OT Has the bubble deflated.
I assume you mean the great internet bubble of the end of the 20th century. I think this bubble is probably 80% deflated, though as you suggest, there may still be plenty of air in other baloons. Housing may be in the early phase of a bubble as stocks and cash have lost their allure while tax incentives and real estate price trends have made house flipping a popular trend.
Google, of course, is an IPO and probably deserves special situation status. In light of Amazon's competitive offering known as A9, which is kind of a derivitive of Google, since it seems to reformat Google search results (by some form of agreement it has with Google...don't ask me why Google has agreed to it, except perhaps as some sort of limited experiment...hard for shareholders to get a hold of contracts to examine actual terms without going to the pains of a derivitive lawsuit claiming that company is withholding material info from shareholders), it's hard for me to see why Google would be worth billions, although it certainly gets my eyeballs on a daily basis. But then again, Google is far superior to the other search engines out there, including AskJeeves, who IMHO have compromised their integrity and usefulness for pay for placement ad sales.
In general terms, money, or what is left of it after a bubble, always has to go somewhere. I can point to a variety of profitable mundane companies (such as WOOF in the vet care industry) that could get absolutely no traction during the internet bubble, but once it was over was able to gain access to plenty of capital on Wall Street. There's always a certain amount of hot money in search of the next big thing. But bubbles and their aftermath tend to leave a bit of a sour taste and certainly discourage risk seeking to some extent. Perhaps this is reason for large cash holdings in spite of low returns on cash.
My approach is to diversify overseas and sell volatility (both puts and calls) to collect time premium.
Sam |
