For the tech sector it's really been more like the last 22 years. There hasn't been an extended downturn in US tech stock since the original dot-com bubble. The 2008 recession ended up being a 1-2 year blip. The COVID contraction was extremely brief. By comparison, if you invested in the NASDAQ in 1999/2000, you'd need to wait 12-14 years to break even.

I don't have a crystal ball, of course, but to me things are looking a lot closer to 2000 than 2008.

But did the bubble already burst in tech? Valuations are very low right now. I don't think we're necessarily at the bottom yet, but I think the worst has already come to pass.

Nobody can predict the bottom, or how low things will go.

But I disagree that valuations are very low. Frankly, many tech companies (Uber, Twitter, etc) are still unprofitable money-losing machines with high valuations because of their potential growth and expectations of future profitability. There's an argument these companies should be worth much, much less.

For the past ~10 years in particular, investors haven't cared about profitability; a market downturn may change that.

Also, as the recession or depression continues, advertising is going to get scaled back and may destroy ad-tech companies like Alphabet/Google and Facebook.

Your prediction is as good as mine, of course. But I'm a bear, expecting a river of blood to flow through the streets of Silicon Valley.

I agree with your general assessment of the economy, but those are all factors everyone knows.

The adjustment we saw earlier this year was going from “the economy is booming and interest rates will be 0 forever” to “interest rates are going to 4% and we’re going to have a recession.” That’s an absolutely massive adjustment in expectations and stock prices, especially of high growth tech companies, reflect that adjustment.

In order for valuations to drop substantially further, a similar expectation adjustment would need to happen. Something like “I thought we were going to have a recession but now it’s worse than the Great Depression”. Simply adjusting expectations from “minor recession” to “moderate recession” isn’t big enough to crater the markets like we saw earlier this year.

> Valuations are very low right now.

Very low compared to what?

In the specific case of Shopify, stock value is 20% of what it was a year ago, and 80% of what it was a month ago. Isn't that what's relevant?

Shopify's explosive stock growth always struck me as kind of scammy - or to be more charitable, the results of a very well targeted marketing campaign. It's back to where it should be - along the way, VTEX and BigCommerce jumped on the IPO train at exactly the wrong time. Everyone was sniffing their own farts in that sector for the last two years. Glad to see it come back down to earth.

Not when the discussion in this sub-thread was about the "tech sector". (And it's not obvious if the valuation of Shopify is "very low".)

Lots left to go down. Think of the global events right now - all we need is one or two more destabilizing events and we're in a bigger heap than we are currently.

The bubble may have burst but doesn't mean you've bottomed. Still haven't seen many companies go belly up or VC fund shutdown. All we've seen is valuations drop and some layoff but not big layoffs and also the valuation dropped from their spectacular highs so its all relative.

Companies that lose money have gone from trading at a multiple of infinity to earnings, all the way down to a multiple of infinity on earnings...

Look at how a lot of valuations dropped during dot-bomb. 50% is nothing.

I agree with your point, however there has been plenty of 70-80% (or worse) destruction as well.

Fiverr -88%, Fastly -92%, Pinterest -72%, Zoom -87%, Shopify -82%, Roku -85%, DocuSign -82%, Twilio -84%, Virgin Galactic -91%, DraftKings -75%, Palantir -82%, Coinbase -80%, Robinhood -88%, Rivian -78%, Roblox -72%, Unity -83%, Nikola -94%, Peloton -94%, Snap -86%, Square/Block -73%, Zillow -84%, Teladoc -90%, UiPath -84%, Affirm -83%, SoFi -75%, DigitalOcean -70%, Asana -83%, Okta -80%

That's in the realm of a dotcom bubble style implosion. There are plenty of other prominent names to add to that list. Having lived through the dotcom destruction, this rhymes, even if it's not exactly the same.

Very true. But the crazy thing is, in the opinion of many people, these companies were so overvalued that -80% feels like a "correction" more than a "crash".

Like Nikola is down 94%, but it's still worth $3 billion on paper. This is for an electric vehicle company that staged a video of one of their vehicles being driven, only for us to learn in a fraud trial that it was rolling down a hill, with the excuse that they never claimed the vehicle was moving under its own power, just that it was "in motion." The company is worth nothing at the moment; any "worth" it currently has is a speculative bet that it will eventually produce something of value.

We need to start seeing the GOOG, META, AMZN, etc. stocks tank 80% before we can compare to the dotcom bubble, IMO.