The Tech Bubble 'Pop' - Are We Nearly There Yet?

As with having a good sense of humour and being good in bed, a lot of people would like to think of themselves as prescient economists, able to predict changes in the fiscal weather and ascribe reasons for those variations.

In truth, predicting changes in macro-financial world has largely been a guessing game and even the most valued Cassandras have owed parts of their fortunes to dollops of luck. The one agreement that exists among economists is that there are cycles which start and end at points marked ‘boom’ and ‘bust’. Minor and major versions of these operas are played out repeatedly and for some time now with several indicators having touched high points of positivity, there have been whispers about a popping of the bubble, particularly with reference to technology stocks.

Why? Among other reasons because stocks hit highs, because price/earnings ratios were toppy, because there was a glut of VC funding and because the IPO market was hot.

Today, there are blips in all of the above. Even darlings of the stock market are bumping along near their 52-week lows. Rocket Internet’s IPO flopped while Alibaba’s sagged and Box is still waiting – others like Pure Storage, Dropbox and Nutanix are for now sitting tight on their VC money. Even in B2C there are phantoms and Zynga is held up as a Jonah of hype over reality. And as for those swollen VC funds, well, even on Sand Hill Road they might be dabbing the brakes, judging by the latest numbers.

What happens next is anyone’s guess. Some will take a glass half-full view that technology spending remains the most illuminated road to competitiveness. Others will huddle together looking for more signs from the tea leaves and perhaps talk themselves into a deflation.

And, whichever way it goes, you can rely on the wannabe economist to claim they called it first.


Martin Veitch is Editorial Director at IDG Connect


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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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