Dave Hornik writes that he's afraid of another bubble. My take is that the perception about a bubble is real but misunderstood. Fact: we are in a post correction cycle yes, but throughout history, with each important major change in underlying technology, we've seen massive growth. This growth has been experienced by a redefinition of technology causing growth in new segments that outpaces the "old" and more importantly changes the competitive landscape. Some people understand this other don't. People who don't call it a bubble.
Carlota Perez has some great research that highlights what we're going through.
From the Industrial Revolution to the Information Age, there has been a consistent pattern in the diffusion of technological revolutions and their impact on macroeconomic trends, according to Carlota Perez, a scholar of technology and socioeconomic development at Cambridge University’s Endowment for Research in Finance.
The core radical innovations come first. Their extraordinary success spawns a vast wave of interrelated investment, as happened with mass-produced cars and electrified homes in the 1910s and 1920s, and with PCs and digital telecommunications in the 1980s and 1990s.
This is what she terms the Installation Period, lasting 20 to 30 years and ending in a speculative financial boom. The collapse of this bubble leads to a necessary correction. What comes next are two or three decades of what Perez calls the Deployment Period. This is when the new technology platform is fully applied and woven into the fabric of business and society.
In Perez’s analysis, the intense exploratory investment made during the dot-com frenzy of the late 1990s is likely to be the precursor of a prolonged period of sustained global expansion and growth, with information technology as the engine.inks it's a bubble. As far as investors are concerned the old motto: buyer beware is in effect.
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