The next dot com bubble (some call it web2.0) – is it about to burst ?
When does a bubble burst – In a very simplistic way, one can say, a business bubble bursts when common people start loosing money investing in an industry. The last dot com bubble burst when a lot of venture capitalists lost a lot of badly invested money resulting into a south facing profit graph and low stock prices.
Look at the scene as it was 15 days back, the tech stocks seemed to be climbing and on NASDAQ while today they look as if they are going to loose the footing on Nasdaq and as its reaction on Nikkei. BSE and NSE too was affected by the sluggish international markets – BSE and NSE indexes are not tech heavy indexes so, one really cant say anything about collective performance of tech scrips however, a cursory glance on todays market figures shows them dipping south.
While that was a pessimistic scenario, from a more picturesque optimistic scenario, and looking at things from a broader perspective – The stock prices rise and fall marginally all the time -the trend more or less still looks upwards.
People are still not loosing money – the profit graphs of tech companies have not started plunging yet. The investors big and small VCs and banks included, still seem to be interested in putting money albeit in good technologies and capable technologists. More and more brick and mortar business are expanding their realm of business to the net, resulting into an increased bottom lines on a comparatively smaller investment.
Now thats gives a pleasing a pretty picture.
I am no business analyst, but by simply pitting the negative against the positive, I would like to believe that this bubble will not burst, at least not in very near future, and the longer it takes for it to burst, the less harmful it will be.
Well, I think people grew up after the last burst. There havent been a great many websites with millions of dollars in funding as last time, investors are much more catious. So a downturn in the tech stocks, might not indicate badly on web-2.0 companies because its not like each and every company has millions of dollars in investments.
I think the industry has matured greatly, there is an oppurtunity to make money with a good idea and i mean money as from customers and not as easily from VC’s. Its a good thing too, shows progress.
BSE and NSE indexes are not tech heavy indexes so, one really cant say anything about collective performance of tech scrips however, a cursory glance on todays market figures shows them dipping south.
To get a specific view on how Tech shares on trading, check the sectoral index of the BSE. Its currently at 2883.80 and it rose 14.57 points today.
I am no business analyst, but by simply pitting the negative against the positive, I would like to believe that this bubble will not burst, at least not in very near future, and the longer it takes for it to burst, the less harmful it will be.
I disagree, the longer it takes to burst, the bigger it gets and the more harmful the consequences will be. People will love the north ride and keep putting lot of money and suddenly when the market tanks , they will find their stock plummeting.
Again a simplistic view…
A bear market need not be a sharp downtrend at all – on a broader perspective it can be just a plateau in the indices – a period of consolidation which separates out the boys from the men of the industry. And I see that already happening which the likes of Kiko being auctioned on eBay besides like said – there just isn’t enough mindless money in the boom as yet for a bust!
Please, please stop me from reposting links to my blog …
Bubble 2.0 – the Gold edition
And the bubble will not burst, it will merely move elsewhere like it did for US 🙂
Keep Posting 🙂