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Is a second dot-com crash inevitable?


Analysts predict a second dot-com crash in the coming years

By Brady Gidge, Contributor

ARTICLE IN A GLANCE

  • All of the evidence suggests that we’re living in a new tech bubble and analysts predict it is about to crash.
  • This modern tech bubble we live in has grown to the extent that Interbrand “named Apple as the most valuable brand in the world.”
  • Draper predicts that we are currently on a venture-market upswing.

In the tech sector, the year ended on a high note. Many startups with virtually no revenue have billion-dollar valuations and the stock market saw the strongest bull market ever. All of the evidence suggests that we’re living in a new tech bubble and analysts predict it is about to crash.

The current tech sector closely parallels the dot-com boom that occurred between 1997-2000. During that time, stock markets soared because of the steady growth of the Internet. Investors in industrialized countries were willing to invest large amounts of money into any company with an “e-” prefix before the name. But on March 10, 2000, the bubble burst after the NASDAQ lost more than 10% from its peak. By 2001, stocks plummeted at rapid rates and many technology companies stopped trading after losing their venture capital.

Is a disaster like this really on the horizon today?

This modern tech bubble we live in has grown to the extent that Interbrand “named Apple as the most valuable brand in the world.” It is reported to be worth 98.3 billion dollars. Together, Apple and Google have pushed Coca-Cola, a nostalgic pop culture product, to third place in terms of value as of 2013.

Business Insider reported that Timothy Draper, founder of the venture capital outfit Draper Fisher Jurvetson, predicts “tech venture capital may have reached the top of its cycle.” His theory is that after a recession, people wonder if they can do better than the failing company they work with, start their own companies and create another boom in the sector. Draper said “eventually venture capitalists…assume that anything they touch will turn to gold – and the venture market crashes. Then private-equity people streamline the system, and the cycle starts again.”

Draper predicts that we are currently on a venture-market upswing. If his theory is correct, a tech sector crash is a possibility. Technology is currently at an all-time high, and according to Drapers opinion, we’re headed straight for the end of the line.

 

Brady Gidge is a freelance writer and audio engineer currently living in Nova Scotia. He enjoys writing and speaking about controversial topics, world issues and technology. You can find more of his works at http://www.BradyGidge.webs.com and follow him on twitter – @BradyGidge

Photo courtesy to businessoffashion.com & mashable.com

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