On the heels of the Lyft IPO (LYFT) the news is out that Uber has filed for its IPO (UBER) as well, set for next month. For those of you not familiar with the terminology, an IPO is the Initial Public Offering in which a corporation, usually a C-corp, offers proportionate ownership of the company, called shares of common stock, to the general public.

The valuation on Lyft was about $23 billion on the first day of trading, and the shares sold for $72 each, spiked to a high of $88+, and have traded as low as $58 this morning.  In one of the trading groups I belong to someone asked if the rest of us thought it was a good buy at $60. If you’re buying puts or shorting the company, then yeah, it’s probably a good buy.  This company will probably go the way of others like Vonage and become a single-digit midget long before the next economic crisis.

The reason I am not fond of buying long on LYFT is because even though the company has top line revenue of over $2B per year, it quickly burns through that and an additional $900M, as significant headwinds admittedly lie ahead.

And Uber is no different, save for the fact that it is on a much larger scale.  The company is aiming for a $100+ billion valuation, which will probably put shares in the $100 price range. Yet even though the company has top line revenue of more than $11 billion, it is actually losing over $1.85 billion per year.  In the IPO filing Uber lists one of its risk factors as operating expenses “to increase significantly in the foreseeable future.”

The two taxi services are indicative of what’s going on with Wall Street these days. The Street has collectively become a drunken college freshman wearing a horribly blinding pair of beer goggles at his first frat party, and he can’t figure out if he’s staring at the hottest sorority chick or the frat house pet dog. But I guess that’s what you get when the Fed and the other major central banks of the world (ECB, BoE, BoJ, others) are still in the midst of radical monetary policy known as QE, ZIRP, and NIRP. We haven’t fully left those policies behind, and as I’ve said, we won’t be able to until the entire monetary world order is reformed.

Literally trillions of dollars of capital have been misallocated to all the wrong places as a result of these dangerous policies. Companies that are losing money for 10+ years, under normal circumstances, should have been out of business long ago and the capital reallocated to something better. Instead we have Wall Street looking through a kaleidoscope when looking at their financial statements and prospectuses.

In this article and accompanying video from CNBC you can see why this is going on.  At the IPO analysts are treating companies, with valuations in the billions, as if they are startups with a pipe dream rather than mature or nearly mature companies. If it sounds like the dot-bomb all over again, that because it is. Factors like capital allocation strategy, long term pricing power, and margins at maturity are all factors that I’d be looking at if I was Mr. Wonderful on Shark Tank, not someone tasked with fiduciary duties towards other people’s money. Instead of selling nearly defunct companies to unsuspecting retail investors, they should be encouraging people to either short the shares or at least buy put options on the shares.

Just wait and see, because when the next stock market crash happens, lawsuits over these IPOs and others will abound. For now, even a matador won’t be enough to stop this bull.  We’ll need the central banker’s butcher to finish it off.