Sadly, the New York Times has decided to glob onto the hysterical headlines ‘Is This a New Technology Bubble‘ and the ‘meme’ is on!
It’s a ridiculous subject when we have a raging bubble at the Government and Federal Reserve level.
Paul Kedrosky nails the issue. We have a RE-IPO market brewing and that is not what I would like to see. It is thin at the top.
These companies — LinkedIn, Zynga, Facebook, Groupon, Twitter, etc. — are already public, just not public on traditional stock exchanges. So, when they go re-public, that is, when they go public on more traditional exchanges, like Nasdaq or the NYSE, that will be the moment at which insiders exit en masse in an unprecedented way. Any professional investor who wanted a taste of this stuff has it, and they will be idiots not to exit when the liquidity improves on more traditional exchanges.
That doesn’t make them bad companies, of course. They’re not. They’re very good companies, emblematic of huge changes in society and technology. But they’re public, and they’re about to go re-public, which will almost certainly make their prices fall.
On the subject of the ‘bubble’ that should be discussed, take a read of Jack Barnes ‘The Superhawk Era‘.
General Electric earned (was gifted) $5 billion and did not pay taxes. The $70 billion in market cap of Zynga, Facebook, LinkedIn, Twitter and Groupon is not our problem and not even worthy of a discussion in the scheme of financial problems.
The boom in startups is not a result of bad or dumb VC’s. These VC’s are paid to put money to work and just two years ago when they likely needed to put money to work, investors were in a panic.
This is NORMAL cycle bullshit associated with fear and greed.
What is NOT normal is the out of hand Federal Reserve intervention and the bullshit interest rate setting that makes taking risk in startups inevitable.