1. I can think of many bubbles that the author has lived through, even if he can't. Oklahoma natural gas in the early 1980s, junk bond credit bubble in the mid 1980s, Japanese stock and property markets in the late 1980s, regionalized housing bubbles in California and Boston in the 1970s and 1980s, etc. There are many other examples, depending on how old he is (Nifty 50 in the late 1960s), etc. And I don't think it's a stretch to call the "mania" for tech stocks in 1999 a bubble. (If that's not, why is housing/credit in the 2000's a bubble?) Ignorance of history is not generally a qualification to opine on it.
2. To take this seriously as comment, he'd need to define the difference between a bubble, a mania, and a phenomenon, at least well enough for someone else to apply it to a situation and arrive at the same classification. Otherwise, this is an article about how he doesn't think there's a bubble, so you shouldn't either.
3. I will do him one better and hazard at least a partial definition of a bubble--a rapid and escalating series of price increases that is driven by a feedback loop of public perception rather than by the fundamental cash flows of the asset. One can quibble with this (it's hardly scientific). If you don't like mine, have a look at Robert Shiller's (http://dealbook.nytimes.com/2010/01/27/schillers-list-how-to...).
4. To establish that this is not a bubble, he would need to make it clear why he believes that the cash flows the affected firms will ultimately generate will make their present valuations reasonable. While that may be true in some cases, in general I don't think it's a hard case to make that the tech industry has jumped from cyclical upswing to nascent bubble. Pockets of tech financing--arguably angel financing and some late-stage financing--are, to my eyes, pretty much already there.
"We had ONE bubble in my lifetime and it was a ‘credit bubble’."
In other words, he has redefined bubble to mean what he wants so that all the other bubbles aren't really bubbles and he can make a link-bait headline.
I found this particular article vague and lacking of any necessary supporting facts. I read through a few other posts by the author and found them along the same lines [1,2]. I see no reason to value anything written by Mr Lindzon on the serious subject of whether we are in a bubble.
I actually agree with this.. I tried to think back about the dot.com era (which some people refer to as a bubble. If you think about it, the dot com bubble never burst. It is still alive and if anything, has allowed the amazing platforms we have today to materialize from something. Perhaps the insane growth has somewhat mellowed, but the dot.com era never blew up (destruction blow up, not growth haha). The dot.com era and our current entrepreneurial/start up era are unique, but I still think they play by the similar rules that any business, product or service goes by. They'll be created, experience growth, begin to mature and then possibly (with no regard to adaptation) decline or slowly die out. It's up the people behind the companies how long it takes and how much traction they can establish in each phase, which is where the true entrepreneurial skills shine.
Just a few points that come to mind after this article, not saying they're right or wrong.. but thanks for getting the mind cranking!
You're right, market values dramatically declined.. but you have to include other variables such as 9/11. The market was its worst in 2002 and one would have to think that without the repercussions on the market from 9/11, things wouldn't have been nearly as bad. The market went on to rebound and soar very high for the next 5 or so years and then our current situation began.
Case and point, the dot.com era experienced a decline in product life cycle growth as it transitioned from its growth to maturity stage (and of course, the events that took place on September 11th didn't help either).
1. I can think of many bubbles that the author has lived through, even if he can't. Oklahoma natural gas in the early 1980s, junk bond credit bubble in the mid 1980s, Japanese stock and property markets in the late 1980s, regionalized housing bubbles in California and Boston in the 1970s and 1980s, etc. There are many other examples, depending on how old he is (Nifty 50 in the late 1960s), etc. And I don't think it's a stretch to call the "mania" for tech stocks in 1999 a bubble. (If that's not, why is housing/credit in the 2000's a bubble?) Ignorance of history is not generally a qualification to opine on it.
2. To take this seriously as comment, he'd need to define the difference between a bubble, a mania, and a phenomenon, at least well enough for someone else to apply it to a situation and arrive at the same classification. Otherwise, this is an article about how he doesn't think there's a bubble, so you shouldn't either.
3. I will do him one better and hazard at least a partial definition of a bubble--a rapid and escalating series of price increases that is driven by a feedback loop of public perception rather than by the fundamental cash flows of the asset. One can quibble with this (it's hardly scientific). If you don't like mine, have a look at Robert Shiller's (http://dealbook.nytimes.com/2010/01/27/schillers-list-how-to...).
4. To establish that this is not a bubble, he would need to make it clear why he believes that the cash flows the affected firms will ultimately generate will make their present valuations reasonable. While that may be true in some cases, in general I don't think it's a hard case to make that the tech industry has jumped from cyclical upswing to nascent bubble. Pockets of tech financing--arguably angel financing and some late-stage financing--are, to my eyes, pretty much already there.