The valuation bubble will eventually burst -- the question is when?

The gross over-valuations occuring today are not sustainable -- the companies that are being purchased for billions USD are not actually worth that much. $16 Billion for an instant messaging company, $2 Billion for a research company with no product. Now everyone feels they are worth Billions when in fact, not only 3 years ago these companies would have sold for maybe a few hundred million USD at best.

I see them as merely a correlation of the overvaluation of tech companies, not a continuation of the bubble cycle. Most of those huge acquisitions are done with stock, and if that stock is overvalued, so is the purchase price, even if the purchase price was correctly valued once you control for the price of the stock.

Take WhatsApp's acquisition which is the holy grail of overvaluation. If you think Facebook's stock is way overvalued, then Facebook may have correctly valued WhatsApp's price. If you remember it was initially announced as 19b before Facebook's stock devalued it to 16b in the face of the seemingly hilarious overpay.