Skip to main content
Publish date:

Sweat a Private Equity Bubble Later

A plethora of deals doesn't mean things have gotten puffy.

This column was originally published on RealMoney on Nov. 17 at 8:36 a.m. EST. It's being republished as a bonus for 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


(HTZ) - Get Hertz Global Holdings, Inc. 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,




Burger King


, 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

TheStreet Recommends


(TOL) - Get Toll Brothers, Inc. Report



(LEN) - Get Lennar Corporation Class A Report




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.

Random musings:

Are you clicking on the "Ratings" link in our tickers yet? What are you waiting for? This is a prime chance to get help with your homework. Get another view on a stock.

For free. Ratings has collected tons of information on and given a grade to virtually every ticker you'll see on our sites, and we've made it all available to you. So get clicking! (Look for the "Rating" hyperlink that follows a company's name in the text of our articles, columns and blog posts, or just go right to Ratings area of our site.)

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

Jim Cramer is a director and co-founder of He contributes daily market commentary for's sites and serves as an adviser to the company's CEO. Outside contributing columnists for and, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

Action Alerts PLUS. Listen to Cramer's RealMoney Radio show on your computer; just click

here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click

here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click

here to get his second book, "You Got Screwed!" and click

here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by

clicking here. has a revenue-sharing relationship with Traders' Library under which it receives a portion of the revenue from Traders' Library purchases by customers directed there from