Riding on the boom

Riding on the boom

Pessimism and spiritualism are the most fashionable thought outlooks today. I know this pretty well but the tinge of pessimism and philosophy is very hard to ignore every time I sit down to write!

News No.1

My dear reader,How on earth do you interpret this? A company called Google buys a company called you tube for 7500 crores!!(1.65B$)

You tube is a company that just has a portal with loads of web multimedia content in its database. It’s a company with a mere 67 employees. It’s a company that started with a venture funding of 3.5 million dollars( 161 crores). 7500 crores for 161 crores ? I just have one word for this, ‘Ridiculous’

This is just a show of opulence and an attempt to exploit the confidence and fame Google has with investors.

News No. 2

Tata plans to buy Corus Steel ,at a deal valued at more than 10B$

Now the same question repeated. How on earth do you interpret this? Tata steel is a 3.5B$ company that aims to buy a steel giant valued at more than 15B$.

Corus Steel is an angle-dutch company with 50000 employees and a turnover of Ten billion pounds. Now is the time to remind my readers about the topic. Why I saw this is riding on the boom? Where will Tata get the money for such a mighty acquisition? Tata plans to source money from investors and plans to float a bond for 2B$. And take a loan of 6B$ from Standard Chartered Bank. Again a show of opulence and a showcase of exploiting investor’s liquidity.

That poor fellow was scary of investing in stocks and preferred to open a FD with Standard Chartered Bank. Look where his money eventually goes :) .Philosophy not missed in this article!

Back on track,

I am just striking at some illogical valuations and some illogical acquisitions. Why on earth can’t someone be pessimistic if such deals happen around us. And you have another fashionable word discovered with justifies all these acquisitions. And the word is Consolidation.

Consolidation in one industry that relies heavily on a depleting Natural resource and Consolidation in another industry that relies on Open source data.

Where are we heading. Are the investors being fooled.. Are we riding on a boom that’s gonna become unsustainable because we rode rashly and lost our balance in the process?

Sorry I tried to be neutral but the pessimism seems to peep so very often. I will write more about this!

Beware my dear investors :( .Drive safe and drive with a smile!