Curious Capitalist

Are We in Another Tech Bubble?

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Robert Galbraith / Reuters

There’s a reason why a lot of the world’s top investors, like Warren Buffett, don’t invest in technology — it moves too fast. And it’s too hard to track whether the hot stock or idea of today will be worth anything in five years. Buffett famously references the auto industry when he talks about his aversion to technology stocks. There were hundreds of car companies in the U.S. during the early part of the 20th century, but only a handful survived and made investors any money over the long haul.

The big question is, Are we in a bubble right now? First, my gut feeling. I’ll come clean here and share that back in 1999, I was actually recruited to join a Citigroup-funded technology incubator in London called “Antfactory,” which aimed to invest in pan-European media plays. (Yes, I cringe as I write those four words.) The very fact that such firms were hiring journalists as partners was clearly the sign of a market top. And while there’s certainly more substance to many of today’s hot firms, like Twitter or Facebook, than there was to, say, Pets.com or many other iconic firms of the late 1990s, I do feel the same frothy enthusiasm in the market as investors put enormous valuations on firms that still don’t make any money. I also sense a lot of bubble-like hubris from techies themselves.

(MORE: ‘Candy Crush Saga’: The Science Behind Our Addiction)

Beyond this, it’s a question of whether you believe in the business model of social media and online retail today, which is essentially a landgrab that (hopefully) gets turned into profitability at some later date. The Financial Times has done a lot of smart analysis and number crunching on this. Their verdict: the jury is still very much out on the longer-term profit trajectory of the hot social-media companies of the moment. And having ridden one dot-com bubble and bust, I’m personally sitting this one out.

Joe Nocera, Charlie Herman and I explored this point as it relates to the technology sector today, and firms like Twitter and Snapchat, in this week’s episode of WNYC’s Money Talking. The topic comes up about halfway through the show.

8 comments
chas
chas

The moslem world is not producers of technology. Rather they are consumers of technology.  But the #1 most important technology to the middle east has not been invented yet. That's dirt cheap desalination. That is, desalination technology so cheap that the middle east can produce farm crop at competitive world prices. What the middle east needs most is desalination technology that desalinizes water so cheaply that it can be used to turn the deserts green.

Desalination prices are falling. But very slowly.

The middle east however, is doing little to hasten the appearance of cheap water desalination technology. The saudis attend most of the big desalination tech conferences and sponsor  desalination research at big universities in the USA and Europe. They even have a big research lab of their own.

Even still the saudis are  minor players in desalination research.  They're playing to show, not to win.

Dirt cheap water desalination technoly is coming. But its a couple decades away.

  The smartest thing the moslems could do--to hasten cheap desalination technology's appearance-- is convince the some of the gulf billionaires to hold  a worldwide competition to collapse the cost of desalinated water.  Offer 1 billion dollars for every $100@acre  foot that any company reduces the cost of water desalination--without using carbon based fuels for an energy source.

The cheapest desalination plants -- run about $600@acre foot. So it would take roughly 5 billion in prize money to get the costs down to $100@acre foot. Then hold another competition with a 1 billion dollar prize to get costs down to $50@acre foot. So total prize money allocated would be 6 billion dollars.  (Some stipulations would have to be that the price points would have to be accomplished on 3 oceans--so as to prevent friendly governments from manipulating the numbers--and to ensure the the desalination results are reproducible.)  

For comparables here, the Saudis alone plan to spend 30 billion on desalination plants over the next 20 years.

Something not understood at all in the Moslem world is that the technology competitions  yield ten times more research than  just investing directly in research.  Why? because you have many companies striving to get the money prize and the bragging rights. Prize money would focus the world's research labs on the problem of reducing the cost of water desalination--and thereby hasten the day when dirt cheap water desalination technology arrives.






 

DeweySayenoff
DeweySayenoff

@Openminded1 @DeweySayenoff @alaa It's fairly typical of your hypocrisy to correct people about something in which you, yourself, have no mastery.

You said you had a point to him, but you admit he wouldn't have understood it.  Therefore your insults fell on utterly deaf ears.  Therefore your post, and insults, had no point at all.  Although it was understood by others in the English-speaking world, all it did was represent the bile and hatred of an American who couldn't even properly use English in the first place.  In short, rather than defending America, or English, you made America, and yourself, look like hypocritical fools.

And now you defend your complete lack of skills in the language of our land once again, by further insulting someone else who points out your hypocrisy.  That compounds your errors of reason and rationality further.  I could care less about the spelling or grammar.  It's the hypocrisy and tarnishing the image of the United States by your actions that I was posting my response.

I'm not calling you stupid for that.  But you do seem to have the most abysmal luck in your thinking. 

Great going, there, Sherlock. 

aztecian
aztecian

@Openminded1 @DeweySayenoff @alaa you still can't accept other cultures.  you think they all need to be like yours.  well, tough.  he/she can post in any language.  just like they don't need to speak english to become a u.s. citizen.  so why don't quit trying to turn everything back to the 1950s. 

Openminded1
Openminded1

@DeweySayenoff @Openminded1 @alaa Whats the difference dewey, he most likely will not understand it and would most likely not care if he did. The real point is you did understand it but felt compelled to defend the moron. My point to him was clear and understood by everyone that can read english. Even if it disturbs your perfection. I also did not capitalize english or your name, my god  that must be killing you.