Bubble 2.0?

[AccruedExpenditure]

After four years of sitting on the sidelines and watching and major blue chip stocks like Wal*Mart, Microsoft, and Dell go sideways it looks like investors are looking to jump into growth stocks/sectors. Take a look at so called net 2.0 companies like Baidu, Broadcom, Google, and Overstock.com. What do they all have in common, ridiculously high P/E ratios.

Company Name Price to Earnings Ratio as of 3/12/06
Google.com- 68.6
Baidu.com- 272.05
Salesforce.com- 162.04
Overstock.com- This company doesn?t make money
Broadcom- 60.78

Now compare these ratios to Net 1.0 stalwarts
Company Name Price to Earnings Ratio as of 3/12/06
Amazon- 42.93
Yahoo- 23.63
Ebay- 48.81
Priceline.com- 5.57
Expedia.com- 28.52

Irrational Exuberance anyone? Only a mere five years after the last stock market bubble and we are already seeing investors move into stocks with little or no earnings track record. Do these companies future growth potential really justify these sky high valuations?

 

[gigapet]

the dot come bubble was no bubble at all it was a blip on the map of a trendline that has been rising for years at an increasing rate. It will not stop any time soon.

 

[AccruedExpenditure]

Originally posted by: gigapet
the dot come bubble was no bubble at all it was a blip on the map of a trendline that has been rising for years at an increasing rate. It will not stop any time soon.

WTF are you talking about.

 

[dullard]

Originally posted by: gigapet
the dot come bubble was no bubble at all it was a blip on the map of a trendline that has been rising for years at an increasing rate. It will not stop any time soon.

That IS the definition of a bubble. A temporary blip.

 

[gigapet]

Originally posted by: dullard

Originally posted by: gigapet
the dot come bubble was no bubble at all it was a blip on the map of a trendline that has been rising for years at an increasing rate. It will not stop any time soon.

That IS the definition of a bubble. A temporary blip.

ok I think I meant use the word crash here. The dot come crash was not a crash at all....

 

[dullard]

Originally posted by: gigapet
ok I think I meant use the word crash here. The dot come crash was not a crash at all....

Why not? Why can't an increasing quantity be superimposed with booms and busts?

 

[gigapet]

Do these companies future growth potential really justify these sky high valuations?

absolutely...... B2B and B2C markets are growing exponentially. The amount of ppl using these technologies is growing exponentially. The growth will continue until it saturates and then a new technolgy will emerge initiating the next paradigm shift followed by another exponential growth period.

 

[AccruedExpenditure]

Originally posted by: dullard

Originally posted by: gigapet
ok I think I meant use the word crash here. The dot come crash was not a crash at all....

Why not? Why can't an increasing quantity be superimposed with booms and busts?

It can be and is, I'm not quite sure what he's talking about.

 

[JLGatsby]

We're not in a bubble, and we'll be entering a moderate downtrend within the next year.

2007 will probably be a down year in the market. Rebound and bull market from 2008 - 2010.