[quote=AN][quote=CA renter]If the country (and world economy) wasn’t in such dire straits, interest rates wouldn’t be this low and investors would have more (and better?) investment opportunities that might not be at all related to tech. Nobody knows what it would look like, but I don’t think we’d be seeing these valuations in tech if the economy were better and interest rates were normalized. I could easily be wrong, though.
I prefer to think of myself as an optimistic realist. ;)[/quote]
Do you remember 98-2000? Interest rates were higher and economy was booming. So, you’re right, we won’t be seeing these valuations in tech, we’d be seeing MUCH MUCH higher valuation. Try taking the P/E ratio of tech companies in 2000 and apply it to today’s earning. Let me know what Apple’s market cap would be?[/quote]
The reason prices were so high back then was because the “publicly available interent” was a new market with unknown potential. The coincident advent of electronic trading enabled newly-minted “day traders” to bid stocks up to incredibly high valuations. It was an unusual and unique environment that enabled and encouraged a massive stock/tech bubble. Those conditions aren’t there now, which leads me to believe that the current stock market/asset price/tech bubbles are very much related to the manipulations in the credit markets — the credit bubble is still very much alive.
