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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

#51

Post by anovikov »

In 1999 boom, Nasdaq P/E reached 200, while general stock market P/E was 'only' 34. 6 times the difference. This time it is around 24 and general market is at about 19. Just 25% the difference. So i think there is really nothing to be worried about. There are few extreme valuations, and when those correct (Zynga, Groupon, ...) it doesn't create a domino effect.

Even Snapchat doesn't sound so stupid - it may never make any revenue, but having such a crowd of loyal users can bring a lot of cash to many companies who have already figured out their monetisation (Apple, Google, etc.) so they will be just buying a huge market. And they have a lot of cash to pay for what they buy, and sometimes they do actually buy. So people investing in Snapchat on these seemingly extreme valuations are likely not that stupid, or subversive.

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

#52

Post by ExpiredLink »

forrestthewoods wrote: post #10

"A parabolic rise in start ups with valuations of $1 Billion or More" or "A linear rise in startup valuations on a logrithmic scale". Amazing what happens in 10 years when worldwide smartphones go from a tens of millions a year (2004) to over a billion a year (2014). Apple has 130 billion in cash sitting overseas with nothing to spend it on. Microsoft has 90 billion. Google has at least 30 billion. Facebook has over…

> if you can get 100,000,000 users you can sell for $1,000,000,000.

30 USD per user is/was published sometimes.

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

#53

Post by linkeex »

I've always wondered what pure software startups are doing with millions of dollars.

I mean come on you can develop awesome software without having a fancy office, nice furniture and a super high salary.

Take me and my friends for example. We love building stuff and work for all our products in university or at home. Also we're doing it for, what, like 400$ a month working 20-30h...

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

#54

Post by XorNot »

k-mcgrady wrote: post #46
paganel wrote: post #32

Earlier quoted context omitted.

> 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…

It sounds like your issue was a slow phone. Facebook's Messenger app works great for me. I also use Whatsapp daily but prefer the Facebook app. It's a much nicer experience.

I'm indifferent. But when WhatsApp asks me for money, I suspect I'll just start using Facebook Messenger or Google Hangouts instead.

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

#55

Post by paganel »

k-mcgrady wrote: post #46
paganel wrote: post #32

Earlier quoted context omitted.

> 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…

It sounds like your issue was a slow phone. Facebook's Messenger app works great for me. I also use Whatsapp daily but prefer the Facebook app. It's a much nicer experience.

Yeah, it's slow because it's "old" (3-year old). The thing is that it is slow only when trying to use the FB app, the browser, WhatsApp and GMaps all work pretty well.

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

#56

Post by rootofunity »

junto wrote: post #5

I've recently sold all my long term shareholdings on a similar gut feeling. I wonder what will be the trigger that sets off the selling frenzy this time round?

I think the trigger will be as most bubbles. Every joe shmoe on main street starts buying and profiting off these start ups in some way or another then smart money takes it's profits, prices dive slightly, main street panics and there you have it.

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

#57

Post by lmm »

bhouston wrote: post #24
bello wrote: post #21

Earlier quoted context omitted.

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.

> it's VC money, not people's savings. Well, technically VC money is people's savings, usually parts of pension funds I believe.

A little of it is pension funds or sovereign wealth funds, but most of it is from high-net-worth individuals. Investors are required to be financially sophisticated; they know the risks they're taking.

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

#58

Post by lmm »

lotsofmangos wrote: post #37
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.

If the market goes "rational" where that was what you were betting on, you make money. You go bankrupt when the market "stays irrational", i.e. the stocks you thought were overpriced stay overpriced.

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

#59

Post by [deleted] »

XorNot wrote: post #50
lotsofmangos wrote: post #44

Earlier quoted context omitted.

I don't think it was a comparison of quality, just an observation of spending clout. Things are being bought at billion dollar valuations that would have failed, just because the top players don't want to even think of risking their dominance, and that isn't going to stop unless they run out of money. This means that some of the easiest exits available are in making things like snapchat, where you will get bought jus…

Which is still a big risk: at some point, the market can crash simply because the dominant players get low on cash to keep making acquisitions like that. Suddenly all the assumptions and valuations people are relying on turn out not match up to reality, and everyone stops investing while they take a long hard look at their books.

[deleted]

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

#60

Post by Amezarak »

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.

They are, of course, weakly correlated. If the US government dropped one million dollars cash into everyone's yard via helicopter, we would probably have some inflation.

But contrary to sibling poster, economists have known for many decades that it is only a weak correlation and plenty of other forces are at work. The weak inflation resulting from QE was predicted by mainstream economics and does not come as any surprise. This is nothing specific to the US economy - Japan and the EU are similar real-world examples if you don't care for the economics and the modeling.

Japan is a fine example actually - 15 years later, Japan is, as expected, still not seeing some kind of phantom, invisible-hand "correction" causing massive inflation.

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