| I'm a little confused about the way the article is using numbers. They say their generous worst case calculation of losses is $550 billion, based off of the number of angel investors, throwing out a 1 million number against each, and then valuing companies at $327 billion. They then compare that to the losses in NASDAQ of 5 trillion. That is based on the peak of 6.7 to the low of 1.6. Why does the chart in the article only show a peak of about 5 trillion, which would cut the losses from about 5 trillion to to about 3.4 trillion? Isn't it wrong to compare the estimate of angel investors and valuations against NASDAQ? Why not compare NASDAQ against NASDAQ? To use their style of comparing against extremes, back in 2009 we hit a low of 1.29. In July we hit a high of about 5.2. If those gains were erased, wouldn't we take a loss of about 3.91 trillion, which is a little larger than their chart showed for the dotcom crash? Am I missing something, or is this article making a misleading comparison? EDIT: Reading about the NASDAQ composite index on Wikipedia, it says that the index was changed in 2014, and the composition is very different then it was in 2000. So, even NASDAQ to NASDAQ may not work as a comparison, unless it can be recalculated the same way, and even then, other factors such as inflation should probably be factored in, since it was substantial. (The CPI shows $1 from 2000 is worth $1.39 in 2015 dollars.) EDIT #2: After researching a bit, I think the difference between their chart showing a loss of 3.91 and them saying 5 might be because the 5 trillion is in terms of market cap. On August 18th we were at 9.15 billion, but I don't have a good source for historical market cap data. From the look of things, I'm guessing the losses off our recent peaks to the 2009 lows would be larger than the dotcom losses, but I'd love to hear from anyone who better understands these things. |
I think the potential for losses is ostensibly much larger in the proposed "worst" case scenario; That being said, I don't think it's a very plausible outcome.