So, is there a tech bubble or not?

May 21, 2012, 3:04 PM UTC

FORTUNE – Does anyone want to talk about a bubble now?

In the weeks leading up to Facebook’s (FB) much-trumpeted IPO, a debate simmered over whether Silicon Valley was entering another bubble. Some cited “bizarre activity” like spending big on companies with no revenue. Others dismissed fears of a new bubble as overblown. And of course, none of this was new. Last year, there were sober discussions of a Silicon Valley bubble. And you can find people wondering about one all the way back in 2006.

Facebook’s IPO was supposed to be an acid test to show whether investors were falling back into irrational exuberance. And it could have been more than a test, it could be the powder keg that ignited a mania for tech stocks, enticing investors to speculate in web stocks and bringing a flood of new startups into the queue looking for easy capital.

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Or that’s how it seemed before Facebook filed its IPO prospectus. Once it did, any close look at Facebook’s financials revealed an indisputably successful company, but one whose best years may already be behind it. Facebook’s most recent quarter was lackluster. And its last-minute, $1 billion purchase of Instagram wasn’t received as a way to strengthen its weakness in mobile, but as a sign of desperation.

So small investors weren’t lining up Friday when Facebook finally became – after years of availability for high-net-worth investors on secondary market exchanges – theirs for the buying. Underwriters priced Facebook fairly for the company, but they didn’t do themselves any favors. The irrational thinking that has influenced some recent deals in Silicon Valley wouldn’t infect the public markets. There would be no bubble – at least not for now.

But neither is there an absence of irrational investing in the tech world. And it’s interesting how many of the venture investors who are so quick to dismiss talk of a bubble are also reluctant, unless pressed, to decry the strange behavior that is, if not rampant, growing increasingly common.

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Start with the valuation of Facebook. One reason many investors were quick to sell their IPO-alloted shares must be its absurd valuation: 26 times its trailing 12 month revenue and 107 times its net income. If that doesn’t seem high to you, just ask the same investors (like Goldman Sachs and Digital Sky Technologies) who were clamoring to buy a piece of Facebook a few years back. Now they couldn’t wait to sell: 57% of Facebook’s IPO proceeds went to insiders. Only 43% went to the company.

Things are even less logical in the area of M&A, where it only takes one buyer to create a valuation worthy of a mania. Take the emerging trend ten-figure valuations to wildly popular apps and sites with little or no revenue. A new watermark was set last month when Instagram was bought by – that’s right – Facebook. So you have a company with an absurd valuation using its stock to buy companies at even crazier valuations. Facebook seems to be a daring innovator not just in social media but in creative fundamental analysis as well.

It didn’t take long for another buyer to get even crazier. Last week, as Facebook was readying for its offering, Japanese e-commerce company Rakuten led a $100 million stake in Pinterest in a deal valuing the hot social network at $1.5 billion.

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So no, there is no bubble on any scale that should concern everyday investors in the stock market. The Nasdaq is, barring any global calamities, not going to lose three-quarters of its value. But there is a growing trend of dealmaking that seems to leave logic locked outside the conference-room doors. And there are few financiers in Silicon Valley who seem to care, creating a complacent environment where the nonsensical is increasingly received as sensible.

As a journalist, I covered the Japanese stock bubble and the dot-com bubble. As a homeowner, I lived through the housing bubble. And I know that, when a kind of upside-down thinking becomes commonplace, that’s when you have to start worrying about a bubble. True bubbles are illogical investing scaled up to huge markets. Facebook’s lackluster IPO may have sucked the air out of a tech-stock bubble. But that doesn’t mean we’ve seen the end of irrational investing.