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Tech Bubble 2.0 (Less Profitable and More Manic)
By the look of things, we’re in another Tech Craze, similar to the one in 2000.
The last two years have seen a number of high profile Tech IPOs for businesses that are barely profitable or have never turned a profit. Indeed, of the tech firms that went public in 2013 so far, 73% have never turned a profit (compare that to just 27% of the tech IPOs that were unprofitable in 1999).
Of those companies that are profitable, trouble is brewing. I’m talking about Facebook, Zynga, and the like. All of these businesses have very serious issues with their business models.
A final key component of the market’s current bubble concerns profits. As I’ve pointed out before, today corporate profits as measured by earnings or net income are at a record.
This has contributed to the market rally in a big way. However, the reality is that these earnings numbers are in fact heavily massaged through various accounting tricks pertaining to taxes.
As Citigroup recently noted, if one were to look at operating profit margins (profits before taxes, amortization and depreciation), one would find that profit margins have been flat to down for the last year and a half.
My point is that if we look at real earnings instead of those being manipulated by taxes and asset manipulation, the corporate profits picture is not nearly as rosy as the markets imply.
All of this points to signs of a major market top forming. This is not to say that there won’t be significant opportunities for investing to the longside in the markets.
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Best Regards,
Phoenix Capital Research
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"Let me get this straight, that little box is going to safely and accurately dispense money instead of my tellers and you say they will be on every corner in 20 years?"
"Oh, you Harvard guys kill me...a math driven search window worth $20B+ some day? Just to help people find these internet things? You have GOT to be FUCKING kidding me..."
Facebook just bid $3 billion for Snap Chat, a company with twelve employees.
http://www.bloomberg.com/news/2013-11-14/facebook-said-to-offer-3b-for-snapchat-to-attract-teens.html?cmpid=msnmoney
Their single app product, which was developed in a frat house, allows you to send photos and messages on your smart phone that automatically erase in seconds. The app is particularly popular among teens for sexting and sending derogatory messages about others in school classrooms and at home with less risk of being caught (little do they know the NSA probably still gets a copy).
Thanks Facebook, for doing such a fine job of helping teachers and parents manage and develop their kid’s behavior, or as Facebook likes to put it, “Reaching out to appeal more to our younger user base”.
I guess we’re all supposed to “Lean In”, and “Just say no, er yes”.
Furthermore, I guess this means any company that finds a way to get 1 mpg more from each gallon of gasoline should be worth around a $trillion.
And if someone finds a cure for cancer that’s got to be worth at least a $quadrillion.
I can hardly wait for those companies to emerge. I mean it, really, I would much rather see that happen, even if I don’t get to own a single share.
and a company that mines gold is worth what excactly?
No business model?
I thought the new business model for mid level already established firms like Yahoo was to get a young bright CEO and have her lay upside down on lawn furniture?
"You have never read my work." Marshal McLuhan. You have no idea what you're talking about dude. The newly minted billionaire from Nebraska entitled his "feed" Medium. you THINK you know what LinkedIn is...but you don't actually. Sure...Facebook might be done for already...on the other hand "we have replacements waiting in the wings" too. I do agree "long row to hoe in the mining space." we can't get gold out of the ground for under a thousand an ounce? really?