Michael Filighera | Jan 26, 2016 02:01AM ET
It is not uncommon to move past a “bubble” bursting and not realizing it. Denial plays a big part in the recognition of such a phenomena. While I admit the speculation can grow extremely strong as pundits try to claim their 15 minutes of fame by making bold statements of impending doom only to get caught up in the hype itself. It is unfortunate that for the most part a bursting bubble is basically only recognizable in hindsight. Until then we witness what has become known as the Wile E. coyote period. Fans of the Roadrunner cartoons should get this picture – Wile E. Coyote running off a cliff, legs still moving forward with nothing underneath them and then that look of “oh crap” as gravity takes over.
I remember the “dot-com” implosion. While the top occurred in March of 2000 there were huge swings to the upside as traders failed to see the “writing on the wall.” The downside though was persistent. Scattered and appearing small at first, it then avalanched until the end of 2002. As a resident of the San Francisco Bay Area the layoffs were also scattered and small at first but when all was said and done the slide wiped more than 250,000 jobs from the local economy. Local residents, though, either denied it was happening or were totally oblivious to it – at least for the balance of 2000. The local economies were flush with cash bad business plans found funding, office space was quickly leased at any price and real estate listings drew massive crowds willing to bid well over the asking price. Office parties were all the rage often resembling a grand New Year’s Eve celebration.
Sound familiar? Could the next Wile E. Coyote moment be at hand – that moment when you suddenly realize that gravity is about the takeover and hurtle you back to earth. Let’s take a look at several reasons the tech sector should be concerned:
The signs are out there. Whether or not they will get noticed or picked up is something yet to be seen. The huge influx of capital seems to be still in place as millennials continue to believe it’s all just getting started and any downside is a “buying” opportunity. So how do you better prepare yourself. One method would be to keep a closer look at what company “insiders” are doing and where institutional money is being placed. As earnings season begins to unfold many firms will be moving capital around as well as many insiders take profits.
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