-- Posted Thursday, 25 November 2010 | Digg This Article | | Source: GoldSeek.com

Facebook is not yet listed on the Nasdaq and still commands a private company valuation in excess of $40 billion, almost the same as the largest US-listed gold producer Barrick Gold Corporation, while Google at around $200 billion is worth more than all the top 20 US-quoted gold producers together.

Does this not make the US technology sector look something of a bubble in terms of gold? It is easy enough to see the value of a company with millions of ounces of precious metal in the ground, not so a social networking site with unproven advertising potential.

Google’s billions

Google is undoubtedly highly successful at selling Internet advertising but will it necessarily continue to grow in this space and keep its virtual monopoly? The tech sector is surely long on examples of companies with unassailable positions that eventually fell by the wayside. Technology always moves on.

Indeed, that is the point as far as many Nasdaq valuations are concerned. Companies like Microsoft are now in advanced middle age with old technology that continues to sell but it is hard to see Windows as the operating system of the future.

Not that those with newer technology are necessarily fairly valued either. Apple is also approaching the Google level of valuation mainly because customer enthusiasm for its new iProducts is equalled by over-enthusiasm for its share price. History has plenty of examples of retail investors getting this sort of thing wrong, and anybody who has queued for an Apple new iProduct ought to recognize the symptoms of a mania.

Nasdaq crash?

Could there yet be a final stage to this Nasdaq bubble, like in late 1999 to March 2000 when prices doubled? It is possible but does not seem very likely as the oxygen that has fueled the long stock rally since March 2009 is getting very thin.

Yesterday North Korea lobbed missiles at the South. Ireland’s debt solution looked in political trouble and likely to cause a banking crisis in Europe. The Chinese appeared to be tightening credit. And US stocks fell sharply.

Anybody trying to chase the Nasdaq bubble higher at this stage is likely heading for a nasty fall. Remember what happened to tech investors a decade ago. It may not be different this time.

The December edition of the ArabianMoney investment newsletter will focus in detail on gold and silver investment opportunities, and how best to capitalize on this bull market over the next 12 months (Sign-up here for this advice which is not published on this website).

-- Posted Thursday, 25 November 2010 | Digg This Article

About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in 1999 to complete his first book, a history of the Bovis construction group.

Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.

Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.

He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.

Order my book online from this link

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