Why This Tech Bubble is Worse Than the Tech Bubble of 2000

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Mark Cuban's latest blog post outlines the reason he thinks the current tech bubble is far worse than the tech bubble of 2000.

So why is this bubble far worse than the tech bubble of 2000? Because the only thing worse than a market with collapsing valuations is a market with no valuations and no liquidity. If stock in a company is worth what somebody will pay for it, what is the stock of a company worth when there is no place to sell it?
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All I know is Apple stock is overrated...how many Ipads and Iphones can a person take in.
 
What tech bubble? :confused: Of course, without this so called "tech bubble", he might not have anything to talk about? What then? Guess I am failing to see what his point is.
 
He does have a point, there have been a lot of big-name buyouts with huge values for software that isn't even profitable like What's App, Instagram, Snapchat and plenty of others.
 
When snapchat is looking for a $19bn valuation, you know we're in a tech bubble. What exactly does Snapchat provide in the way of revenue or value? Can anyone tell me? Because I don't see it, and it's only a matter of time before it all comes tumbling down.
 
He makes a decent point about some crazy valuations. Oil and diamonds are ridiculously over valued as well, one organisation can collapse the value of either one. He doesn't seem to have a problem with that though, he does seem to have a beef with all these transactions and investments around that he isn't making any money off of.

"How am I supposed to make more money with my money if you keep buying things I never thought had any value?"
 
the-one1 said:
Until the next version comes out with one more feature "copied from someone else" that the last one lacked.
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Fixed that for you.

Apple purposely leaves out features, so they can add the feature the following year and sell millions of new phones to all the iBots who have to have the latest fashion accessory, I mean iPhone.

I'm also sure they will sell a lot of the new iWatches, no mater how bad or limited it is, and a new version will come out next year that the same people will rush to buy again. And most of these iBots will go around bragging about how Apple invented the smart watch, even though there have been better smart watches around for 2 years.
 
Twisted Kidney said:
He makes a decent point about some crazy valuations. Oil and diamonds are ridiculously over valued as well, one organisation can collapse the value of either one. He doesn't seem to have a problem with that though, he does seem to have a beef with all these transactions and investments around that he isn't making any money off of.

"How am I supposed to make more money with my money if you keep buying things I never thought had any value?"
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yeah...

I get the sense that he would benefit from a bubble burst.
He ain't trying to warn you out of the goodness of his heart.
 
Jesus fucking Christ! Does everything have to turn into an Apple/Android pissing match on here now?!

Cuban raises some very valid points. The previous tech bubble had the potential for companies to engage in a new form of business with potential revenue generation. The current bubble involves speculating on companies with huge mountains of user data hoping that one of them manages to find a way to monetize it somewhere down the line. I think that is a huge difference.

Investing in a company with a new business model is risky, but sometimes can pay off, especially when that new business model is disruptive enough to upset established industries. Amazon comes to mind. Even if they end up going under at some point in the future, there will have been no doubt that they revolutionized the concept of online shopping.

Facebook is a cool concept, but as a company, I honestly have a hard time figuring out what they're selling. Can they continue to exist as a marketer of targeted advertising? Are they branching into the fields of AI, VR and/or mobile integration because they can make money there or simply because they've got mountains of cash from an inflated public offering and have no clue what to spend it on?

Even Google's business model makes more sense to me than Facebook. Google, for an awful lot of people, is the portal through which they interact with the web. How many people do you know have no clue what the term Internet browser is? How many of them tell you they get online by Google?
 
TheOneKnownAsMe said:
When snapchat is looking for a $19bn valuation, you know we're in a tech bubble. What exactly does Snapchat provide in the way of revenue or value? Can anyone tell me? Because I don't see it, and it's only a matter of time before it all comes tumbling down.
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data
 
He does have a point.

Lots of companies with large numbers of users and no plan to monetize the user base are getting bought out for astronomical amountsof money.

Some of them might figure out how to covet their costs at some point, but I highly doubt most of them will.

If I had lots of money, I would be shorting the hell out of social media companies. Long term their fall is preordained.

He's probably shorted some, and now is out trying to make news that hastens their share price resuctions so he can make a quick buck.
 
Terminus said:
data
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Yeah, but the data is highly overvalued.

I wouldn't say we currently have a tech bubble but I would say we currently have a social media user data bubble, of epic proportions.

Sure all that data has SOME value, but in the end someone has to convert the data into something sellable or use that data to sell the users something else, and in that regard I can't help but think the bottom will fall out of it all at some point.

Google is probably relatively safe in this regard, but the Facebook/Snapchat/Instagram/whatever's of the world have - IMHO - rather uncertain futures.
 
On a more positive note, it's going to be awfully funny when all those whiny bitches in San Francisco who scream and yell about gentrification are suddenly under water on their mortgage because the bubble bursts and housing prices drop like a stone.
 
Twisted Kidney said:
BOTH SUCK!

Fight the power!

Flip phones are the future!
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LOL

My personal phone is still a flip phone. Sadly it is dying and the pickings are slim for a device that focuses primarily on calling nowadays. I have no use for browsing or a data plan on my personal phone - they gave me an iPhone at work that does all of that and I don't have to pay the bill :D
 
SRTie4k said:
On a more positive note, it's going to be awfully funny when all those whiny bitches in San Francisco who scream and yell about gentrification are suddenly under water on their mortgage because the bubble bursts and housing prices drop like a stone.
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I think you have misunderstood the situation in San Francisco.

Its mostly long term renters who are complaining about gentrification. The people who have lived in the same neighborhoods for generations and now can't afford to stay.

They are angry at the gentrifiers, those coming in and buying or renting at higher rates and driving up costs.

These are the people who would likely be affected in the way you suggest if this were to occur.
 
Zarathustra[H];1041465733 said:
I think you have misunderstood the situation in San Francisco.

Its mostly long term renters who are complaining about gentrification. The people who have lived in the same neighborhoods for generations and now can't afford to stay.

They are angry at the gentrifiers, those coming in and buying or renting at higher rates and driving up costs.

These are the people who would likely be affected in the way you suggest if this were to occur.
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That's pretty much what I'm saying, high paid tech workers are driving housing costs in the area up. Once the bubble bursts, tech workers are all gonna leave and the housing market is going to collapse as well.
 
Disagree with the Cubes here. First thing, although "tech" is used as a catch-all, it's a much more diverse field.

Uber counts as tech...but it's transportation with an app layered on top.
Square counts as tech...but it's payments/finance with apps and hardware layered on top.
Snapchat counts as tech...but it's communications software (ok, maybe Snapchat isn't the best example.) ;)
Etc, etc.

Further, as these are mostly privately traded (and yes with little liquidity), if it crashes you're going to see much, much less widespread pain. Further, VCs are much more diversified this time around. They'll easily give out $100k - $1m to many companies to see if they can prove the basic foundation of their idea; but then to go further than that, it's much harder to get the huge dollars that so many companies got during the dot-com bubble. While some smaller investors will get hurt, unfortunately, under the new looser Reg D JOBS Act stuff, very few people that aren't investing in stocks in the first place are going to dip their toes into small scale private equity.
 
Zarathustra[H];1041465674 said:
Yeah, but the data is highly overvalued.

I wouldn't say we currently have a tech bubble but I would say we currently have a social media user data bubble, of epic proportions.

Sure all that data has SOME value, but in the end someone has to convert the data into something sellable or use that data to sell the users something else, and in that regard I can't help but think the bottom will fall out of it all at some point.

Google is probably relatively safe in this regard, but the Facebook/Snapchat/Instagram/whatever's of the world have - IMHO - rather uncertain futures.
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Would agree with this. Just because you have 500M users of whatever flavor of the month free app doesn't mean you'll ever be able to monetize any of them, much less at the astronomical values they're seeing assigned. It's too easy to nearly completely recreate Snapchat for free again and have users migrate.
 
It's not always about the money that the acquisitions can make and monetizing their user base - usually it's about using those acquisitions to funnel people back into your core platform. Once you get people into your platform you can skim money off of all the commerce that happens on it.
 
I think a lot of people are missing the point, including Cuban. Those huge valuations and companies being bought out for tons of money have nothing to do with the hope of monetizing the user base. It has to do with self preservation and the fact that if the tech giants dont buy up the these smaller apps with huge user bases they face the very real risk of losing users.
 
Comixbooks said:
All I know is Apple stock is overrated...how many Ipads and Iphones can a person take in.
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Apple has convinced poor people they need iDevices. I am too cheap to join the iBandwagon and save nearly half my income to hopefully retire early.
 
mikefxu said:
Apple has convinced poor people they need iDevices. I am too cheap to join the iBandwagon and save nearly half my income to hopefully retire early.
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And eventually the government will tax your savings, your net worth, or take away your social security under the pretense that you already have enough. Then they will use that money taken from you to provide iPhones for all the people who didn't save for retirement.
 
It's interesting......

didn't Cuban make all his money the same way in the early days of the internet boom?

the pot is calling.....
 
Its not news everyone knows there is a bubble in tech. There are also bubbles in all stocks, Bonds, Housing, and most other sectors of the economy and why not, The Fed and every other central banks in the world has printed tens of TRILLIONS of new currency into existence since 2008. That money has to go somewhere and since most are bailout money, its only natural that speculation is the name of the game.
 
MrCaffeineX said:
Jesus fucking Christ! Does everything have to turn into an Apple/Android pissing match on here now?!

Cuban raises some very valid points. The previous tech bubble had the potential for companies to engage in a new form of business with potential revenue generation. The current bubble involves speculating on companies with huge mountains of user data hoping that one of them manages to find a way to monetize it somewhere down the line. I think that is a huge difference.

Investing in a company with a new business model is risky, but sometimes can pay off, especially when that new business model is disruptive enough to upset established industries. Amazon comes to mind. Even if they end up going under at some point in the future, there will have been no doubt that they revolutionized the concept of online shopping.

Facebook is a cool concept, but as a company, I honestly have a hard time figuring out what they're selling. Can they continue to exist as a marketer of targeted advertising? Are they branching into the fields of AI, VR and/or mobile integration because they can make money there or simply because they've got mountains of cash from an inflated public offering and have no clue what to spend it on?

Even Google's business model makes more sense to me than Facebook. Google, for an awful lot of people, is the portal through which they interact with the web. How many people do you know have no clue what the term Internet browser is? How many of them tell you they get online by Google?
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Facebook is competing with Google, and will continue to battle it out.

AdRevenue for both companies = #1 priority.

None of these "FEEL GOOD" companies that the public LOVE treat their employees good, hell look at the lawsuit against the big players in SIlicon valley for price fixing, black listing, etc...

They want to make $ with ads, they don't really care much about your privacy, your data or anything else.

Most people LIVE IN THE BUBBLE.
 
The reason US stocks are "overvalued" right now is due to foreign investment. European productivity and growth has been crushed by austerity measures, China has too much uncertainty regarding regulations and investment, and countries are starting to put a stop to foreign land investment so investment money from places like China is ending up where it grows and appears safe - US securities.

I'm not sure Mark Cuban is a good source of information regarding global market forces.
 
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