Wednesday, May 16, 2012

Irrational Exuberance vs Rational Expectations: Facebook or GovCon

So in the next days few Facebook goes public and investors are poised to exhibit the same irrational exuberance that was rampant in the 1990s. Needless to say, I will be on the sidelines of this IPO.

I am not a Facebook fan for many reasons, but I understand some of the excitement around the IPO, except the price.

Once again, many are looking for the immediate 'home run", the proverbial long ball that will save their financial butts, give them bragging rights, whatever -  without having done sufficient due diligence.

Often we see the same irrational exuberance when a company enters the government contracting (GovCon) arena. Thinking that registering with CCR or getting a GSA Schedule will automatically generate income is nothing less than self-delusion. A small company walking into an OSDBU office expecting a contract is a similar but frequent occurrence.

Rational expectations are predicated on market knoweldge, historical persepctive, patience and applying lessons learned to your current situation. Money can occur either in the stock market or the government contracting arena, but only when you really are a student of the respective market and apply lessons learned from the front lines.

Operating on rumor, innuendo, myths and outright falsehoods propogated by cold callers selling the idea of a GSA Schedule being your personal panacea will lead to massive disappointment.

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