I read a brief article in the WSJ this past week about how there's a cycle of bubbles that investors themselves create. The basic premise is that investors pour financial capital into an industry on the premise that asset prices will rise. As capital is poured in, the asset prices of course rise so it's a self-fulfilling prophecy. Then, when the bubble bursts in that industry, investors make up their losses by pouring their money into a different sector, creating another bubble, more artificially high asset prices, another bust, and the need for yet another bubble. So where's the next bubble? Alternative-energy!
There's a lot of VC money going into "green tech" projects these days - $2.2 billion in 2007! I read an article in Forbes about the next generation of VC's leading the charge. The bios of these folks is truly ridiculous. Here's an excerpt: This trio could get hired anywhere. Aileen Lee was president of her section at Harvard Business School. Trae Vassallo learned to program when she was 7 and at 28 cofounded a wireless e-mail company that Motorola bought for $550 million. Samir Kaul led the effort to sequence the genome of the arabidopsis plant and then built three life sciences companies from scratch. He's only 33. These three are among venture capital's new guard. That's kind of humbling.
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