What's the Fun Without a Few Bubbles?
— August 31, 2015
By Aswath Damodaran
The technology sector is a favourite whipping boy , especially in light of the surge in valuations of many young technology companies, and there are many who have not only been forecasting the imminent collapse of tech stocks, but will be gleeful when it happens.
If you label a market as being in a bubble, you have already classified investors in that market as irrational, greedy and perhaps stupid, and by doing so you have eliminated any chance that you can learn from their behaviour. I do believe that young technology companies are collectively over-priced today but I will hasten to add that is not only a natural outgrowth of markets, but a sign of vitality in markets.
Read the full article as published in the Economic Times.
Aswath Damodaran is the Kerschner Family Chair in Finance Education.