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Fortune has discovered there might be a tech bubble. No, revise that. Fortune has, a little late, declared a tech bubble upon us, at least on its cover, which shouts in big, bold type: "Tech Bubble 2.0." But once inside the magazine, you're met with a headline, "Don't Call It the Next Tech Bubble -- Yet," which suggests, well, more uncertainty than the cover declares. In fact, the Fortune story by David Kaplan takes a tortuous path up the mountain of bubbledom, then down into the valley of maybe not. Yes, Silicon Valley is hot, venture capital is flying around, social media companies are going public at high valuations, and -- Fortune has a fixation here -- already expensive real estate has gotten ridiculous. And, oh yeah, there's some very expensive balsamic vinegar on sale in the Valley.
But is it a bubble or is simply some euphoria over a subset of tech stocks that may -- or may not -- prove to be justified? Let's clear a little underbrush. A bubble may be difficult to detect and deflate, but its definition isn't really in doubt. A bubble occurs when the price of an asset loses any connection to underlying value; it's increasingly driven by its own momentum. Now, of course, this definition is full of peril, mostly involving that underlying value, which particularly when it comes to tech stocks is a potentiality that exists somewhere out there in the misty future, exposed to all kinds of factors that could justify a price that seems high today, or confirm that some fool paid too much. So it's hard to tell. This definition is necessary but not sufficient to corner the elusive bubble. Because -- and this is often lost in enthusiasm for bubble stories -- a bubble is not just an overvalued stock, or even an inflated asset class. A bubble is large and contagious. It must have scale; it must spread. Some stocks are always overvalued -- some dramatically. But a sector, say biotech in the '80s, that sent a lot of companies public without a prayer of success, was not a bubble in the systemic sense, because when reality gobsmacked investors, biotech stocks fell, while the rest of the economy forged merrily forward. 
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Bob Teitelman, editor in chief and a member of the company’s executive committee, is responsible for editorial operations of print and electronic products. Contact
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