Bubble, bubble, toil and trouble?

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Alan Greenspan is perhaps our most distinguished living economist. But the gnomic former Fed Chair is probably best remembered for two words: irrational exuberance.

That was Greenspan's warning to overeager investors in 1996.

That pithy evaluation was enough to shake markets across the world. The effect was short-lived, however. Stock prices continued to soar. Tech stocks became wildly overheated.

And we know what happened next. A gigantic, fragile bubble was punctured. Dot.com paper millionaires became pauper millionaires overnight.

And the average investor suffered greatly.

What would Al say today?

Those troubled days are now a fading memory. The Nasdaq, after all, is on an historic run. Tech investors are spoiled by fantastic returns. It's hard not to feel good about the sector.

But it's also tough to avoid those nagging fears that crop up. The sort of fears any smart investor has.

Fears about investing in companies that have shown no ability to make money.

Fears about investing in companies that seem to have lots of ambition, but little else.

Fears about companies whose business plans are little more than a collection of buzzwords.

Fears about CEOs who plan to "disrupt" entire industries before learning how to make a dollar.

Fear of unchecked hubris.

You're right to be alarmed by any of the above. But there are a few good reasons to think that our present exuberance is (mostly) rational.

The anti-bubble argument

A recent article in Barron's offers an in-depth look at the possibility of a new bubble. The article is a sequel of sorts to the company's famous cover story from 15 years ago. That story raised the alarm about an impending Internet stock collapse.

A month later the Nasdaq was down 31-percent. Barron's call proved prescient. A multi-year slide was in full force.

With the Nasdaq now poised to exceed 5049, it's only natural to wonder about a correction.

In some ways, 5049 is just a number. But it's also a psychological symbol. It represents the high-water mark of Greenspan's era of irrational exuberance.

Are we headed for another fall?

Barron's says no -- or at least, not likely. The landscape is fundamentally different in some respects. Greater profits, for example, have created a better priced market.

The Nasdaq is now trading at about 22 times 2015's expected earnings. That's vastly better than in 2000. The figure in those pre-bubble burst times? A remarkable 122 times earnings. The Dow is also trading at a significantly better number via expected earnings.

So that's good news for profits. There are other positive indications, according to Barron's research.

Today's Internet companies are better capitalized. The leading companies in the space are more established. They are better positioned to ride out uncertainty or setbacks.

Are social media stocks vulnerable?

Social media has been trendy for years. But some observers feel the novelty may be wearing off. Twitter's had well-publicized user engagement problems. The high-profile, low-profit company's stock has subsequently tanked. Other platforms are also struggling to hold user interest, let alone expand "eye share."

There's a simple answer for much of this -- proliferation. Platforms are locked in fierce competition for users. Users grow tired of social networks and are drawn to the latest digital bauble. Companies such as MySpace remind us that even social media titans can be wiped out by some platform bootstrapped in a dorm room.

Privacy concerns are also always lurking in the background. A major data breach could create big problems for even the most popular platform.

Hard won wisdom

It's often said that "experience is the best teacher." That may account for the difference between today's tech investor and his 1999 counterpart.

Anyone active in the market back then could attest that unchecked euphoria was rampant. Investors were far less cynical with regard to the wild claims of Internet evangelists.

But once bitten, twice shy. The hard lessons of the first bubble haven't been entirely lost. Valuations aren't in the stratosphere -- unless you're Uber, and we'll call that one a $40 billion outlier.

This market doesn't have the same gold rush feel.

In this corner, we're betting that 2015 puts 5049 in the rearview mirror. Another great year is in store.

Invest accordingly.

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