Re:Tech bubbles are bursting all over the place
by adam_arthur on Friday May 13, 2022 @07:12PM
(#31373505)
Which tech stock was valued at 100x sales in the 80s? I'm sure there are plenty of examples from 1999, though.
Re:Tech bubbles are bursting all over the place
by paulpauper on Friday May 13, 2022 @09:28PM
(#31374268)
what were interest rates in 1998-1999?
Re:Tech bubbles are bursting all over the place
by adam_arthur on Saturday May 14, 2022 @02:51AM
(#31375658)
You implied the tech stock boom wasn't due to a low discount rate, yet the valuations today are far higher than tech stocks in the 80s, even at comparable growth rates.
Which makes it plainly obvious that a lot of the valuation gains are, in fact, due to the discount rate, and not organic growth.
3x of Apple's market cap growth since 2018 is a change in valuation multiple, and nothing to do with actual growth of its revenue/profits, for example. Is it a boom if a majority of your gains are due to changing the valuation peg and leaving the rest the same? Sounds more like a bubble to me
Though my point is more directed towards the 100x PS companies, which are a far more egregious example of overvaluation
Correlation does not mean causation, as it's commonly said. Interest rates were high in the 80s and 90s yet tech stocks boomed. Tech stocks did so well because they make so much money. Facebook earned $40 billion in profits for 2021, 3x Walmart. Google makes even more. Also, market dominance and moat factors working to big tech's favor.