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Maybe it's just me, but there's a little but growing feeling in the pit of my stomach that's making me increasingly "nervous." And the cause of that? Too much private equity money sloshing around. How many multi-billion-dollar buyouts have we seen in the past year or two? And especially recently, like the past 3-6 months?

Yeah I have noticed the same thing, it is amazing how much money is running around chasing deals.

One thought I had was that, at some point, a significant portion of the stock market is going to "go private", thus eliminating those investment choices from the general public. One purpose of the stock market is to provide companies capital with which to grow, but is it possible that there is enough capaital in private equity to serve the same purpose? Although, I don't think the PE money is really investing in the companies, it is probably more self-serving.

I also think that all of the money flowing around is a large source of the tailwind all of us equity types have been feeling. Stocks are being bid up, which is good news for stocks that you bought 1-2 years ago, and there are a lot of takeovers at decent premiums, which is also generally good news. This helps to insulate us from our mistakes -- if you make a lousy investment, you might get lucky and be bought out by a PE shop!

Clearly, this is a trend that can't continue forever... though it isn't clear exactly what's going to make it stop.

T
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