While the “stock market” continues to flirt with new records, there’s turmoil under the surface. High-flying social media companies Twitter and LinkedIn fell hard in late April, and now recent IPO Etsy, an online marketplace for arts and crafts, is down 50% since going public (8% of that today).
Bull markets don’t end all at once. Generally a few egregiously-overvalued sectors blow up first and are dismissed by most observers as aberrations. Instead, they turn out to be a sign of things to come.
In the previous decade’s bubble it was subprime housing that led the way, while being initially characterized by experts as too small to matter. Click here for Ben Bernanke’s ongoing attempts to convince the world to relax and ignore housing’s problems.
This time around we of course won’t know until after the fact which sector is the canary in the coal mine. But these epic fails in the bubbly social media/online marketplace region of tech certainly look like viable candidates.
So…why these companies at this time?
So that’s the tech tank story. Now we’ll see whether it becomes the story of the market in general.