I've personally witnessed at least two tech bubbles. One was in the 1980s, triggered by the game console market collapse in 1982-1983, which would later affect the computer industry. More recently was the dotcom collapse of 1999-2000, which was exacerbated by money wasted on Y2K scams followed by the 9/11 attacks, throwing everything into a tailspin.

If you were to take this as a cycle of perhaps 17 years then it should happen again in 2016-2017. This coincides with a lot of economic doomsaying.

These collapses are visible to those on the lookout. Anthony B. "Tony" Perkins released a book in 1999, just months before the collapse began in earnest, called The Internet Bubble. If everyone had sold every bit of equity owned the day the first edition came out, they'd have been in great shape. But nobody was interested at the time.

I'm personally fascinated by these ups and downs and there is no doubt that one is underway now. Just look for the signals.

One is simply what you hear on the street. Comments like "Wow, that's nuts." Or "Apple is the most valuable company in the world."

During these massive bubble-creating upswings the news becomes vacuous, as if nobody wants to do any real thinking when things are going so well. Take, for example, the publicity garnered over the past few weeks by Taylor Swift (look, even I am writing about her). For what? A new album? How is this news? Why has she appeared on every news show? Even my friend at The Register, Andrew Orlowski, wrote about how she is taking her music off Spotify without noticing that this too was a publicity stunt. This is a sure sign of a bubble. In 1999, the Taylor Swift icon was Britney Spears. Perhaps Olivia Newton-John or Joan Jett in 1982. Seventeen years earlier it was Diana Ross.

Of course these pop icons come and go and may not be a harbinger. But there's one thing I'm convinced is a harbinger: an insane illogical fad. In 1999 it was Beanie Babies.

Today it is bitcoin.

I've said before that bitcoins are the new Beanie Babies, and suffice it to say that it looks, sounds, and feels like the Beanie Baby era without the TV shows that cropped up around the stupid stuffed animals.

If you look to the 1982 crash period you'll find the progenitor of the Beanie Baby, the Cabbage Patch doll, also heavily collected. The earmarks are always novel, collectible, intrinsically worthless, and nuts. In the mid 1960s it was toy cars (which to their credit eventually settled into an actual hobby).

Each of these collapses is worse than the one before. This is rank speculation based on the ever-increasing importance of the tech sector. Who knows what will happen now that tech has gotten to be the biggest part of the economy (if you go by Apple being the world's biggest company based on market capitalization).

During the dotcom crash I was doing a daily show on the cable channel TechTV. I was right in the middle of the dotcom phenomenon in real-time with guests who would come on with sincere delusions that "we were in a new economy" and things were now "fundamentally different" in the Internet era. Thus, most companies were extremely over-valued, just like many companies today. CEOs everywhere were in a daze, a dream world.

I thought that a general collapse, which looks cyclical to me, would happen after the next Presidential election, no matter who wins. But a lot of these signals are loud enough to make me wonder if doom is not just around the corner. Let's hope not.

Further Reading

Software & Service Reviews