All Those Bubble Sightings Turned Out to Be Mirages

Calling bubbles is hard. For example, take tech startups. In 2011, billionaire Mark Cuban -- who won much of his own fortune in an earlier tech bubble -- declared that the modern venture-funded startup scene was like a Ponzi scheme. That same year, the Economist warned that irrational exuberance had returned to the tech world, and that investors ought to watch their wallets. Two years later, there had been no bust, but the alarms continued -- Farhad Manjoo, one of my favorite tech writers, warned investors to watch out for the next tech bubble, while Rolfe Winkler and Matt Jarzemsky warned of “froth.” In 2014, Jack Willoughby and Alexander Eule were warning about a new bubble in private-market tech stocks. The torrent of bubble predictions continued into 2015.
QuickTake Watching for Bubbles

Yet the boom persisted for at least five years after the warnings began. Valuations continued to rise, especially for so-called unicorns like Uber Technologies Inc. and other privately owned tech startups worth $1 billion or more. Companies such as Square Inc. and Snap Inc. conducted successful initial public offerings, and venture-capital funding continued to rise. Only very recently have signs of weakness begun to appear -- tech startup funding fell in 2016, high-flying biotech company Theranos Inc. imploded dramatically and Uber’s negative public image may be taking a toll on its valuation. But there still hasn't been anything close to the kind of spectacular bust seen in the early 2000s. As of today, all of the smart people who called a bubble during the past six years are still waiting for their predictions to be borne out.