Next tech bubble may float past Minnesota

  • Article by: ERIC WIEFFERING , Star Tribune
  • Updated: May 24, 2011 - 9:15 PM
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johnmcclaneMay. 25, 11 9:16 AM

It's not a tech bubble. The entire stock market is a bubble right now. That is by design. Easy money monetary policy will inflate the value of paper assets in order to maintain confidence in the market.

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joemamaswMay. 25, 1112:53 PM

First let me state for the record I run a Minnesota based technology start-up. Minnesota bubble? There would need to be an abundance of investment from either Angel investors or Venture Capital to create a bubble effect. I can tell you from my experience that type of activity flat out isn't happening here at the entry or even mid levels of start-ups. It has been not only my experience but I've discussed with countless other start-ups that Minnesota based Angel Investors and for the large part Venture Capital funds are very tight with their investment dollars. With limited money being invested there is a very limited risk of a MN bubble (a bubble is considered when market participants drive stock prices above their value in relation to some system of stock valuation). The bubble on the coasts largely exists due to Venture pumping up the values with excess cash for start-ups or tech business to do "something" with the funds. I would be willing to bet that type of investment will not happen in conservative -Bootstrapped- Minnesota. My tech friends travel outside of Minnesota for their capital.

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atomicpunkMay. 25, 11 3:46 PM

Yes, I believe there is a internet bubble now, albeit much smaller and of a different nature than back in the late 1990s. The internet bubble of the late 1990s was driven by FRAUD. This is how it worked (and I was told this by an investment banker back in 1999): All investment banks performed the same basic services and charged the same fees. How they differentiated themselves was based on their "research". The investment banks sold clients on the influence of their analysts over the market. If you let Goldman Sachs (or Merrill Lynch or any other firm) handle your IPO, their research analyst would give your stock favorable ratings to help keep the price high. As many corporate executives are required to hold their stock for a period of time before selling, it was in their financial best interest that the stock price remain as high as possible. And this is why Wall Street firms kept "buy" ratings on their clients even as they went bankrupt. And this is why they issued "buy" ratings on stocks that they knew were worthless. Is a company that is losing hundreds of millions of dollars with no profitability on the horizon worth $3 billion? No. And that's why they went bankrupt.

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