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Here We Go Again: How to Tell a Bubble When you See One
Until last Thursday, there was some cause for hope. True, the day before the New York Times had written a piece reporting on the growing prevalence of "acqhire" transactions. That's where a company (like Facebook) buys a company for millions of dollars, only to promptly shut it down. Why? Because it wants the employees — $500,000 to $1 million per engineer is the current going rate. That's not quite as high as it was during the Internet Bubble years, but the same companies are doing lots of big-ticket acquisitions as well. Whether or not these transactions pay off in new revenues, the dilution to existing stockholders will be the same. |
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Comments (9)
This is awesome, Andy is really cutting loose:
Quoting:Still, things aren't quite as crazy as they were back in the day, back when anyone with a drivers' license to prove they were under 25 could stroll along Sand Hill Road in Menlo Park or Winter Street in Waltham looking for money. VCs would swarm them like horny johns cruising the Red Light District for a little fun on a Saturday night. Without even asking to see a business plan, they'd throw an entrepreneur $10 or $30 or $50 million for a roll in the hay they hoped might lead to a quick IPO. Hundreds of times, it did, although the same companies were often dead as a doornail a year or two later.
That was my problem. I wasn't under 25.
Quoting: Wall Street, you see, is not a sophisticated network of brilliant strategists as some suppose, but an extremely highly paid fashion industry. Every year it "discovers" and sells a new fashion line and touts it as the must-have latest and greatest. One year it will be REITS, the next derivatives. It doesn't really matter what "it" is, so long as it's new and can give the machine something to sell.
Despite the rhetorical enthusiasm, I suspect that this remark is much closer to the mark, than most economists are comfortable with even acknowledging.
Mark Twain would have approved.
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What were we told? THE OLD RULES DON'T APPLY!
Sooo...
Following the new conventional wisdom (repeated periodically as a new generation of suckers and flim/flam artists is born), be happy, don't worry.