Buyout bubble: Getting there, but not yet


Defining periods of irrational exuberance can be difficult. However, one method to do so might simply be to look at the headlines. Here are this morning's:
The headlines are not too different from the 1980's LBO boom when virtually every headline was associated with a hostile buyout of some sort. Are we approaching the end of the buyout binge? Most likely not. These periods can last for years.

This buyout boom has been fueled by a number of factors. The most important factor has been undervalued stocks, which, in many cases, still remains. In the post tech-telecom bubble of the 1990s, investors went into a cocoon while U.S. company management continued to grow earnings and increase returns on investment.

What will end this buyout boom? My bet is a massive bull market which pushes valuations off the radar screen of private equity.

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