Lindzon: Welcome to Peak of Bubble 2.0

SAI contributor Howard Lindzon is a Phoenix-based venture capitalist and entrepreneur.  He has run a hedge fund for 11 years and is a partner in Biltmore Ventures.  Recently, he founded Wallstrip, which was purchased by CBS in June.  He blogs at howardlindzon.com:

The last Internet bubble peak was marked by the AOL/Time Warner merger and the CEO of Infospace (Naveen Jain) coming on CNBC and predicting his company would become the FIRST ‘TRILLION’ dollar company. That was not the best time to buy Internet stocks.  Here's what we have going on today:

1.  The Facebook/Microsoft chatter is now deafening.  Rumors are that Zuckerberg now has a $15 BILLION valuation on Facebook--even perma ‘glass is half full’ bullish me is concerned. As Wired reported via Alley Insider last year , Facebook/Zuckerberg had all but approved a Yahoo $1 billion deal WAY WAY WAY back in 2006 . 

2.  Amazon is back at all-time highs and has an "iTunes killer? Thankfully, I am long...

3.  RIMM goes up 5 percent a day, so do Apple and Baidu.  (Yes, I own the latter ones, too).

4. Demand Media, a company that buys abandoned domain names and floods them with advertising, just raised another $100 million.

5. Most important, the laggard internet juggernauts are up 15 percent the last few weeks - Ebay and Yahoo. These are the media and blog world whipping boys. 

As my friend Phil twittered today- Something is building. My thoughts are that the deals and rises are too easy and too loose.  Too much back patting and knuckle fives.

I, personally, will continue to diversify my holdings and add breakouts because the tone is great and the Fed is easing and the US government is spending like the good Christian drunk sailors they are. I am listening to the tape and although I feel that a huge crash is at hand, the tape says we are o.k.

Don’t get me wrong, we are inning 1-2 of the Internet, but you can still have a frothy environment and giant drawdowns within the major trend.  Maybe this time a gigantic tech/internet merger is just the beginning.  Stranger things have happened.