Dec 102012
 
 December 10, 2012  Posted by at 9:35 am Not So Stupid Questions  Add comments

My last day in Thailand, going from 35-40 degrees Celsius and sun to -20 and snowstorm 😀
Recorded at Bangkok airport 🙂

With the over-evaluated of several large tech companies the last few years several people say that we are in a new tech bubble that will soon burst. At the same time people argue on the other side that only a few companies are over-evaluated and that the companies also offer more services and possibilities than those in the dotcom bubble. The definition of a bubble is rather vague, but in general is a rapid inflation of companies by a rather large margin. According to. Debate in the economist last year the readers involved in the debate 69% voted in favor for the motion, and I would belong to that side. I think we are in a tech bubble, but not necessarily a big one. What do you think?

  2 Responses to “Stupid Question 100: Are we in a new tech bubble? (and what is that anyway?)”

  1. I don’t think we are in a tech bubble. There may be a few overpriced companies, but this is nothing like the craziness of the dotcom rush of 1999/2000.

    Two key aspects of a bubble which I think are missing here, is (1) the bubble drives up the value of most companies in the industry and (2) conversely, when the bubble bursts, everyone’s value goes down.

  2. The thing about “a bubble” is that it’s not really “a bubble” until most of the population believes that it is not 🙂

    If 70% of the population think that we are in a tech bubble, then only 30% of the population are investing money into that bubble. That really limits the size of the bubble. Even if it collapses, 70% of the populace are untouched… so is that a bubble or just “over-speculation”?

    13 years ago, we had a bubble. Everyone was dropping money into tech stocks. People with no possible revenue model were receiving gobs of money and spending it poorly. Investors with very little technical or investment knowledge were buying pets.com on their brand new e-trade accounts.

    What’s happening now is very different. There is a lot of venture capital in the markets, probably too much, but nothing like 2000. All of the recent tech IPOs have been overvalued by the markets (Facebook, LinkedIn, Groupon, etc.) But none of these stocks have dropped to zero either. These are mostly legitimate businesses (even Groupon) and despite falling prices, they’re not going to disappear either.

    I would posit that the tech overvaluation is more a symptom of markets looking for the “Next Big Thing” on the back of 10 years of really poor stock market performance.

    That stated, computer programmers are not going anywhere. At some level, we may be slightly overpaid, but every modern business is becoming more and more reliant on the type of automation we get from programming computers.

    And the problem is that we have a legitimate lack of people who have the skills required to program computers at a high level on a large scale. It takes a good 8-10 years of education / experience to “grow” a true senior developer / architect person.

    As much as we like to think that we can “scale” everything, we really cannot scale people in quite the same way.

    As it stands, I do not think “the stock markets” appreciate that fully. But I do believe they understand the inherent value of all of this automation and interconnection that we are doing.

    At the end of the day, this means that we are in a “Tech over-valuation” rather than a “Tech bubble”.

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