Re:Pressure on startups is building with IPOs and sales stal...
by adventured on Tuesday July 11, 2017 @02:31PM
(#14746716)
> But jeez, this is one fairly specific industry hoovering up all of this cheap money in our economy
That's not actually happening. VC capital for tech / Internet / software start-ups is a hilariously trivial fraction of capital invested into the US economy and an even smaller fraction of the cheap money sloshing around.
Most of the cheap money in the US economy has gone back into the stock market and real-estate. Raise interest rates to historical norms if you want to know just how much cheap money is in real-estate right now ($10+ trillion?).
The over-valuation just on Google and Amazon right now amounts to a minimum of several hundred billion dollars. Apple's earnings and sales have fallen, rather than climbed, and their market cap expanded by hundreds of billions of dollars for absolutely no good reason other than money is desperately chasing returns due to the Fed's hyper low rates for the better part of a decade.
By itself that over-valuation amount, on just Amazon and Google, is more than all the capital invested by VCs into tech start-ups over the span of years.
But it goes far beyond tech companies in the stock market, it's every company. McDonald's hasn't grown for years - they're sporting a 27 PE ratio with zero growth for five years. Their overvaluation alone matches the total VC put into tech companies in a given year. Why did their stock go up 50% in the last two years, while their business contracted? Cheap money.
That's not actually happening. VC capital for tech / Internet / software start-ups is a hilariously trivial fraction of capital invested into the US economy and an even smaller fraction of the cheap money sloshing around.
Most of the cheap money in the US economy has gone back into the stock market and real-estate. Raise interest rates to historical norms if you want to know just how much cheap money is in real-estate right now ($10+ trillion?).
The over-valuation just on Google and Amazon right now amounts to a minimum of several hundred billion dollars. Apple's earnings and sales have fallen, rather than climbed, and their market cap expanded by hundreds of billions of dollars for absolutely no good reason other than money is desperately chasing returns due to the Fed's hyper low rates for the better part of a decade.
By itself that over-valuation amount, on just Amazon and Google, is more than all the capital invested by VCs into tech start-ups over the span of years.
But it goes far beyond tech companies in the stock market, it's every company. McDonald's hasn't grown for years - they're sporting a 27 PE ratio with zero growth for five years. Their overvaluation alone matches the total VC put into tech companies in a given year. Why did their stock go up 50% in the last two years, while their business contracted? Cheap money.