Sweat a Private Equity Bubble Later

A plethora of deals doesn't mean things have gotten puffy.
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This column was originally published on RealMoney on Nov. 17 at 8:36 a.m. EST. It's being republished as a bonus for TheStreet.com readers.

The bubble in private equity isn't really a bubble ... yet. We've had a massive number of deals, that's for certain, and I am convinced that a lot of the properties being bought are in secular decline or face tremendously difficult competition and a changing landscape. Radio's dropping like a stone. Print magazines are severely challenged. You can't get excited about a hospital chain when hospital pricing could come under attack from the Democrats -- certainly more than pharma, even though pharma gets all the print.

But a plethora of deals isn't a bubble. A plethora of deals at high interest rates is, and the rates at which these deals are occurring are so low that the deals most likely can work, as the

Hertz

(HTZ) - Get Report

deal shows.

Hertz is quite instructive because the two things that would 1. create a bubble and 2. have it burst are higher rates and a unforgiving exit strategy. The fact that Hertz was able to pay a dividend to the firm that bought it and come public, because for now the public will buy anything, says it is way too early to fret. We also had two other deals that busted in recent memory,

Sealy

(ZZ)

and

Burger King

(BKC)

, and no one seemed too perturbed by those.

As long as rates stay down and the market is dumb enough to take the paper -- bonds and stocks --

it is not prudent to worry about this

. Remember how I view the world: There is always a sense that it is prudent to worry. I fret about opportunity costs and bubbles. If you missed the run-up in

Toll

(TOL) - Get Report

and

Lennar

(LEN) - Get Report

and

Centex

(CTX)

because you were worried about the bubble, you didn't get the performance you should have.

Worry first about the performance by being in dogs of stocks with OK fundies and underlevered balance sheets. Then when rates go high and the market won't take a Hertz or a Sealy, worry about whether you are in the wrong stocks.

Until then, if you miss out, you're leaving too much money on the table.

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At the time of publication, Cramer had no positions in any of the stocks mentioned in this column.

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