Aaron Pressman's post reminds me of a funny story of my late father, who passed in 2003. All through the bubble, we'd talk about how he couldn't get IPO shares of any of the companies I'd talk to him about. Then he excitedly told me his broker had offered him some AT&T Wireless. Uh, Dad. No.
But the lesson from this morning's action in Vonage(NYSE:VG) is pretty simple: There is no Web bubble, no tech bubble, no IPO bubble. There's a pretty brainless piece on Bloomberg this morning claiming high valuations are bringing companies out of the woodwork, but high corporate profit growth and a nothing-extra stock market actually has market multiples pretty firmly in check. Even Google, which everyone gets so worked up about, trades at 30 times 2007 estimates and 40 times this year's. In 2003, when I tried to pick an argument with Barron's about its Bubble II cover, Web leaders like eBay and Yahoo were trading at about 50 times 2004 estimates. Google's PEG ratio, which adjusts P/Es for growth, is 50% lower than either Coke's or Pepsi's and lower than the S&P 500's. Some bubble.
Vonage was not the sign of a new bubble because this market has learned Mullaney's First Law of Bubbles. And it is thus:
Section I. It Ain't a Bubble When They Sell It, because Wall Street will always try to sell risky or even junky companies that can pay investment banking fees. If Bank A won't do it, Bank B surely will. If that's a definition of a bubble, it's always a bubble. There's never a good time to buy stocks. And everyone needs a mattress. Which is silly, and supremely ahistorical.
Section II. It's Only a Bubble When You Buy It. Because no one is making you. Never did. Never will. And my Dad never did buy that AT&T Wireless, either, even when men were men and bubbles were rrreeeeeaaaaaallllllyyyyy bubbles.
And they didn't really buy Vonage, did they?