back to article No, we're not in an IT 'stockapoclyse' – boom (and bust) is exactly what tech world needs

Is this the stockapoclyse, as tech shares crater into the ground and no more money gets invested into the sector? Or is that 20 per cent fall in the largest internet-based companies – Netflix, Flicker and Twitter – that $275bn drop in collective value over the last month, just an overdue correction to recent price run ups? …

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  1. Hi Wreck

    Flash boyz

    It's all a big casino these days, so don't bother yourself with any of that analysis stuff.

  2. TheOtherHobbes

    >the efficient markets hypothesis

    It's almost as if no one has read 'Extraordinary Popular Delusions and the Madness of Clouds'.

    Wait - I meant 'The Madness of Crowds'.

    Sorry.

    1. Jason Ozolins
      Devil

      Efficient Markets Hypothesis? It's not a hypothesis unless...

      ...it's falsifiable. As in, it is possible to describe a state of events that, should they be seen to actually occur, would falsify the hypothesis. It's a bit of rigor that adherents to the Dismal Science ought to embrace.

      Tested (and as-yet unfalsified) hypotheses eventually get accepted as theories. But the way that free marketeers toss the EMH around, you'd think it ought to be called the Efficient Markets Axiom.

  3. Anonymous Coward
    Anonymous Coward

    Progress requires stupidity

    Efficient markets cannot cope with new technology because its effect cannot reliably be predicted. How can you factor into oil shares the potential effect of harnessing fusion when nobody is sure if it will happen, when it will happen or how much it will cost?

    Adoption of new technology requires that some people will get it wrong and invest in things that lose lots of money - early railways and canals often went bust. We need a supply of investors who are bad at evaluating technology and assessing risk, to create a supply of possible inventions some of which will be wildly profitable.

    I think that is the basic problem with command economies - the Soviet Union was good at basic research (especially when it was military), mining and refining, but it had no way of testing new ideas in a market, that would have allowed the development of service industries and end user equipment.

    1. Tim Worstal

      Re: Progress requires stupidity

      "Progress requires stupidity "

      I like that, I like that a lot. I shall have to start using it myself. Sorry, but given that you've got yourself as an AC here no credit can or will be given.

      1. Anonymous Coward
        Anonymous Coward

        Re: Progress requires stupidity

        I forget where I got it from, but it is one of the laws of which Hutber's Law is an example - Improvement causes deterioration.

        This is the law that states that any attempt to improve a working system that provides a service will, in fact, make the service worse. Hence the need for disruptive technologies, and people stupid enough to fund them in the early, money-losing stages.

        AC because I think my comments should stand or fall purely on their own merits, not because they are made by someone who somebody else thinks agrees with them.

  4. Destroy All Monsters Silver badge
    Mushroom

    That is, sadly, what the efficient markets hypothesis says: that all available information is efficiently integrated into prices in a market.

    Really? The efficient markets hypotheses is for 5 year olds and politicians and useful idiots.

    But seriously, the rationale for wealth transfer from Main Street to Wall Street and Central Bank sycophants via monetary mass inflation and the inevitable bust-induced pain and disruption born mainly by Main Street (of course) is so that we can have .... Google????

    FUCK.THAT.SHIT!

    I would rather have hard money and well-thought out investment schemes than neverending Ponzis and international dubious Megacorps.

    1. Anonymous Coward
      Anonymous Coward

      @Destroy All Monsters

      The whole point of Wall Street is to create the illusion of efficient markets while ensuring that the asymmetic information needed to prevent them is confined to the banks and hedge funds. It's annoying for them when the asymmetric information is in the heads of technologists.

      But Worsthal is right about one thing: technological progress and well thought out investment schemes are incompatible. By definition, a potentially disruptive technology cannot be accommodated in any scheme of efficient markets.

      1. Androgynous Cupboard Silver badge

        @Arnaut

        If your first sentence isn't QOTW I will despair. Excellent summation.

    2. Anonymous Coward
      Anonymous Coward

      @Destroy

      Another incoherent projectile from 'Destroy All Monsters', the overgrown teenage revolutionary.

      Can you go and "Occupy" somewhere else, please?

      Okthxbye.

      1. Anonymous Coward
        Anonymous Coward

        Re: @Destroy

        Perhaps DaM can defend himself, but I would just add that his comment is not incoherent nor is it "Occupy-related". He links to a perfectly serious article about the fallacy of efficient markets, and how its proponents seek to deal with any problems by simply repudiating them - e.g. the housing bubble didn't exist, therefore it is not an argument that the market is not efficient.

        He also argues that if the best that the proponents of Wall Street can point to is Google, that's a rather weak argument.

        His last line is arguing the Buffett strategy. The difficulty nowadays is finding suitable investments to which it can be applied, and I personally think it impractical, but his core points - that efficient markets are a myth, that Google is an advertising agency not a technological triumph, and that people have got rich on the Buffett strategy - have a resonance far beyond Occupy.

        Don't you have some high speed trading you should be getting on with?

        1. fandom

          Re: @Destroy

          It's funny that last year the nobel for economics went to Fama, Hansen and Shiller

          Fama is the, I think, the founding father of the efficient market theory while Shiller works show that markets are quite irrational.

          As an encore, this year they will give the physics prize to Andrei Linde, now that inflation is a proven fact, and a creationist.

  5. Anonymous Coward
    Anonymous Coward

    stock a what?

    Methinks you are missing a p.

    1. Jon Egerton
      Facepalm

      Re: stock a what?

      Its worse than that. I can't get sense out of "stockapoclyse" without some serious re-arranging.

      The following would make more sense:

      Stockalypse

      Astockalypse (I like the ring of this one)

      On interesting thing though - googling "stockapoclyse" (https://www.google.com/search?q=stockapoclyse) gives a good idea of just how many clone news sites there are out there.

  6. Spoonsinger

    Re : "Love Google? Thank the first dot-com bubble"

    Ermm, I suspect that the only reason Google got the foot hold was because back in the day they provided a very plain search screen with good results. As opposed to Excite - the big player at the time - which filled their initial search page with adverts - (Their search wasn't actually worse, just filled with junk adverts). This was actually a problem when most of us were on dial-up. The thing is that Google in current times hasn't really learned from that lesson and is actually salting the results with crappy ad's.

  7. ecofeco Silver badge

    We did have something better

    "Perhaps our final question is, well, if this stock market stuff leaves us open to overvaluations, booms and busts, why the hell do we put up with this method of financing? Can't we design something better?"

    We did have something better. Then the entire US and GB financial industry was deregulated beginning in the 1980s.

  8. Annakan

    What you do and most of elReg "analysts" do theses days has a name ...

    it is called "cognitive dissonance" : trying to make senses of things that don't have sense to avoid confrontation with an unpleasant truth.

    And the vacuity of such reasoning is apparent in the pseudo universal underlying argument :"that's the way it is" A.K.A. : I want to be irresponsible A.K.A. changing things is so hard, why don't we put up with the crap and a a few other names.

    War is horrible : necessary evil, men always kill each other

    Inequality are growing faster than wealth grows : that's the way it is, have and have not

    The market it chaotic and meaningless : the market is magic and no harm can come from the market

    "fast trading" (who is obviously not a trade since nothing change hands) : let's invent a role for that shit (market balancing whatever) and go to sleep again.

    etc etc etc ...

    El Reg has become a conservative (I.E. : the system is has it should, the people are wrong) outpost wrapped into a science, IT and technology "mordernist" candy.

    I used to like you so much.

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