Let Speculators Speculate

http://www.nytimes.com/roomfordebate/2013/12/02/is-wall-street-too-giddy/let-speculators-speculate

"Let Speculators Speculate

Neil Barsky, a former hedge fund manager and newspaper reporter, is the director of the documentary film, "Koch."

Updated December 2, 2013, 8:04 PM

Financial traumas tend to live a long time in the minds of those who suffer through them. For decades following the Great Crash of 1929, a generation (or two) avoided stocks out of a visceral fear that another crash was coming. Skyrocketing inflation in the 1970s similarly informed monetary policy long after it ceased to be a serious threat.

In the 1990s, nascent Internet stocks unquestionably underwent an investment bubble. Start-ups with nothing more than a sexy business plan received billion dollar valuations on the hope they would become the "next Amazon" or "the next eBay." Even tech stalwarts such as Cisco, Dell, Intel and Microsoft traded at valuations that could not remotely be justified based on future earnings. So when the Nasdaq fell 78 percent from peak to trough, the pain was widely felt, and it continues to sting.

We are in a period of rapid innovation where both brilliant and idiotic financial decisions are made. It won’t be clear for a while which is which.

Therefore, it is no surprise that at the first sign of social media stock speculation, the “bubble” warnings are upon us. Are we in a new bubble? Does the fact that Twitter went public with de minimus earnings at a $25 billion market cap suggest the animal spirits are back? Or how about the the fact that the 23-year-old former Stanford student who founded Snapchat – a social media company with de minimus revenue, earnings or cash flow – turned down a $3 billion offer from Facebook. If that is not a sign of the silly season, then what is?

I would argue that we are undergoing a period of rapid innovation where both brilliant and idiotic financial decisions will be made, and it won’t be clear for some time which is which. The investment road is littered with the corpses of dot.coms gone bad – Pets.com, geocities, Webvan and dozens more. But consumers also are enjoying the fruits of other once-speculative companies with names such as Ebay, Google and Amazon, all of which were highly speculative investments in their day. In an earlier investment period, so were Apple, Microsoft and Intel.

This is called a market. In a free market, investors have the right to act foolishly, and often they do. No one puts a gun to anyone’s head to participate.

The stock bug doesn't seem endemic. I'd bet that your cab driver isn't giving “sure-thing” market tips; your uncle whose credit won’t qualify him for a credit card isn't buying a half dozen homes in Las Vegas, and CNBC isn't pre-empting ESPN at your local sports bar.

So let speculators speculate, and let risk-takers take risks. And if a young man from Stanford, flush with the early success of his company, wants to turn down an obscene amount of money from another young billionaire, that's for him, and possibly his parents, to worry about."

Banks, Wall Street are parts of our economy and if we have opportunities for job for everyone our economy will be in good condition.

Unemployment creates problem. 

If we have limited directions for jobs we created real bubble. If mostly we have jobs in housing industries it's create crash in economy, not Wall Street or Banks, which will work in any condition of economy with more or less profit.

We must focus how to create more directions for jobs despite globalization of today level, which will stay in USA and create stable economy. 

Let Speculators Speculate, stop blame Wall Street, Banks. If we fail in creation of jobs it is our real economical problem.