Nobody can predict the bottom, or how low things will go.
But I disagree that valuations are very low. Frankly, many tech companies (Uber, Twitter, etc) are still unprofitable money-losing machines with high valuations because of their potential growth and expectations of future profitability. There's an argument these companies should be worth much, much less.
For the past ~10 years in particular, investors haven't cared about profitability; a market downturn may change that.
Also, as the recession or depression continues, advertising is going to get scaled back and may destroy ad-tech companies like Alphabet/Google and Facebook.
Your prediction is as good as mine, of course. But I'm a bear, expecting a river of blood to flow through the streets of Silicon Valley.
I agree with your general assessment of the economy, but those are all factors everyone knows.
The adjustment we saw earlier this year was going from “the economy is booming and interest rates will be 0 forever” to “interest rates are going to 4% and we’re going to have a recession.” That’s an absolutely massive adjustment in expectations and stock prices, especially of high growth tech companies, reflect that adjustment.
In order for valuations to drop substantially further, a similar expectation adjustment would need to happen. Something like “I thought we were going to have a recession but now it’s worse than the Great Depression”. Simply adjusting expectations from “minor recession” to “moderate recession” isn’t big enough to crater the markets like we saw earlier this year.
But I disagree that valuations are very low. Frankly, many tech companies (Uber, Twitter, etc) are still unprofitable money-losing machines with high valuations because of their potential growth and expectations of future profitability. There's an argument these companies should be worth much, much less.
For the past ~10 years in particular, investors haven't cared about profitability; a market downturn may change that.
Also, as the recession or depression continues, advertising is going to get scaled back and may destroy ad-tech companies like Alphabet/Google and Facebook.
Your prediction is as good as mine, of course. But I'm a bear, expecting a river of blood to flow through the streets of Silicon Valley.