Meet Mr. Capital -- and Learn to Avoid Him

Mr. Capital loves fat profits. Among Mr. Capital's problems is that he doesn't think logically or in terms of cycles. In fact, there's scant evidence that he even considers the long term. If there is easy profit to be secured, Mr. Capital will unleash his largesse in wholesale pursuit of it -- and damn the consequences.

In the last cycle, capital flowed in torrents to underwrite anything and everything related to the tech/telco Internet revolution. In a typical cycle, capital will flow to companies that have been profitable in the hope that additional profit will be generated. But the most recent cycle was different. Little, if any, profit was made at most of the Internet-related companies that were seeking capital. But there was plenty of fat, easy profit to be made -- by the brokers, investment banks and venture capitalists.

The Sieve of Competition

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