I'm not going to pretend I know what I'm talking about.
Last night I went fishing in Shorncliff with my friends. None of us knew how to cast the net, so we improvised. We caught a fish by surprise. Surprise because we thought the net didn't spread when we cast it. So pulled on the net and up came a little fish (3 inch). No idea what fish it was.
The day ended when we accidentally let go of the net completely when we cast it.
Oh well. Headed home after throwing the fish back in the water.
The news article Rampant M&A activity may signal peak of global business cycle puts forward a nice justification that the next bust is near. Current M&A activity ($3.6 trillion) has already exceeded the activity ($3.4 trillion) of the previous tech bust.
I, for one cannot understand YouTube's valuation of $1.65 billion or Skype's valuation of over $3 billion. Just numbers of customers cannot justify those valuation. Right now all of them are supported by ads. What will happen to them at the next bust when advertising money dries up. However, its all part of evolution. We need the next bubble bust to kill off the weak, so that the strong can rise from the ashes.
It takes a long time for a big company to die: so long that it's non-obvious that most of them are in fact dying, or at best treading water. We're a hit-driven industry. A few big successes can make it seem like everyone's doing well. But most of them have only had one hit. Go visit most tech companies, and all you'll find is a fussy henhouse parading around an aging goose that laid one or two golden eggs. All their innovation happened in the first act, and now they're focused on "managing for success." But that kind of managing is just staving off insolvency until a real innovator takes their business away. Any tech company overly focused on (or dependent on) its management is probably a good candidate for short-selling.
