It's too bad that venture capitalists haven't really changed. This behavior of perennially asking if it's a bubble or it's a real growth, if the market is bullish or bearish, is exactly what causes these market bubbles in the first place.

If they actually concentrated on funding companies that created value, and could turn that into profit, they'd have nothing to worry about.

But alas, for them a market is a market, and since it's their job they trade often, and faster, and catch more of the upswing and less of the downswing. They're completely oblivious to how many people these shenanigans put out of work, or how many would be inventions are stalled or will never see the light of day because of their schoolyard bully-pack behavior.

"This behavior of perennially asking if it's a bubble or it's a real growth, if the market is bullish or bearish, is exactly what causes these market bubbles in the first place."

I would have thought that this kind of questioning is exactly the type of prudence that protects us from bubbles. Surely its much worse when they assume there's real growth without questioning it?

DaniFong's point is that investors would do much better to evaluate each startup's profit potential independently, based on the quality of the market, product, and team, rather than worry about the broad macroeconomic environment. Invest in Google or PayPal, even at the top of a bubble, and you still do well. Invest in Excite or Lycos, even if it's not a bubble, and you still get crushed by the folks who invested in Google.

This applies to almost all investing. It's much more difficult to forecast macro movements than micro movements, so you're much better off making your decisions based on specific, tangible information on individual companies. Warren Buffett is famous for not trying to predict recessions or interest rates: he buys good companies at good prices and then holds them no matter how bad the general economy gets.