I'm not so sure that the arguments that "the world has changed" or that "this time is different" (not quote from your post) really are applicable to today's situation. True there is technology available now that never has been available before which is changing the face of the world. However, there are a number of other cases where there were bursts of technology which had just as great and greater impacts on the world. Examples of these are the railroads, automobiles, radios. television, etc...
I think that these advances can be used as models into what is happening today. None of these are exact models of today's changes nor are they exact models of each other. However many of these did have similar impacts on economics and society in general. What happened in the 20's with the automobile companies, radio companies, and stock mania does seem to be to be analogous to what is happening today. History never repeats itself precisely in the same way, however I think there are enough historical analogous models to what is happening today to discount the "the world has changed" or that "this time is different" arguments. The world has changed and it has changed just as significantly in the past. Every time is different and every time has parallels.
Looking at what happened in the past when many companies jumped into the fray of new technology, seems to offer quite a few parallels into what is happening today. You had an initial burst of new companies, overvalued stocks, industry consolidation, overvalued pricing of the consolidated companies, shakeouts of the remaining large companies, and severe corrections of stock prices. It may not happen exactly like that this time, but the odds are that there will be similarities to that. In fact, some of the noted events have already occurred. Unfortunately, in my opinion having a "correction" which brings industry leaders from a P/E of over 200 to 175 (i.e. CISCO), leaves plenty of more room for history to repeat itself. |
