Dooming stock markets are a warning sign for those with long memories
STOCK markets are trading near record highs and people are bullish, which is why those of us who remember the dotcom crash are getting nervous.
The stock market is booming which should give people pause for thought
Last week Snap, the parent company behind the Snapchat multimedia instant messaging smartphone app, announced that it intends to float on one of the US stock exchanges.
Although it has yet to make a profit since it was founded in September 2011, Snap is valued at a staggering $25billion (£20billion), which is more than Sainsbury’s and Tesco combined.
Snap makes its money through advertising, such as sponsoring the lenses and filters used to augment the photos people send using Snapchat or by screening short adverts between videos.
Any investor who buys shares in the Snap flotation is probably throwing money away.
Snapchat's parent company is preparing to float on the stock market
The firm admits in its pre-flotation filings that “we have incurred operating losses in the past, expect to incur operating losses in the future and may never achieve or maintain profitability”.
If that is not a financial health warning, I do not know what is.
For old cynics like me, the sense of déjà vu is palpable, as market conditions increasingly resemble the 1990s technology bubble days.
Economies are growing and unprofitable technology outfits are floating at mystifying valuations
Once again we have a scenario where economies are growing, stock markets are rising and unprofitable technology outfits are floating at mystifying valuations.
We know what happened last time and it is inevitably going to happen again. You have been warned.
*geoff.ho@express.co.uk