"Why This Tech Bubble Is About to Blow"

I just stumbled on this article, from the journal Business 2.0. It says the big gains in high-tech stocks we've been experiencing recently have no basis in reality -- and while investors' collective hallucination isn't as bad as it was in the late '90s, it's bad enough to cost a lot of people a lot of money someday soon:

Crazy valuations are back. The Nasdaq 100, the Dow Jones of tech companies, now trades at 97 times expected 2003 earnings. That's three times as rich as the more diversified S&P 500. Yahoo (YHOO), quadrupled from its 52-week low, trades at 112 times the profit it's expected to make this year. Amazon (AMZN), likewise, now sells at 93 times its anticipated earnings. Such valuations are beyond optimistic; they're hallucinatory.

And a lot of people are day-trading again, and buying on credit. Not good.

Yes, the article's a couple of months old. But the trends it describes don't seem to be changing -- the NASDAQ has continued to go up, and a number of the must-to-avoid high-tech stocks mentioned in the article are even higher than they were when the piece was published. (Ask Jeeves, which had gone up 1,779% in the twelve months prior to publication of the article, has gone up even more, from 18.79 a share to 22.10 as I write this. For the love of God, why? Does anyone use Ask Jeeves for searches?)

Just something to think about.

(By the way, if you can't get the link at the top of this post to work, you can find the story on the right side of this page -- where you can read a brand-new CNN story about a guy who liquidates high-tech companies and thinks business will be pretty damn good this year.)