Magic Trumps Math at Web Start-Ups (NYT)

>LinkedIn generated $3.4 million in profit last year. Using adjusted earnings, which accounts for items like stock-based compensation, it reported nearly $48 million.

I think this quote nails the difference between this bubble, and that of 2000: A decade ago, companies were going public with absolutely no profits (or even revenue). This time, some companies are actually making a bit of money, but it's over estimated and somehow being used to justify multi-billion dollar valuations.

Obviously GAAP rules are not the end all and be all of reality but this article seriously made me step back and marvel at the audacity of some of the companies. Loose accounting seems to present before every bubble stretching back to the East India Company.

We are certainly headed for a correction of some kind.

If you're interested more on how companies previously invented metrics to make themselves look more valuable than they are and how this led to speculative insanity, and a general introduction to investing and economics, try this book:

http://www.amazon.com/Random-Walk-Down-Wall-Street/dp/039332...