and increase their revenues per customer by a factor of 10 or 50 or something. Sure, their whole VR play may pay off hugely, but I couldn't say it's extremely likely the way their stock said. Netflix was not going to grow their subscription base by 10x and/or charge their customers 10-50x more. Etc.

I mean, I guess it's within the range of possibilities for these companies, but these stocks were priced like it was all but guaranteed that these companies were going to see smooth sailing to levels of revenue I couldn't even remotely guess how they were ever going get to. How is Facebook, at this point, going to pivot into making $500/user/year from their current ~$20/user/year? And whatever your answer, what is the probability of that just smoothly working with no hiccups within the dollar-cost-value window it would have to take place in?

In the last couple of months, I've been getting my answer to this question, and my confusion has been resolving.

Re: Tech bubbles are bursting all over the place

#334

Post by m0llusk »

dominotw wrote: post #308
gonzo41 wrote: post #92

Earlier 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…

why is the housing market not budging. Its just lagging other assets?

Hard to say, but it has always been like that. Housing prices are extremely sticky. With corrections most of the work ends up being done by inflation while prices stagnate. One peculiar advantage to the burst of inflation is that it could help the housing bubble correct itself relatively quickly.

Re: Tech bubbles are bursting all over the place

#335

Post by bdcravens »

burkaman wrote: post #100
olivermarks wrote: post #26

The problem I have with the Economist these days - they've changed a lot recently as has the Financial Times - is that they are one of the big cheerleaders for creating bubbles out of tech they clearly don't understand. This starves the startups that have compelling and reachable business models and goals because the funding goes to (quite possibly financially scammy) moonshots with vague goals somewhere over the hor…

Searching for "uber" in the Economist archive, I would not classify their coverage as "cheerleading" or even positive. Most articles seem either neutral or negative, including headlines like "Can Uber ever make money?" I would also be interested to see examples of the problem you're describing.

I don't think Uber qualifies as "tech they clearly don't understand". Uber is certainly a company with issues, but it's a clear problem they are solving, adding automation to an industry that's very old.

Re: Tech bubbles are bursting all over the place

#336

Post by Foobar8568 »

stjohnswarts wrote: post #295
vishnugupta wrote: post #58

It's fascinating to trace the genesis of present crash to Fed's policies post 2008 crisis. The interest rates were kept artificially low to prevent another Great Depression. 2010s saw an unprecedented rally of tech/growth stocks, fuelled by cheap capital. Growth at all cost was the mantra, hoping companies will turn profitable at some point á la Amazon. Uber's CEO hit the nail on the head when he wrote "The average e…

The market is having issues now not because of inflation being kept low but because people panic when everything isn't going smoothly. The supply chain and WW3 have investors scared, and now they're panicking and leaving the markets and taking their profits with them. Others panick and get what cash they can. Some will buy low and it'll level off soon probably. I think this is more of a pull back than a recession. Ge…

Typically one can take a look at HOOD 13F, institutionals are enjoying free meals while retails are bleeding money by getting out.

Re: Tech bubbles are bursting all over the place

#337

Post by throw_nbvc1234 »

MomoXenosaga wrote: post #306
colechristensen wrote: post #138

Earlier quoted context omitted.

This was driven by extended 0-ish% interest for an entire recession cycle. Unable to get "safe" returns, money chased more dangerous classes of assets and inflated prices. Inflation and a return to nonzero interest means capital gets to retreat to safer ground, pulling the rug out of stupid unprofitable startups that can only make money with head-in-the-clouds IPO valuation or FAANG acquisition.

Is it really a bad thing? Unemployment is pretty low.

Labor Force participation is also low. Job openings are around an all time high.

https://fred.stlouisfed.org/series/CIVPART https://fred.stlouisfed.org/series/JTSJOL

As these two converge, wages are probably going to go down while inflation may still be high.

Re: Tech bubbles are bursting all over the place

#338

Post by freeflight »

bink wrote: post #203
martindbp wrote: post #179

Earlier quoted context omitted.

Tesla made more money last quarter than Ford, GM and Toyota. Toyota made 10x the number of cars as Tesla. Tesla is growing vehicle production 50% YoY, while growing profit even faster (having barely hit economies of scale yet). Tesla has a backlog of orders approaching a year in many regions. Everyone else is losing money on their EVs and can't make them in volume production, can't find the batteries for them, becaus…

All of those things can be true and Tesla's stock can also be over-valued. A rapidly growing and popular company doesn't justify any arbitrary valuation.

Indeed, which also begs the question; How much of that growth is driven by the over-valuation?

Particularly as Musk is no stranger to using creative accounting techniques, and sheer speculation, to make his companies suddenly look more profitable [0]

There's also him leveraging his other companies to create growth among each other. Like Starlink being a major customer for SpaceX.

Which could either be really smart, or the making of a really impressive house of cards.

[0] https://www.cnbc.com/2021/04/26/teslas-bitcoin-speculation-h...

Re: Tech bubbles are bursting all over the place

#339

Post by turtlebits »

avgDev wrote: post #2

I work for non-tech generating 100million+ in revenue. Cushy job, fully remote, good pay and full autonomy with flexible hours working as an IC. I recently talked to a startup, similar pay, culture would be a better fit since it was mostly techies and I'm a nerd by nature.....but things just got awkward as soon as I asked about their revenue....they were bleeding money and I was told they were being acquired by a big…

I was in the same boat as you. I was about to accept an offer, then I had a chat with their CTO and I asked some hard questions about their strategy (compelling product - but their vision was becoming a "platform" as a lot of startups do). Think I threw them for a loop and didn't get a great answer. Ultimately changed my mind on joining.

Re: Tech bubbles are bursting all over the place

#340

Post by gigantosaurus1 »

hiram112 wrote: post #97

I've grown anxious the past few years watching salaries skyrocket while I've played it safe, remaining at my company with years of seniority, but average pay that has been eaten away by COL and inflation increases, though in a very stable industry related to defense. Every time I got the urge to hit Leetcode and start interviewing for a new gig with a 50% pay increase, I remember 2007-2009 and getting laid off from 3…

There are companies that are arguably what I’d consider recession proof, offering 400-600k for fully remote senior / staff roles with very reasonable WLB. Including GOOG / MSFT / AMZN. They’re not laying people off / nor are they going anywhere for the foreseeable future.
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