Tuesday, December 12, 2017

Chart of the Week #6: Pearl River Delta

Here's an interesting report from the Economist a few months back. It described how the Pearl River Delta of China is now an innovation hub and a region of the future. The left chart shows that number of international patent applications. The data ends in 2016 but I suspect that China had already surpassed the US in 2017. China is now world's largest patent market today.

The right bar shows that the bulk of the patent filing comes from Shenzhen, arguably already surpassing the Silicon Valley. The city that Deng Xiaoping first visited on his Southern Tour and declared that China will rise, starting from the Pearl River Delta. Indeed, we have seen that transformation especially with the internet big names like Tencent and Huawei. 

Here's a list of the most innovative and interesting Shenzhen based companies other that the two mentioned above:

1. BGI (Beijing Genome Institute - shifted to Shenzhen)
2. BYD (automobiles)
3. ZTE (mobile phone)
4. Mindray (medical device)
5. Vanke (property developer)
6. SF Express (logistics)
7. Hangzhou Hikvision (security camera)
8. DJI (drone)

In 2013, we discussed that China had a huge conundrum because it lacked certain decencies, corruption, deceit and counterfeit ruled the day. But it seemed that things are changing. The anti-corruption campaigned started by Xi Jin Ping since those days had continued and might really be working. Deceit increasingly doesn't pay as society matures and businesses look for recurring customers and building trust brings more money that cheating. The shared economy and e-commerce require trust as a bedrock principle to work, which is why China internet companies need to establish that asap. And lastly with innovation, China is beating counterfeit left-right-centre.

Hence, the 21st Century truly belongs to China. It might still take some time to get to where US and Japan societies are in various aspects but it may not be 50 years as described in the conundrum post. That's the thing about prediction! Nobody ever gets it right!

Tuesday, December 05, 2017

Inspecting the Vicom Story - Part 2

This is a continuation of the previous post.

Okay, in the last post, we discussed the basic stuff about Vicom. It is hugely cash generative and we are getting it at low teens PE, 13x to 16x PE for a 30% operating margin, 20% ROE business. This is really not expensive, albeit the growth angle could be questionable. Singapore is a mature economy, our vehicle population is maxed out, we don't have enough roads for more cars. So how to grow?

Maybe Vicom is cheap because there is no growth. Or is there really no growth?

This is where it gets interesting. In stock investing parlance, we call it optionality. Optionality refers to potential upside that is there but we do not know if they would materialize. Usually, if they do, it means a lot more upside but if they don't there is also not much downside. It is said that the best investment portfolio is simply a portfolio of free optionalities.

To delve further, this optionality concept comes from the big branch topic in finance simply called options which were created as early as 600BC by Greek mathematicians but only well understood when two Professors put on their thinking hats and solved the puzzle in the 1960s. Their theory won the Nobel Prize and today, all finance students have to study what they created - Black Scholes Option Pricing Theory. Rings a bell?

Call option chart

The simplest option chart (above) shows how the downside is capped if the stock does not move or in the unfortunate event, even if it goes down a lot, the option buyer only loses his premium (capped at $200 in the chart above) and face no further downside loss. But in the event that the stock price goes up, the option buyer stands to benefit from all the upside. The catch is that options expire and the deal is off once the option hits expiration date.

In a more general context, optionality refers the similar asymmetry in risk and reward but with no expiration date. The catch is that most optionality do not really materialize which is why it is not worth much in the first place and the market refuses to pay for it. The sector with the most optionality examples would be the pharmaceutical sector. Pharma companies are always researching on new drugs and nobody knows which ones would be the next blockbuster drug. The example that comes to mind would be Pfizer and Viagra. 

Back in 1996, Pfizer was just another pharma stock trading at $5. It was not small though (market cap at that time was already USD 40bn!). It generated a billion plus dollars of free cashflow with its huge portfolio of drugs. But in the same year, it filed the first oral drug for erectile dysfunction (ED) - Viagra. Nobody knew how big the market would be. There wasn't such a market in the first place. Men with ED just lived with it, unless it's super serious then they go drink Tongkat Ali or eat oysters or something. There wasn't any medical treatment for ED. If the drug failed, then Pfizer would just continue to make its billion dollar annually with its huge portfolio of legacy drugs and the stock would be $5. As it turned out, Viagra became the biggest hit ever, allowing old men to have sex again and the stock went 5x to $25. At its peak, Viagra sold roughly $3 billion annually. 

Tongkat Ali, herbal treatment for ED in S.E.Asia

So that's optionality. Pfizer was (and still is) a blue chip (now with the blue pill :), if one had bought it then at $5, one could enjoy the blue chip growth (maybe just single digit) and collect a stable dividend (2-3% dividend yield). If Viagra didn't happen, then it's decent growth, or rather, just blue chip growth and dividend. But when Viagra happened, then we are off to the moon. In fact the stock raced very early on as the market simply got excited even before the drug was launched. It more than doubled from 1996 to 1997 despite cashflow being weak in 1997 at only $600m (normally it should be above a billion dollars. Today Pfizer is a $200 billion market cap company.

Let's move back to Vicom. So what's the optionality? I see a few:

1. Price increase for inspection
2. Overseas growth
3. Buyout by ComfortDelgro

The first optionality is just about the timing of price increase. At some point, prices go up like everything else in Singapore. We just don't know if it is 2 years or 5 years. The history shows that the industry had a habit of raising the inspection fee every few years. It was $50 in 1997, then it was raised to $54 in 2001, then $56 in 2005 and then $58 in 2006. Based on its website, current fees are $62 inclusive of GST. This relentless price increase would simply continue bcos first it is nothing compared to the price of the vehicle (more than S$100k in Singapore today for a 1.6L car) and the other costs such as fuel, maintenance and what not. Every price increase again drop directly to its bottomline since there is very little cost in between. So even with the population of vehicle stagnates, Vicom can enjoy revenue growth. This is the beauty. Guaranteed revenue growth. Of course, the cherry on the cake is that Singapore's vehicle population will only go up. We need more buses, trucks, taxis every year. Passenger cars will also just keep growing bcos it is an aspiration to own an expensive car in this warped bubble on a little red dot. The market doesn't see this now, but when it does, that's when our option gets exercised!

Overseas growth is a new angle that is not being talked about right now. But the potential is huge. Singapore, for good reasons, is seen as a leader in standards by our neighbours and a few of them are very happy to bring Singapore companies into their country so as to learn from us. Vicom talks about opportunities in Vietnam. In the same vein, countries like Myanmar, Laos, Cambodia would one day require inspection and testing. Imagine if Vicom could just get 1 or 2 of these markets, or rather just a small slice of one of these markets, the potential is a huge increase in revenue. Vietnam alone has 100m people. Of course, this scenario is still pretty remote. There is nothing concrete yet. 

The last optionality is similarly remote though not zero probability. ComfortDelgro (CD) today owns 67% of Vicom and it is not inconceivable for them to buyout Vicom given that it's such a lucrative business. Why give away that 33% to others? Of course they also want to buy back at a good price which is why nothing has been done all these years after the stock ran from 50c to $5. So the other way to look at this is that if Vicom falls too much, Big Brother CD will just buy it out. Hence there is an inherent floor price to this stock. Our downside is capped much like a call option.

In a red dot not so far away... car wars

But given that Vicom is now a $500m company. CD needs to raise $150m to buy the 33% it doesn't own. With its woes, thanks to Uber and Grab, it would rather put money into this car sharing war to defend itself than to buy back Vicom. (CD only made $100m in free cash flow last year. So it's not a small sum for them, although one could argue that effectively they only need to raise $50m since Vicom has $100m on its balance sheet!) In any case, it might just be status quo for now. Some day they might buy Vicom, but not today.

To sum it up, Vicom has all these optionalities, but it is hard to put them into numbers. So we are paying c.$400m (after accounting for the $100m on its own balance sheet) for a steady $30m free cash flow. This translates to 7.5% free cash flow yield or 13x PE after adjusting for cash. The rest of the options, if it happens, comes free. With bank account interest rate at 1%, property rental yield at 2%, I would say 7.5% yield is pretty decent. In fact, 4% (or more in the future) would come back annually as dividends since they don't know how to deploy the huge amount cash coming annually.

That's basically why Vicom is a buy! Read from the first post.

This author owns Vicom.

Monday, November 27, 2017

Inspecting the Vicom Story - Part 1

Vicom has been one of the most amazing multi-bagger in the Singapore stock market. It was trading at 50 cents 10 years ago, with a market cap of S$150m and over just one decade, it became a $5 stock with a market cap of S$500m, generating S$30m of free cash flow per year on a revenue of S$100m and piled up another S$100m of cash on its balance sheet. Despite such a huge run, I took a look at this stock again and believe we can still squeeze some juice out of it. In fact quite a bit of juice especially if some of the optionalities come true.

Ok, first things first, what are Vicom's businesses?

Vicom is Singapore's leading testing and inspection company with two core businesses. The first is the vehicle inspection business which it has 70% market share across 7 inspection locations in Singapore. For car owners, we know this all too well, as we need to bring our vehicle to these dreadful places every year and get charged $60 for some 20 min routine work which doesn't seemed clear to us why it needed to be done except to satisfy the regulator.

The second business is industrial testing and certification which is done by its subsidiary SETSCO which provides calibration, testing and certification services to various industries. The important ones being construction, oil and gas, aviation. This business makes up 2/3 of its sales but only c.40% of its profits. There is some cyclicality in this business as industries grow or falter with global trends. In the recent years, the slowdown in both the construction and oil and gas sector had impacted earnings. 

So, now that we know more about Vicom, what's the story or rather the investment thesis? The investment thesis is the reason why we want to invest in some company and it should be simple enough for primary school kids to understand. So here's the version for Vicom.

Vicom is a stable, cash generative business (6-7% free cash flow yield) that is under-appreciated by the market. There is floor on its stock price underpinned by its strong cashflow and dividend but yet there are optionalities that would help boost the stock price even higher if they materialize. Vicom is also part of the ComfortDelgro group which might to take it private someday.

The stock market represents the view of all the investors and speculators and they tend to focus on the obvious and the recent events. The consensus view on Vicom is that there are now less cars on Singapore roads and most cars are brand new luxury cars then do not need annual inspections. (Only cars more than 3 years old require annual checks). Since c.60% of its profits come from vehicle inspection, so the stock is not interesting. The other business, as we discussed, is facing headwinds in construction and oil and gas. So, no story. This is why the stock did nothing for the last three years. Its stock price just hovered between $5.5 to $6 since 2014.

Cars are only 37% of Vicom's vehicle inspection business

However, astute investors, we dig deeper. We think at a higher, second level. The pie chart above shows the breakdown of inspection by vehicle type and as you can see, passenger cars only make up 37% of the total pie. The rest of it shows that 63% of the volume actually comes from commercial vehicles which require much more regular inspections. This is the reason behind Vicom's stable cashflow. Inspection is a recurring business. Taxis and buses are required to be inspected every 6 months and goods vehicle annually. There is some volatility due to the economic cycle but by and large, I would estimate that 40-50% of Vicom's overall revenue is very stable. This same argument can be made for its industrial testing and inspection business.

About 15 years ago, this stock was undiscovered as it was too small to matter to most global investors. It also only had the vehicle testing business since it had not bought SETSCO. But when SETSCO came in around 2003, the picture changed and investors took a few years to realize the beauty of its businesses. But still, for the next few years (2005-2009) it was still trading above 10% free cash flow yield. Over time, ultimately, it got bid up and is now at 6% free cash flow yield. 

This strong recurring cash generation capability is what underpins the stock price and hence it is very unlikely that it corrects a lot. To add more colour, Vicom's assets are all fully depreciated, these centres do not need capex, nor much labour, nor marketing or other expenses. Hence the $60 that we pay almost drops directly down to its net profit. That's why Vicom stopped reporting gross margins. But when it did report last time, it reported gross margin it was 96%! That's back in 2013. Today we know that its operating margin is still 30% which had stayed almost unchanged for the past 10 years.

Given such strong cash generation, it has to pay them out or else it would just drown in cash. Actually, it's somewhat drowning in cash. Despite paying 4% dividend annually, the firm amassed S$100m of cash over the years which is 20% of its market cap. They might have to do a big special dividend or something to clean this up. Needless to say, Big Brother ComfortDelgro would probably want it to uplift some of this cash given that its taxi business is really not doing so well and Big Brother really don't mind having a bit of that S$100m buffer.

So even without discussing further, we know that Vicom is a huge cash machine that we can get at 6% free cash flow yield of which 4% comes back annually as dividends. On conventional metrics, it is trading at 16x PE but if we strip out the cash it is actually more like 13x and EV/EBITDA is a reasonable 10x. In today's world of negative interest rates and low returns, these multiples are really not expensive for such stability.

Ok, next post we talk about the optionalities!

This author owns Vicom.

Sunday, November 19, 2017

Chart of the Week #5: Total Business Person!

This came from a book on restructuring businesses with an interesting analogy on how one should improve ourselves as a good business person simply by harnessing our bodies and senses better.

How to improve ourselves as human beings?

(1) Use our senses to first receive all the different inputs well
(2) Use our brains to analyze, strategize, think
(3) Use our heart, elevate our EQ and be able to empathize others deeply
(4) Use our gut, have the courage to make the tough decisions
(5) Use our composure, exhibit strength, character, lead by example
(6) Use our mouth, to communicate
(7) Use our arms and hands, these refer to skills we have learnt
(8) Move! Get into action, stop procrastination

It's quite deep if we want to think throroughly about this. For (1), oftentimes we miss the subtle cues like body languages, the meaning between the lines and hence fail to close the deal. It is about polishing our sensory inputs to the level where we capture good signals. For some this might come as natural but for others, it would take years.

(2), (3) would be pretty straightforward. The ability to use both our left and right brains is key to be a successful business person, or rather, a decent human being. Perhaps EQ is slightly more important than IQ today.

(4), (8) seem to go together as well. Human beings are cowards and sloths by nature. We need to overcome huge inertia to just have guts and to get things started. It is overcoming the daily grind that leads to greatness.

(6) has become very important today because speaking well gives the impression of being more capable of getting things done. That is why ang-mohs always get promoted. This is a skillset our education system should really focus on.

Besides talking, there are other skillsets that would be relevant in different fields such as being able to code, or being able to use special software or hardware. This is (7). In the world of finance, it is accounting, corporate finance, stock analysis etc.

Finally, we get to (5), I would put this as "aura". When we are quite accomplished, we somehow exhibit the composure or aura to be able to lead. For some, it is harder but it is almost a pre-requisite to success. Some people are born leaders, but for most of us, we need to develop all the other seven points to be able to get better at this. I think this is the essence of it all.

So, that's the theory of total business person, corny but deep, I would say. Japan didn't become the third largest economy by chance.

Monday, November 13, 2017

Chart of the Week #4: Singles Day

11.11 has taken a new meaning since it was started in China by Alibaba a few years ago. It's Singles Day! A day where everyone should buy bargain sales online. Somewhat akin to the Great Singapore Sale (which last one whole month in June) but it's just one day.

The same tradition in the US is the Cyber Monday for buying tech stuff and the infamous Black Friday. Here's a chart comparing Singles Day and Black Friday.

In the second year that it was launched, Singles Day sales exceeded both Cyber Monday and Black Friday combined. The sales online has been making new highs every year ever since. In 2016 it was c.USD 18bn and this year it was a crazy USD 25bn! That's more than twice the annual sales of Singtel, Singapore's largest company. It is also larger than the GDP of Iceland.

It remains to be seen if this craziness could continue If Singles Day grows at the average of 30% YoY for the next five years,  it would be bigger than the GDP of Ukraine. One day sales matching the GDP of a country of 45m people. 

Meanwhile, a very belated Happy Singles Day.

Sunday, November 05, 2017

2017 Oct High Dividend List - Part 2

This is a continuation of the previous post.

We are at the second post of this October's dividend stock list. This is the first year that we are doing a bi-annual list. This list has 54 names and we gone through half of those names already. Due to the configuration of Bloomberg, I was only able to capture 15 stocks each, which results in the list being divided into four parts. In the last post, we have Part 1 and 2. Now we shall discuss Part 3 and 4. This is not to be confused with the Part 1 and Part 2 of the posts. So, if each part of the list can contain only 15 names, how many names would there be in Part 2 of the posts? Confusing?

Yeah, that's also how Singapore set exam questions to confuse primary school kids.

The next two lists truly reflect one of the key ideas being talked about in 2017 - the Death of Retail. In the next 20 or so names, we see various retail names like Kohl's, Macy's, Foot Locker and Next PLC just to name a few. As these names get sold down, their dividend yield gets higher but meanwhile they are still generating strong cashflows and margins, well at least that was still true in the last three years, hence they show up easily on these screens. It is hard to say whether they will survive. But what's becoming clearer is that some retail formats are better. Convenient stores and supermarkets will still be around. Innovative concepts (Muji stores, Ikea stores) will still be around. But department stores, hypermarts, undifferentiated malls and shopping centres, these are tough. In short I would avoid these retail names.

Part 3 of 2017 Oct Dividend List

Perhaps the name to highlight in Part 3 would be Harley Davidson. This is a unique brand that has strong appeal to all bikers and its brand image, I would argue, goes beyond motorcycles and is attractive in a few ways. Harley Davidson stands at the pinnacle of motorbikes much like Rolls Royce is known as the most prestigious car every built. It is also analogous to Johnnie Walker Blue Label for whiskey and Patek Philippe for watches. Every biker's dream is to ride or own a Harley Davidson someday. But unfortunately, the draconian traffic regulations and hot weather makes that very much less appealing in sunny Singapore.

Nevertheless, Harley sells 250,000 bikes globally and has a target to reach 50% non-US sales by 2027 (currently at 37%). It has 50-60% market share in the luxury bike segment and generates a significant portion of its earnings from merchandise, customization and financing. These are recurring revenue streams. Harley riders are a unique bunch that won't mind spending a lot on their bikes even when they need to borrow money to achieve that. But there is a limit to such behaviour. Bike unit sales had dropped for the last few years as a result of the collapse of the oil and gas industry (which somehow has a disproportionately high number of Harley riders in the US) and the general weakness of the global economy had squeezed this segment of the population - the disenfranchised workers that would want to own or already owning Harleys. However with such a strong brand name, Harley should bounce back with a vengeance. Having said that, I am adopting a wait-and-see for this stock since there are more interesting names to buy globally. (To be revealed below)

Part 4 of 2017 Oct Dividend List

In the last part of this list, we see a few Singapore names, SATS, M1, UMS, Silverlake, KSH, Cogent and Zhongmin Baihui. Some of these names were discussed briefly in the past but given their small market caps, it would be always be high risk and high return. Much higher than we like it to be. Today, we shall talk a bit more about SATS which had been on this list on and off for many years. There was also a previous discussion in 2016. I had the opportunity to study more about this stock recently and had also visited the newly open T4! Hence it might be timely to give a quick update.

SATS' business is about delivering prepared food in Singapore. It had done a tremendous job in Changi and had expanded quite aggressively to other peripheral markets. It also has some business in Japan and most importantly, it delivers food to the Singapore Armed Forces. There are some issues with the quality of food as every male who had been through army would know, but hey, that's good for investors because recruits can never complain! But the biggest issue facing SATS is always labour cost. It is highly labour intensive and had been squeezed by the clampdown on foreign labour.

The company spins a good story with regard to how it has automated its processes, insofar mitigated the cost of higher labour. In the new Terminal 4, it's all about automated baggage check-in functionality and robot deliveries. These are visuals that sticks and investors appreciate the story better. A good PR and investor relations team is able to add 1-2x multiple premium to a stock! SATS would be in the top quartile in Singapore when in comes to investor relations.

In terms of fundamentals, the firm had also delivered. CEO Alex Hungate had done a great job and we have seen operating margins maintained at 10-13% for the last few years. The company had also delivered revenue and profit growth, which explained the stark contrast between SIA Engineering which had not seen revenue and profit growth for many years. However both stands to benefit from Singapore becoming an aerospace hub with more flights in and out of the country.

Given the strong share price performance over the last 18 months, I would advise buying if only it corrects a good 15-20% from here. SIA Engineering or ST Engineering with a c.5% dividend yields  look like better bets! So that's all for this year's October list!

Here's the past lists:

Monday, October 30, 2017

2017 Oct High Dividend List - Part 1

As promised, this is the first bi-annual dividend list (started only in 2017!) with the first list out earlier this year. As usual, the criteria have not changed over the years and we have used three year average ROE, 4 year average free cashflow and EBIT margin. The dividend yield is cut at 3% and we have 54 interesting names.

They are ranked by market cap. With the largest being P&G at c.USD 220bn. This is the world's largest consumer staples company. While huge in absolute size, it pales in comparison with the internet giants at USD 600-800bn market cap. Apple, the world's largest company today stands at $842bn while Amazon and Alibaba is about $500bn market cap each. Both Amazon and Alibaba has never manufactured anything.

Part 1 of 2017 October Dividend List

The first part of this list also featured some drugs and tobacco companies. The defensive sectors like consumer staples, pharma and tobacco had done very well from 2014 to 2016 and as market goes, this reversal hit them hard. Not in absolute terms but in relative terms. While they did not fall 30-40%, most of these stocks had done nothing in the last 12 to 18 months while their peers charged ahead. The internet names had so far led the way, but the whole rage now is with anything remotely related to tech. Stocks from semiconductors to IT services to IT patent companies had done really well. The only two laggards seemed to be IBM and Qualcomm featured here. 

The current market thinking is that we might see a tech revival not unlike the dotcom era. For the first time in 18 years, we are running out of computer chips. In the past, every IT cycle had a physical demand limit. A few cycles ago, the highest possible number of chips sold would be dependent on the number of  PCs sold, then it was dependent on the number of laptops sold, then the number of mobile phones sold. But this round, there is no physical limit. This cycle would be led by demand for computing power. This is computing power for A.I. or artificial intelligence. Part of the demand would also be for Big Data, which then requires storage, lots of it. Then we have internet of things ie chips in everything from shoes to fridges and also chips for the 900m cars in the world.

Part 2 of 2017 October Dividend List

Speaking about storage, Seagate surprisingly got onto the second part of the list. Perhaps there is a buying opportunity here? Servers today still needs hard disks despite that notion that NAND flash would take over and make HDD obsolete. This was touted more than ten years ago, unfortunately, as prediction goes, it did not happen. We might see a revival for HDD if the storage boom does happen. And the good news is, there are only two companies making HDD nowadays.

The ad agencies like WPP and Omnicom deserves a bit of mention as well. These companies lie in the intersection between the consumer giants like P&G and Unilever and tech. The understanding was the large consumer companies require these agencies to help market their products. They make us think that we need the best shavers and shampoos to groom ourselves. But as internet took over, people are happy to use just any shavers or shampoos. These large consumer firms also failed to engage new users on Facebook and Google. Worst still for the ad agencies, Facebook and Google replaced TV and also became their competitors for ad fees. So, there they are now, looking cheap and looked as if they might be decimated in the new economy. 

The verdict is not out yet. Are they a screaming buy or sitting ducks? We do not know. I have a gut feel they might be sitting ducks. Facebook and Google had simply become too powerful. These old traditional firms might not have a chance. But everything has a price. If they get too cheap, maybe it's worth a last cigar butt puff.

Sadly, I struggle to recommend a good idea from these two parts. If I have to choose, it might be one of the pharmaceutical names. Drug companies in aggregate had done good for the society. Yes, they had their fair share of damages, such as opioid, overcharging and other issues. But they are slowly winning the war against cancer and cured many other diseases that had plagued humans for centuries. Not to mention, Pfizer improved the sex lives of many, many couples. While many readers here are in no need of Viagra and its generic cousins, but hey, we all grow old! Some day, we would all hail Pfizer and thank the great firm for inventing the blue pill!

The miracle blue pill!

Again, they have devalued because they are not part of the new economy. I would say that paying teens PE and receiving a 4% dividend yield for some of these firms are bargains. It might be worthwhile to start researching on some these great drug companies: Pfizer, Merck, GSK and AstraZeneca. Though not on the list, Roche, the world's leader in cancer drugs might be a good candidate to start with. It also has another diagnostics business that is stable and steady.

Next post, we look at Part 3 and Part 4 of this October's list where more Singapore names appear!

Here's the past lists:
2017 Mar Dividend List
2016 Dividend List - Part 2
2016 Dividend List - Part 1
2015 Dividend List - Part 2
2015 Dividend List - Part 1
2014 Dividend List
2013 Dividend List - Part 2
2013 Dividend List - Part 1
2012 Dividend List
2011 Dividend List
2010 Dividend List
2009 Dividend List

Tuesday, October 24, 2017

Chart of the Week #3: Life Cycle of Bubbles

The following are famous charts created by McKinsey (I believe), depicting the life cycle of bubbles as we have seen. This chart had gave a good explanation of at least three bubbles in recent history. The dotcom bubble, the Japan bubble and the 1929 stock market boom and bust that led to the Great Depression.

The chart above shows the phases of development staring with R&D and then moving to first generation products and how early adopters will join first. This pretty much described how the internet and the dotcom bubble had evolved from the late 1990s till today.

This second chart (above) tries to plot various technologies today into the same bubble life cycle. I think this was probably done a few years ago but some of the data points are probably still relevant. It is also worth noting that it takes decades after the initial hype for the stock markets to return to previous highs. 

For the 1929 boom and crash, the US stock market only exceeded the previous peak in 1955 and good 26 years later. For the dotcom bubble, it took 17 years. Japan hasn't surpass the peak of 1990 after 27 years. So never get caught in a bubble!

Hope this helps!