IMO, no.
Anything outside of market forces, imo, can not have a bubble, or should not be called a ‘bubble’. I know a lot of smart people in the tech industry are crying “bubble” due to the Sony’s pay out for Grouper (ie article, battellemedia) but the invisable hand disagrees.
Let me explain. The invisable hand (one of Adam Smith’s key points to capitalism, imo) will create order w/in capitalism. This is what is happening w/the Web 2.0 valuation. Bubbles exist in true market driven forces because mob mentality sometimes gets the best of market (near-term) movements. While markets have proven themselves to be efficient, on a long-term basis, psycology (among other things) does not allow it to be effecient on a short-term basis (IMO).
The Web 2.0 (and I would group all LOBs in this ‘bubble’ talk) can not be bubble driven because the dynamic of the way the buying works does not allow itself to get caught up w/ psychological forces. Don’t get me wrong, markets are seen at every level of buying/selling. But the relavence of psychology toward buying and selling decreases as few people are involved. And the few people involved w/web 2.0 and LBOs are very smart people who would not allow such forces to overtake them. (The stupidity of mob mentality is supressed.)
The reason Web 2.0 companies are selling for these prices is because larger media companies realized the fuckup they made by passing up on companies like Yahoo, Google and other internet superstars. Why didn’t TWX buy Yahoo during its startup phase? If they paid $1B when it was barely making money, TWX would look like geniuses today. This is what media companies are doing now w/web2.0 companies… especially w/ video sights. (And rightfully so. The potential there is big, and it is being realized.) The longer the media companies wait, the more expensive these companies will be. Although some see little revenue, and no profit today, the companies will make money in the future… once video ads catch up to the services a company like YouTube provides.
(LBOs are a different story, but similar concept. More players are in the field so more of a market mentality is involved. But instead of viewing an overpriced LBO as overpriced, the players look at it like this… instead of making x amount, we will only may x-1. Either way we make a net of Y… which is a shit load of money. A major reason for their overpriced purchases is that there is a lot of liquidity in the current economic enviornment. And the players can afford to pay more for the reduced margin payout, so long as they make a shit load of money in the outcome.)
