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  • Why The 'inevitable' Web 2.0 Bubble Didn't Burst Part 1 [Edit or Delete]0 comments
    Apr 26, 2012 2:55 PM

    Stocks keep surging. Every dip keeps being bought because the US economy is still fundamentally sound. The media generated Spanish debt crisis and 'global slowdown' ended before it had a even chance to begin lol.

    The US economy and stock market has been decoupling from Europe since October 2011 because our economy is so much better. The DJIA is up 30% from the October lows while the DAX and FTSE is still in a funk. Europe is trying to dig itself out of a deep hole, and austerity is the first step, but it's not going to make much of a difference. The Euro, on the other had, has exceeded all expectations interns of stability considering the pundits in 2011 had derided it as an 'experiment that failed', in anticipation of its dissolution. That obviously didn't happen. Even the slightest macro hiccup triggers a knee-jerk flight to safety. This has an analeptic effect on treasuries, which keep going up and up, along with the DJIA, oil and gas prices. A PM in Europe has an upset stomach or someone says something bad about something however vague and the TLT ETF is up 60 cents, the 10 year yield down .04 and the market are up, anyway.

    If there is supposed to a crisis, it still hasn't manifested in the most important economic data; profits & earnings, exports, consumer spending, consumer credit, productivity and personal savings. The blowout AAPL earnings on Tuesday handily debunks the 2011-2012 leftist predictions that the consumer is being 'stretched thin' by gas prices or the imaginary 'iPhone slowdown'. Face it, libs, people are getting richer than ever with web 2.0, high tech, buying the dips, and speculation. There's not goanna be crisis or recession for a loooooooooong time. Get used to a new era of infinite wealth creation and economic perpetualism.

    I wrote a few weeks ago that using history to try to predict the future doesn't work for stocks and economics because there are very subtle differences between the past and present that result in opposite outcomes; i.e. a long term, secular boom versus a pump and dump.

    original article:

    You can have 99/100 of the historical datapoints match predicting a bubble, but that one mismatched datapoint will lead to an economic boom instead. That's been the case with web 2.0 where a lot of the liberal pundits as far back as 2006 were predicting it was a bubble, and yet these valuations keep rising. They said that LNKD was a bubble when it doubled its IPO last year from $45 to $90 and because its PE ratio exceeded 800, and yet here it is eight or so months later still above $100. Why was the 'inevitable' sot no? We had the media hype from 90's; check. The high PE ratio's from the 90's; check but the bloggers overlooked the subtle differences; LNKD has market dominance and is doubling its earnings per share every year. The companies that failed in the 2000 dotcom bubble had neither. The successes from the 90's; Google, Amazon, and eBay still dominate their respective niches and post envious profits & earnings growth. Instead of the shares of these high valuation companies like BIDU, PCLN or GOOG collapsing, they keep rising and they 'grow' into their PE ratio, yielding a high, but still lower valuation even after the stock has appreciated multiple times. For example, PCLN today has a PE ratio of 40 after the stock has risen 1000% from 2007 when it had a PE ratio of over 100. BIDU had a PE ratio of over 1500 back in 2005 but it's only 50 now, even after the stock has risen 1000%.

    Part 2 (mocking the bubbleheads with Google)

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