PDLP Chapter 530: The Bubble Is About to Burst
Chapter 530: The Bubble Is About to Burst
A week later, major media outlets in Europe and America also began to pay attention to this paper.
A well-known financial television channel even invited two economics professors from Harvard and Wharton Business School to publicly review the paper.
Good evening! Welcome to this episode of "Financial Depth". Tonight, we focus on an academic paper that has sparked heated debate: "Hidden Worries about the Internet Boom: Market Irrationality Under Technological Revolution from the Perspective of Historical Bubbles". The author of this paper compares historical cases such as the railway bubble and the Japanese asset bubble, stating bluntly that the valuation of the current Internet industry has seriously deviated from fundamentals, and also warns in the article that the stock market crash rate exceeds 70%.
For this purpose, we have invited two distinguished guests: James Tobin, Professor of Finance at Harvard Business School, and Quasimodo Buchanan, Professor of Behavioral Economics at Wharton School. What are your thoughts on the core arguments of this paper?
For example, the median price-to-sales ratio of the Nasdaq Internet sector is as high as 42 times, while the figure for traditional industries is only 3 times. This gap has never lasted for more than two years in history.
"I strongly agree with this paper's analysis of behavioral biases, especially the driving role of 'narrative economics' and 'fear of missing out'. The relevant data in the paper mentions that the proportion of retail trading surged from 15% to 45%, coupled with the 85% 'buy' rating in investment bank research reports, all of which point to typical irrational exuberance."
However, I would also like to remind everyone that the disruptive nature of technological revolutions may render historical comparisons invalid. For example, while Amazon's stock price is overvalued, it is indeed reshaping the retail industry, and traditional valuation models may be unable to capture this paradigm shift.
The host nodded solemnly, then asked, "Professor Buchanan, you mentioned that interest rate hikes could lead to a market crash, but current interest rates are still below historical averages. Is the market really that fragile?"
The host then asked, "The article suggests that policymakers increase margin requirements and mandate disclosure of profit paths. Is this feasible?"
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"I apologize, but due to time constraints, we need to hurry. I would like to ask both of you to share your advice for ordinary investors?"
The host smiled and said to the television camera, "Thank you both for your insightful observations. Regardless of when this bubble bursts, history always reminds us that economic laws are never absent, only delayed. Dear viewers, please invest rationally. See you next time!"
At that moment, the background on the TV screen displayed a Nasdaq chart, which clearly showed that on February 27, 2000, the Nasdaq index was at 4992 points, just one step away from the 5000-point mark.
Zhang Yun turned off the TV with the remote control. When she first read the paper, she strongly agreed with its viewpoints. Now that the paper had been published, it had indeed immediately attracted the attention of the academic and financial communities.
This means that the Nasdaq crash, which has a large number of internet technology stocks, is about to begin. After all, this paper has been reprinted by a large number of newspapers and magazines, and many TV financial interviews have been related to it. From investment banks to ordinary retail investors, everyone is already on high alert.
I wonder how the market will react tomorrow? Reaching 5000 points seems a bit uncertain.
After a long period of preparation, Zhang Yun had already cast out a series of giant nets, and now she was just waiting to reap the rewards, but she didn't know how much she would get this time.
According to reliable sources, some investment institutions and hedge funds on Wall Street have already started shorting the Nasdaq. Although they are a little late, one has to admire their professionalism and reaction speed.
The next day, the media's opinion suddenly changed. Some media criticized the paper, saying it was a conspiracy by those with ulterior motives, a negative bomb released to short the stock market. Many other media also published articles that agreed with this view.
After reading these media reports, Zhang Yun smiled and dismissed them. It was clearly a scheme to muddy the waters and then reap the rewards.
Those investors know better than anyone that the bubble is bound to burst!