Bad Asset Allocation (BAA) I

I have been critical of the valuations attached to the .com 2.0 firms since Groupon turned down $6 billion from Google. I said it then, and I’ll say it again Groupon/Google will prove to be the next Yahoo/Microsoft.

 Let’s have a look at the biggest name to IPO before markets crashed in August.

This clearly isn’t pets.com (there are real earnings there) but I can’t countenance that P/E. They’re priced for better than perfection.

I’ve heard all of the bull cases:

• They’re going to grow exponentially forever! 
• Investors are willing to pay a premium for high-growth companies in low-growth environments!
• They are revolutionizing the head-hunting industry!
• Think of all the advertising dollars they can rake in!

Sorry, not interested. Not at that valuation. If you’re willing to consider though, I have a bridge to sell you.