Great points. During the dotcom bubble, I used to work with a VC firm that did investing for gas and electric utilities during the and learned a lot from their long history in the world of VC. One of the things they aruges is that, “Bubbles produce is Dumb Money.” These booms put a lot of cash in the hands of people that THINK they know enough to be a VC. The vast influx of Dumb Money is usually an important factor leading to the big busts.

These meetings and emails from Smart Money people, on the other hand, are really the equivalent of making kids in Drivers Ed watch “Mechanized Death,” Wheels of Tragedy,” “The Last Prom,” and other works from Highway Safety Films.

While scaring actual children may have gone out of pedagogical fashion, it appears that scaring the bejeezus out of the young, impressionable tech entrepreneur set has not. During the boom times mistakes in execution and management are easily masked, but during the busts…well, that’s when the fundamentals are so important.

http://blog.actonline.org/2008.....me-to.html

Good point. Part of the problem here, and it has shown in the other market’s as well (real estate, equities, commodities) is ‘irrational exuberance’, to use greenspan-speak. Hyperbole and outsized expectations (in both directions) reign. Like in many of the other markets, smart money will continue to find good investments and put capital to work. Unfortunately, this atmosphere does dampen the VC enthusiasm for the movie/music industry ‘hit’ model whereby you invest in 20, hoping 1 or 2 will knock it out of the park.

Back at the house, my aunt would carefully tear the napkins in two and pass out the halves.

This ritual was repeated in good times and bad. We didn’t want to hurt their feelings by saying anything about it.

As it turned out my aunt and uncle were quite well off.

It’s a mindset thing. And it might not be such a bad thing if more people behaved like my aunt and uncle. It’s just too bad that it takes a meltdown such as we are having to get people, individuals, VCs, governments to conserve.

Maybe, as happened with the Great Depression we will have a generation of people who conserve out of habit, even during the good times.