Tech bubbles are bursting all over the place • Hacker News Board

Re: Tech bubbles are bursting all over the place

#471

Post by joe_the_user » Fri, May 13, 2022, 9:07 PM UTC

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…

By effectively guaranteeing the market, the Fed made stock and bond markets more "money like" and so it didn't even have to overtly print money to create a money -printing-like effect ("the wealth effect") even though they also did print money to prove they were serious. So effectively we've had inflation for a while but most of it was inflation of asset values.

If the Fed talks the market down and people sell, it will have destroyed money without other harsh measures. That doesn't mean there won't be more pain other ways also.

Re: Tech bubbles are bursting all over the place

#472

Post by kenrik » Fri, May 13, 2022, 9:07 PM UTC

Johnny555 wrote: post #291

enra wrote: post #259

Earlier quoted context omitted.

There are. It happens when you hit high level of product market fit with a lean team and don’t go on a massive hiring spree after but keep growing the team at a measured pace. I think Github, Notion, Retool, Slack, probably Figma, hit revenues quite quickly as they launched and became profitable or at least close to breakeven.

You mention Slack, but they had losses of $140M/year prior to IPO: Slack says it may not turn profitable; IPO filing reveals $139 million in losses, Microsoft primary competitor The Slack IPO filing shows annual revenue of $400.5 million, up 60% from the prior year, with a net loss of $138.9 million, for the 12-month period that ended Jan. 31. Slack's actual fiscal year-end date has yet to be determined.

Slack grew their workforce too quickly.

Actually the Slack I remember from when it first came out is more or less the same product they have now. I'm not really sure what all of those people were doing for all of those years.

Re: Tech bubbles are bursting all over the place

#473

Post by kevstev » Fri, May 13, 2022, 9:08 PM UTC

georgeecollins wrote: post #133

bombcar wrote: post #85

Earlier 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…

In the typical scenario, I could have sold my stocks and incurred a 20-39% tax on the gains.

The other option was to instead take a margin loan out at a hair over 1% blended which is tax deductible and incur no tax bill.

There was a bit of risk in this yes, but I came out way ahead despite there being a pretty sharp pullback right after I closed on my house. I wasn't leveraged to the hilt at all, I think I had a loan equivalent to about 25,maybe 30% of my portfolio when the market pulled back.

If you have significant assets this is something you should be considering. This is imho one of those "rich guy" things that's available at a relatively low level of wealth, and the risk associated with it is well worth it in most cases.

Re: Tech bubbles are bursting all over the place

#474

Post by JoshCole » Fri, May 13, 2022, 9:09 PM UTC

abzolv wrote: post #289

legitster wrote: post #75

This 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…

If average Jane, who is not a raving Tesla fan, wants to spend circa $140K on an EV, and she has to choose between the Mercedes EQS 580 and the Tesla Model X, which one would you say is the no-brainer (better value for money)? https://www.mbusa.com/en/vehicles/class/eqs/sedan https://www.tesla.com/modelx That is the future of Tesla. Increasing competition by better products offered by manufacturers with far more expe…

At both price points on the link the Tesla vehicle metrics are dominant over the Mercedes vehicle metrics. In fact, the $110k cost Tesla has better metrics than the $130k cost Mercedes: it is faster, accelerates faster, has higher horsepower, and has higher range. If the average Jane has $140k and wants the best value for money it is really hard to see why they would choose the objectively inferior car according to most metrics. They could save $30k and still have a better car.

I really don't understand, at all, how you can conclude that it is a no brainier to get a Mercedes? It seems like a really ridiculous conclusion?

Just clicking around on the site and trying to do the order shows you are wrong that Mercedes is far superior on non-car related things. The dealership model is famous for its failings. Car salesmen have a notorious reputation. The website for Tesla lets you put in a purchase order within three clicks, no interaction with a dealership. The Mercedes purchase workflow had more like seven clicks and it resulted in getting an interstitial telling me to talk to a dealer about how the car wasn't going to have all the features because of chip shortages, that the price would change as a consequence of that, and directed me to talk with a dealership.

How is that better? How is not giving me the listed price but making me go through a high pressure sales channel superior to just letting me buy car the now? I don't understand at all how you can say that dealership model is far superior. Is it right in your eyes that someone poor at negotiating should have to pay more than someone who is better at it? I don't get it. I don't understand at all how you can think Mercedes is providing the better experience.

Re: Tech bubbles are bursting all over the place

#475

Post by DragonStrength » Fri, May 13, 2022, 9:11 PM UTC

shrimpx wrote: post #344

garren wrote: post #247

Earlier quoted context omitted.

Rising interest rates are starting to slow the housing craziness, at least where I’m at. I was regularly seeing 20-27% over asking with limited to no inspections, new listings going in hours. Nuts. All-cash is basically the new norm. Two years ago that was an issue for regular buyers, but it’s workable now since lenders have jumped into the mix, more and more offer an all-cash option - they make the purchase and tran…

> All-cash is basically the new norm. It’s paradoxical that all-cash became the norm in a period where mortgage rates were at all time lows…

Well, only if you ignore how we got there. Housing output took far too long to recover after 2008, and on top of that, many homeowners felt entitled to the gains they lost during the recession because that is what the American Dream promised.

We could also pull on the demographic weirdness of the moment as Baby Boomers only finally cede political power, skipping a generation. What have all are priorities concerned since they came of voting age? Should we be surprised our recent policies continued to favor older people who owned homes over young people deciding the shape of our next generation? And to be clear, I'm not blaming any motives. I'm saying much of this can be explained by an "accident" (or maybe "conclusion") of demographics.

The worst is if our incentives are for lazy capital returns (like rapidly rising residential real estate) for retirees the people who benefit in the younger generations are not going to be the people taking risks like starting businesses.

Re: Tech bubbles are bursting all over the place

#476

Post by WaxProlix » Fri, May 13, 2022, 9:12 PM UTC

mym1990 wrote: post #166

gonzo41 wrote: post #126

Earlier quoted context omitted.

QE as well. I just don't see why they can't put conditions on some of their lending to focus the intent of the money.

Simple: It is not the responsibility of the Fed to evaluate and empower or degrade certain markets according to what "smart investments" should be. This is ultimately up to the banks that receive the money and the people who come up with investment ideas.

This entire conversation is about how those entities don't seem to be doing a particularly good job.

Re: Tech bubbles are bursting all over the place

#477

Post by labcomputer » Fri, May 13, 2022, 9:12 PM UTC

wbsss4412 wrote: post #450

Closi wrote: post #431

Earlier quoted context omitted.

I'm not saying they are worth their valuation, I'm just saying you can't exactly claim/imply that they aren't very profitable compared to others in the market they are operating in. Also remember that they almost tripled profit in the last year, so that PE ratio will be 1/3 if they manage to do that again. Again, I'm not claiming that it is possible, or that that would be a sensible P/E ratio, or that they aren't ove…

I would be shocked if they were able to maintain those margins. They’ve faced relatively little competition in the EV space until this point and benefited from a shortage juicing prices. As demand eases and more entrants come into the EV space, they will have to lose margin, market share, or both.

> I would be shocked if they were able to maintain those margins.

I wouldn't be. They have fundamental and very broad patents on important things like:

* Pre-heating the battery on the way to a charging stop (enables the battery to accept faster charging without damage on road trips)

* Using motor waste heat for battery heating (increases range while use the above strategy)

* Dynamically adjusting charge rates due to real-time battery conditions (enables charging faster)

Those patents don't expire until the mid/late 2030's. That allows Tesla to force competitors to either pay a licensing fee or use more-expensive workarounds, like different battery chemistries, to match the battery range and charging rate. Either way, it means Tesla is likely to have larger margins than competitors.

Re: Tech bubbles are bursting all over the place

#478

Post by worik » Fri, May 13, 2022, 9:13 PM UTC

kurthr wrote: post #196

ripe wrote: post #171

Earlier quoted context omitted.

> non-productive Speculative investments tend to get punished at the end of the cycle by losing all value, thus punishing those invested in it and restoring order. To be precise, the investors who are left holding at the end of the cycle get punished. The early investors who got out make out like robbers. This system incentivizes pump-and-dump.

That is "the market" working for you! We could allocate resources to productive assets by fiscal spending, but that is prevented by politics. Only when "the market" gets its cut can any infrastructure be built in the US. That's also true for much of the medical establishment and pension/retirement systems. If the market was efficient, we wouldn't be complaining about it. Unfortunately, a "free market" and an efficien…

> Most markets that have many individual consumers require regulation to be even close to efficient.

That is not true from what I see (modulo contract enforcement and policing of anti-social elements). There are many examples of smoothly functioning markets. With my economics geek hat on the things required for a market include:

* All participants must have choice, be able to enter and leave in the medium term.

* There must be clear information available about the properties of the goods and/or services

* There must be clear information about the prices.

The first condition (choice) can be rough on suppliers. The "choice" for a coffee shop is closing or bankruptcy. But for the supplier of electricity from a hydroelectric dam the choice is different. There are no clear boundaries.

For the consumer they can substitute potatoes for kumera but there is no substitute for food. Everybody must eat.

So: Reticulated water and electricity are bad things for markets. Vegetables (except during famine) and entertainment services are good

Re: Tech bubbles are bursting all over the place

#479

Post by rebelos » Fri, May 13, 2022, 9:13 PM UTC

mirceal wrote: post #194

the_doctah wrote: post #134

Earlier quoted context omitted.

Any time I ask on some financial forum about moving a chunk of investments to cash I get told that would be stupid, don't try to time the market, and just keep buying. I would have saved myself a bunch of losses if I had done it when I was thinking about it.

You cannot time the market. When you have invested in something, did you do your DD or did you do it because everyone else did it? I would recommend a book called "the intelligent investor". I also recommend low fee mutual funds that track the market as the default thing to invest. Once you educate yourself more you can make more sophisticated investments. I also don't have anything against speculative investments. J…

> Once you educate yourself more you can make more sophisticated investments.

There are countless well-capitalized and mostly underperforming hedge funds that were built on this premise.

Re: Tech bubbles are bursting all over the place

#480

Post by gabrieledarrigo » Fri, May 13, 2022, 9:13 PM UTC

scarface74 wrote: post #223

MAGZine wrote: post #16

Earlier 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.

Why? I work to exchange labor for money. They hired me because I generate more value than they are paying me. The company doesn’t “care” about me. It’s purely transactional. If I got hit by a bus tomorrow, they would send flowers and “thoughts and prayers” to my wife and have an open req before my body got cold.

Say amen to this, guys!