Are We In A Tech Bubble?

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A data driven analysis looking at various indicators to evaluate if we're in a tech bubble

Published in: Technology, Internet, Business
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  • Fast forward 6 motnhs..
  • Was 76 in May 2015; 885
  • Are We In A Tech Bubble?

    1. Are We In A Tech Bubble? Lou Kerner February, 2016
    2. DISLCAIMER The views and opinions expressed in this presentation are those of the author and do not necessarily reflect the official policy or position of his affiliates . Assumptions made within the analysis are not reflective of the position of his affiliates.
    3. The Stock Markets Swings Between Fear & Greed Bear Market Bubble Capitalism Source: Acertus Capital Management
    4. What Causes Tech Bubbles? Amara’s Law Source: Pinterest
    5. “Tech Bubble” Searches Are At A 10 Yr High Source: Google Trends, February 2015
    6. Jet Raises at $600 Million Pre-Launch Source: Twitter, February 11, 2015 Talk Of A Bubble Has Been Going On For Over A Year
    7. What’s Going On In The Public Markets?
    8. Bond De-Risking Has Intensified Spread Between BBB Rated Bonds And Treasuries February 18, 2016
    9. There Have Been 39 Corrections In The NASDAQ (Down 10%) In The Last 30 Years Source: Google Finance
    10. Bubbles Deflate….Saas Multiples Revert to The Mean Source: Joe Floyd, Feb 8, 2016
    11. The VIX (S&P500 Volatility – Often Called The “Fear Index”) Remains Historically High Source: Google Finance, February 19, 2015
    12. Markets Have Still Had A Good 5 Year Run Source: Google Finance
    13. Source: Google Finance Current 10 year CAGR is below the 40 year historical NASDAQ CAGR of 10.5%
    14. CAPE Ratio Is Still 45% Above Long-Term Trend Source: Multpl.com, Feb. 19, 2015 16.65 Mean
    15. What’s Going On In The Private Markets?
    16. Tech IPOs Have Been Performing Poorly For Awhile Source: Wall Street Journal, Feb. 2016
    17. Causing Tech IPOs Of VC Backed Co’s To Decrease In 2015 Source: Wall Street Journal, Feb. 2016
    18. M&A Activity Also Decreased In 2015 Source: Upfront Ventures Feb. 2016
    19. More Money Going In To Start Ups Then Out Was An Ominous Sign Aggregate Exit Valuation & Funding Amounts Source: CBInsights, Oct. 2015
    20. VC Funding Is Now Dropping Source: CBInsights
    21. Though AngelList Kept Growing Q4 ‘15 Source: AngelList
    22. AngelList’s Recent $400 Million Agreement With Chinese PE Firm CSC Upshot Probably Had An Impact Source: CNN Money, Oct 2015
    23. Valuations Are Also Falling Source: Upfront Ventures, Feb. 2016
    24. Unicorn Production Is Tanking Source: Wall Street Journal, Feb. 2016
    25. What’s The Relationship Between Public and Private Market Valuations?
    26. How Many In Silicon Valley Think “Private companies are overvalued OR Public companies are undervalued”
    27. Similarly Stupid Question “Either my watch is running fast OR Greenwich Mean Time is running slow”
    28. All Else Being Equal, Companies Are Worth More Public Than Private Because Investors Pay For Liquidity
    29. “I think tech sector is making a huge mistake in thinking that they know their companies and how to value them better than Wall Street. That kind of thinking is arrogance and pride comes before the fall.” Fred Wilson, July 2 2015 Prescient Call
    30. Did VCs Making Bad Bets On Unicorns? You only find out who is swimming naked when the tide goes out - Warren Buffet
    31. My Conclusions From The Data • Broad stock market valuation metrics indicate valuations remain stretched, even after the recent pullback • The de-risking trend in fixed income is a bad sign for equities • Capital raising outpacing liquidity events is an ominous trend that is exacerbating the investing crunch • The decease in unicorn production is just one sign of a private market correction • The current opportunities for value creation from disruptive tech companies remains at all time highs

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