Mergers and acquisitions (M&As) are booming this year, and that may turn into a problem for the stock market, says Bert Dohmen, president of Dohmen Capital Research Institute.
Global M&A volume surged 23 percent to $804.5 billion in the first quarter from a year earlier, according to Dealogic. That's the best first quarter for the industry since 2008.
"M&A is getting a little crazy now,"
Dohmen tells CNBC. "Now does anyone remember what happened in 2008, wasn't there some kind of a global crisis? When you reach a peak in M&A, it's usually a peak in the stock market."
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The S&P 500 index plunged 38 percent in 2008.
As for now, "it [M&A] is too exuberant," Dohmen proclaims. "When companies have too much cash, they do not spend it wisely. Companies don't care about value anymore, all they care about making is deals."
Dohmen says small-cap stocks have advanced too far. The Russell 2000 index of small-cap stocks had a trailing price-earnings ratio of 73 as of Friday, according to Birinyi Associates.
"Small caps are as overvalued as we've seen at other monumental market tops," he states.
Others are concerned too.
"The corporate urge to merge has gone into global hyper-drive this year. Deal activity has surged as investors egg companies on and bid up the shares of acquirers well beyond mathematical explication, or prudence," writes
Rob Cox, editor of Reuters Breakingviews.
"As new metrics from interested parties are trotted out to justify the irrational, it is time to exercise caution."
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