A ‘bubble’ is a scary term. It speaks of mania followed by a cataclysmic doom.
When the dotcom bubble burst in the late 2000’s, the Nasdaq entered a 2 year downward turn that would wipe 80% of the index value.
An utter blood bath.
In the aftermath, it was understood that analysts had focused on expected future returns. Traditional logic based metrics, like cash flows a generated revenues were simply being ignored.
Sounds similar to the hype surrounding emerging tech today.
In the past weeks, my friend who shuns using a credit card in favour of cash told me she’d started dipping her toes in Bitcoin.
The owner of the diesel and petrol car garage neighbouring to my office told me he was going all in on Tesla. He told me it was the future.
Cause for concern, I thought.
But maybe it wont be so bad. Maybe I shouldn’t be too anxious.
Perhaps we aren’t free falling towards an impending doom as much as we are sailing into a cleansing storm.
For all involved, the dotcom bubble was a demoralising experience.
But in that aftermath of that storm, some trees stood strong in the flattened forest. Some had roots that went deep. Some had branches that could withstand the winds.
20 years later, they still stand evergreen, casting an ever powerful influence over all of our lives.
They are called, Microsoft, Oracle and Amazon.
When the growing bubble emerging tech does burst, there will be carnage, millions of savings will be lost and reputations will be decimated.
But some trees will stand strong.
Some will have roots that run deep.
