Wealth Creation Orgy

Silicon Valley is in a wealth creation orgy, as the web 2.0 and Silicon Valley boom keeps defying all predictions of its decline.

These numbers are just staggering:

Air BNB worth $20 billion

Uber: $40+ Billion

Pinterest: $5 billion

Dropbox: $8 billion

Snapchat: $10 billion

Tesla: $40 billion

Most of these were in their infancy in 2009 or didn’t exist, and this is just a small fraction of the total number of private ‘unicorns’ (companies with valuations exceeding $1 billion).

To put this in perspective, during the first dotcom boom, I doubt there was a single dotcom startup worth over $1 billion (or it was very temporary). A company going public at $50-100 million was a big deal back then; now that’s just a rounding error in today’s tech boom. Seems like $100 million is just the appetizer, and companies that gain some momentum and traction get slapped with $1-2 billion dollar valuations almost effortlessly.

But the thing is, before you call ‘bubble’, a significant number of these web 2.0 companies seem to have defied the ‘crash and burn’ that characterized the first boom. Pets.com and Webvan were failures from inception, but sites like Pinterest and Airbnb keep getting more successful and more valuable.

And on Wall St., things are going crazy, too:

Google stock recently surged 11% in after hours on blowout earnings, or about $30 billion of market capitalization added in the span of little less than an hour.

The QQQ ‘tech index’ has posted a nearly 300% gain since 2009.

Facebook is worth over $260 billion, versus just $10 billion in 2009

Google is worth $350 billion; a gain of 250% since 2009

Apple’s market cap has increased about 9-fold since 2009, exceeding $600 billion.

From tech riches to stock riches to real estate riches, intellectualism and wealth has never been so intertwined as it is now. Having a high IQ is the ticket to wealth in today’s economy. For example, home prices in Palo Also, which is one of the smartest regions in the country, are up 100% since 2008, versus most regions which are still below the 2005-2007 highs. Prices in Palo Alto have gone up so much, the 2000′s ‘housing bubble’ looks like a speed bump:

Crazy…but rational. Today’s leading tech companies such as Apple and Google only have PE ratios of around 19-24, versus the triple digit PE ratios that were typical of the late 90′s.

Feels like 1999 again but with much better fundamentals and much further to go.

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