17
Feb
12

Second Dot Com Tech Bubble

Thanks to Zero interest rates and the Federal Reserve, yet again another Dot Com or Technology bubble has formed in the stock market. From the collapse from a height achieved of over 5,000 points in 2000, the NASDAQ has reached a 12 year high recently (ironically very close to the Elliot Wave retracement for the Fibonacci followers out there). Let’s look at the following companies with the most insane evaluations for this recent bubble:

* Apple Inc with a market cap of nearly $500 billion trading at over 5 times book value

* Amazon.com with a market cap of nearly $100 billion at it’s height recently trading at over 14 times book value

* Microsoft with a market cap of nearly $260 billion trading at nearly 5 times book value

* Oracle with a market cap of nearly $200 billion trading at nearly 5 times book value

* IBM with a market cap of nearly $230 billion trading at over 11 times book value

* Priceline.com with a market cap of nearly $30 billion at it’s height recently trading at over 12 times book value

* Citrix Systems with a market cap of nearly $16 billion at it’s height recently trading at over 5 times book value

* VMWare with a market cap of nearly $45 billion at it’s height recently trading at nearly 10 times book value

* Google with a market cap of nearly $520 billion trading at nearly 4 times book value

* Baidu.com with a market cap of nearly $45 billion trading at nearly 4 times book value

* Linkedin with a market cap of nearly $12 billion trading at it’s height at nearly 20 times book value

With many of the above companies exaggerating Goodwill on their books to inflate their book values, can you imagine how even more overinflated their stocks actually really are? With various other tech companies trading at or near all time highs within this latest stock market rally, why does the US Fed and Treasury keep repeating their mistakes of the past? Are the Fed and Treasury doing this because they do not have the business knowledge to build a strong economy any other way (aka the old fashioned way)? Is it accidental or is it to deliberately make the few wealthy investors much wealthier?

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