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I will not say this is deja vu and feels like 1999 all over again, because I was not into stocks at that time. Having said that, I do know what a bubble looks like, and it's what I see when I look at Salesforce.com's (NYSE:CRM) stock price and key statistics.

Salesforce.com, inc. provides on-demand customer relationship management [CRM] services to businesses and industries worldwide. Its Apex platform allows customers and partners to customize and integrate Salesforce CRM applications or build new applications. The company also offers AppExchange, an online marketplace for on-demand applications.

Agreed that its products are highly in demand and it has very little competition other than Oracle (NYSE:ORCL), but is that enough justification for the stock to trade at a Forward PE of 200, and more shockingly, a PEG of 13?

Over the past few months, the message boards for CRM have been constantly inundated with messages from buyers saying the company is due for a buyout by Oracle or Google (NASDAQ:GOOG). I think either of them is highly unlikely, because Oracle recently bought Siebel, and wont be looking to another acquisition so soon. As for Google, these rumors are completely unfounded, as Google has enough on its plate with the gPhone release due next year.

Here's something which should worry the longs in CRM: a look at insider trading over the past 6 months. If the management was even half as bullish as the investors, they would have shown some signs of confidence in the stock, by buying it at these levels. Instead, they have been dumping shares like there's no tomorrow. Now, I own Akamai (NASDAQ:AKAM) too, and the stock has taken a beating recently. Nevertheless, the management team bought back half a million shares at 40+ levels, which gives me the confidence that they have their own money on the stock and they know its got a positive future.

With CRM, I am sure the sign is that they are making hay while the sun shines and getting out at the top. Smart work, guys!

The market is very bullish now, and the trend seems to be CRM's friend, but when the first signs of weakness come out, it will get plundered like never before. There have been stocks which rode the momentum wave and seemed like they would go to the moon, like Hansen Natural (HANS), NutriSystem (NASDAQ:NTRI) and SanDisk (NASDAQ:SNDK) to name a few. But as the stock goes up, the expectations go higher too, and just one miss is all it takes for it to plummet back to where it belongs in the 30's.

The funds are driving this higher so they can lure you into it and sell in blocks while you watch gaping. Before you buy the hype in the CRM stock, make sure you do your DD. You don't want to have a sad story to tell your grandchildren about the CRM bubble, do you?

Disclosure: Author has a short position in CRM

Source: The Salesforce.com Bubble is Ready to Burst