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In private circles, I have long argued that the Wall Street money machine was not going to let the market for "Web 2.0" stocks fall until the Facebook (NASDAQ:FB) IPO, at which point pretty much all of the air will be let out of the tires of the "pretender" social media stocks and the bubble will finally pop.

While I have no doubt that Facebook is worth $40 billion or more, I think the time might be ripe to short some of the non-Facebook social media IPO's here because they could end up being similar to the Web 1.0 bubble back in the late 1990's (am I the only trader who still remembers that bubble bursting?).

Maybe this is all a little personal for me. You see, my father, who was a respected professor and author, died back in 1996 when I was sixteen. He left me a great fountain pen collection, a really cool leather jacket and, of course, a few unpaid bar tabs and other miscellaneous debts that I am still working on paying off.

The bulk of my dad's assets were passed down to me in the form of shares in a "Growth" fund. This was a technology-based fund that had most of its assets long the most speculative web bubble names of the late 1990s. At the time, I thought I was in pretty good shape financially. Then, the bubble popped and my Growth fund lost some 85% of its value.

I guess my personal bias could make me overly bearish on the current Web 2.0 bubble that I see getting ready to pop. I think we need a Federal agency that regulates bubbles. Maybe the Fed mandate should include preventing bubbles as well as full employment.

Here are some stocks that are way too expensive for any sane investor to own for more than a day trade, which I think will make fantastic short positions over the long run. Investors should consider using options to short these names instead of borrowing the shares from the I banks, because the short sale interest rates on these names are many times downright criminal -- shorting LinkedIn (NYSE:LNKD), for example, would cost investors something like 75% per year in interest costs. Talk about highway robbery!

In other words, while I am extremely bearish on these stocks, I suggest using options to short them instead of "shorting and holding" these securities.

YELP (NYSE:YELP) -- We think Yelp is a great tool for finding businesses on the internet, but we also think this company risks being made completely obsolet by Facebook and Google (NASDAQ:GOOG). Yelp's 60% plus first day pop is evidence of the frothy nature of the Web 2.0 share market and we think this froth will end up costing the investment community billions and that these types of IPO's will end in tears and heartache for longs.

That said, there may be a great opportunity to short these shares using options once they become listed and liquid. We think the only people who will be talking about Yelp in future years could very well be the bagholders who bought the stock after the 63% first day rally in Yelp shares -- "Yelp" indeed! Even though the stock is down some 20% from last week's highs, this $1.2 billion stock looks to be worth much closer to 200M in our view based on profits of $-.28 per share.

Pandora (NYSE:P) -- While Pandora is certainly a huge success with an unbelievable growth rate, we think the company could eventually wind up being a victim of the Napster or Myspace music affect over the long run. Online music has always been a huge deal for investors, but look how "new media" music investors fared in a Myspace, Napster, etc.

While Pandora has no real profits to speak of, the brand value is clearly meaningful, but we think that the value is significantly below the current market cap of the company's current stock price. While we wouldn't touch Pandora even though the company is growing at a 60-70% clip, we do think at $5 a sare the risks are better reflected in the stock's valuation. The risks of another web bubble crash are too high and the valuation of Pandora seems incredibly stretched -- for now we think shorting P is a "good trade."

LinkedIn (LNKD) -- While I love using LinkedIn to get back in touch with past business contacts, friends from college, and former business partners, I just cannot understand why investors are willing to pay 800X earnings for the stock. LNKD is a great business model in the fastest growth market imaginable, but the shares are caught in a speculative late-nineties style bubble that will most likely eventually pop. We think selling call options is the best trade on LNKD because of the high short borrow interest rates given at the major brokerage firms. We think $30 is a fair price for LNKD shares.

Salesforce.com (NYSE:CRM) -- Shorting stocks for profit is all about timing, which is why we think selling CRM short is a good trade right now. The stock has risen back from the momentum grave and we think the stock has once again been set up for a breathtaking crash. Last summer, investors were paying $160 for the stock before it hit $94 a share. We think that even a $94 price tag for CRM shares represents a severe mania or bubble that could and should eventually pop.

Yes, Benioff has all of the right friends including Jim Cramer and President Obama, but even the most "official" looking stock promotions end up being dumped after the pump -- that's just how Wall Street works!CRM is trading at 70X 2014 earnings estimates, which makes the shares appear reasonable based on growth assumptions. That said, after further research we can see that these estimates are for non-GAAP earnings, not actual SEC quality earnings.

Source: 4 Overvalued Web 2.0 Stocks To Sell Short