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The Second Dot Com Bubble Has Now Burst

Tyler Durden's picture




 

It is hard to believe that the first dot com bubble, so vivid to most semi-veteran traders, occurred over a decade ago. What is even harder to believe is that courtesy of the record liquidity bubble created by the Central Planning mafia, 2011 has already seen not only the second dot com bubble, but as the table below demonstrates, its bursting. Of all the dot com 2.0 IPO to hit the market in the past 3 months, the average return is now down 20%, but that has not prevented an underwriting syndicate comprised of the TBTFs to make billions in underwriting fees. Luckily, the fervor that previously had gripped some of the more volatile precious metals, and since spilled over into new public issues, has popped. Incremental cash will now be nearly impossible to get. To all companies that managed to take advantage of momo traders who have a memory of 15 minutes or less, congratulations. To everyone else: get in line for QE3. Wink, wink Groupon.

h/t John Lohman

 

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Thu, 06/16/2011 - 14:14 | 1375232 mynhair
mynhair's picture

Which one is the Weiner in?

Thu, 06/16/2011 - 14:16 | 1375238 TheTmfreak
TheTmfreak's picture

Probably Adul... i mean friendfinder.

Thu, 06/16/2011 - 14:18 | 1375254 andybev01
andybev01's picture

He's not; he pulled out.

Thu, 06/16/2011 - 14:23 | 1375263 TheTmfreak
TheTmfreak's picture

Somehow I doubt he finished his 30 day free trial...

Thu, 06/16/2011 - 14:15 | 1375237 monopoly
monopoly's picture

That was quick. Usually lasts a year or more. :)

Something is up here, this market is very strange acting right now. Am safe in port and staying that way.

Thu, 06/16/2011 - 14:20 | 1375245 TruthInSunshine
TruthInSunshine's picture

http://www.thestreet.com/story/891820/the-winners-of-the-new-world.html

The Winners of the New World By Jim Cramer 02/29/00 - 09:42 AM EST

You want winners? You want me to put my Cramer Berkowitz hedge fund hat on and just discuss what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? I am going to give them to you. Right here. Right now. OK. Here goes. Write them down -- no handouts here!:

 

724 Solutions (SVNX), Ariba (ARBA_), Digital Island (ISLD), Exodus (EXDS), InfoSpace.com (INSP_), Inktomi (INKT), Mercury Interactive (MERQ), Sonera (SNRA), VeriSign (VRSN_) and Veritas Software (VRTS_).

 

We are buying some of every one of these this morning as I give this speech. We buy them every day, particularly if they are down, which, no surprise given what they do, is very rare. And we will keep doing so until this period is over -- and it is very far from ending. Heck, people are just learning these stories on Wall Street, and the more they come to learn, the more they love and own! Most of these companies don't even have earnings per share, so we won't have to be constrained by that methodology for quarters to come.

Thu, 06/16/2011 - 14:20 | 1375265 monopoly
monopoly's picture

Truth, perfect, just perfect, and to think he is still walking the streets, a free man.

Thu, 06/16/2011 - 14:40 | 1375360 Blano
Blano's picture

And now he says he doesn't like Pandora because they don't make money.  Well better late than never I guess.

Thu, 06/16/2011 - 16:06 | 1375673 groucho_marxist
groucho_marxist's picture

roll 212

Fri, 06/17/2011 - 02:44 | 1376826 natty light
natty light's picture

<span style="font-weight:bold;">Bear Stearns is fine!!!</span>

http://www.youtube.com/watch?v=o3FVBKic5Ek

Thu, 06/16/2011 - 14:20 | 1375246 Village Smithy
Village Smithy's picture

I am finding the almost perfectly sinusoidal pattern of yesterday and today's ES interesting.

Thu, 06/16/2011 - 14:18 | 1375258 qussl3
qussl3's picture

Galloping Gertie?

Thu, 06/16/2011 - 14:17 | 1375249 monopoly
monopoly's picture

I know AAPL is not the market but for me it is always a tell.

Thu, 06/16/2011 - 14:58 | 1375413 Going Loco
Going Loco's picture

And AAPL's 20DMA just broke its 150DMA - a Weinstein moment if ever I saw one.

Thu, 06/16/2011 - 14:21 | 1375255 The Axe
The Axe's picture

You should put AIG in there to...its in imagination world   also....  We should probaly nuke it..

Thu, 06/16/2011 - 14:18 | 1375256 The Axe
The Axe's picture

You should put AIG in there to...its in imagination world   also....  We should probaly nuke it..

Thu, 06/16/2011 - 14:18 | 1375257 svendthrift
svendthrift's picture

That was quick. Max Keiser said it would last a few more years. The cycles are speeding up.

Thu, 06/16/2011 - 16:55 | 1375803 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

The bubbles are getting smaller and smaller - there's no air left to blow them with!

A few years! lol! The last time I heard Max Keiser was pumping Bitcoin as "the currency of the revolution!"

Thu, 06/16/2011 - 14:36 | 1375266 hedgeless_horseman
hedgeless_horseman's picture

Q:  Does this mean that Project Playlist is fucked?

A:  Yes, Bob, we were dead after MySpace and FaceBook killed us.

Q:  Why?  We're just as good as Pandora.

A:  Exactly, Bob.

Fri, 06/17/2011 - 02:59 | 1376829 natty light
natty light's picture

Bwahahaha

Thu, 06/16/2011 - 14:24 | 1375268 fonestar
fonestar's picture

Short them all.  Let Sergey sort them out!

Thu, 06/16/2011 - 14:25 | 1375274 mynhair
mynhair's picture

Totally O/T:

Hoist one for the Weiner!

May the door not hit him in the ass on the way out.

(As soon as he shuts up, that is.)

Thu, 06/16/2011 - 14:23 | 1375277 monopoly
monopoly's picture

All the miners getting crushed and gold is down..... $2.00. Beyond words. 1/2 my kingdom to get the turn in miners correct.

Thu, 06/16/2011 - 14:33 | 1375293 mynhair
mynhair's picture

I feel your pain greatly.  Try more HL at 6.88, if it gets there.

Edit:  ok, 6.50

Thu, 06/16/2011 - 14:36 | 1375322 qussl3
qussl3's picture

My fingers are getting damn itchy, but unless BB pulls something out of his ass on the 22 or CHina goes nuts we are probably going lower.

 

Thu, 06/16/2011 - 14:25 | 1375285 Johnny Lawrence
Johnny Lawrence's picture

AAPL through the 200-day for the first time in 2 years.

Thu, 06/16/2011 - 14:33 | 1375306 hedgeless_horseman
hedgeless_horseman's picture

Saw that too.  I'm no technician, but looking like lots of air to 200.

Thu, 06/16/2011 - 14:25 | 1375286 Miss Expectations
Miss Expectations's picture

Does this mean that Jonathan Golub just slammed his forecasting speedster into reverse?


Thu, 06/16/2011 - 14:29 | 1375290 slow_roast
slow_roast's picture

I fucking love this website.  It's like you diatribe for me, to me!

Thu, 06/16/2011 - 14:28 | 1375299 WilliamShatner
WilliamShatner's picture

Dot Con , bitchez!

Thu, 06/16/2011 - 14:35 | 1375316 mynhair
mynhair's picture

+1240

Fri, 06/17/2011 - 03:01 | 1376836 natty light
natty light's picture

he's dead jim

Thu, 06/16/2011 - 14:33 | 1375327 buzzsaw99
buzzsaw99's picture

There are others upcoming as well. Facebook projected $100B. That's all the evidence I need.

Thu, 06/16/2011 - 14:49 | 1375392 WilliamShatner
WilliamShatner's picture

Read somewhere that Facebook lost 6 million users in America last month.

They had their chance to go IPO and let it pass by.

LinkedIn at least saw the window of opportunity closing and went for it.  Start buying puts or just short that baby, it's going to fall fast and hard.

Groupon?  Idiots should have taken the Google buyout offer.  Them turning it down reminds me of Yahoo! turning down Microsoft's buyout offer.  D'oh!

 

Thu, 06/16/2011 - 15:20 | 1375506 Liquid Courage
Liquid Courage's picture

OT: Hey, Bill! Was that you I saw climbing a lamp-post in Vancouver last night?

I know you were at the game 'cause they had a close-up of your manic mug on CBC. Quite the get-up.

Thu, 06/16/2011 - 15:22 | 1375523 buzzsaw99
buzzsaw99's picture

Google is worse than calpers, they'll buy anything.

Thu, 06/16/2011 - 15:31 | 1375545 WilliamShatner
WilliamShatner's picture

LOL

Except Google can't just go back to the state and request more tax payer dollars after taking a huge loss on their investments.

Thu, 06/16/2011 - 15:42 | 1375591 buzzsaw99
buzzsaw99's picture

after calpers takes a bath on their GOOG holdings they damn sure will. lolololol

Fri, 06/17/2011 - 03:04 | 1376839 natty light
Thu, 06/16/2011 - 14:33 | 1375329 monopoly
monopoly's picture

Volume picking up. I have been doing this for a week or two....and I am scared.

Thu, 06/16/2011 - 14:38 | 1375331 AgShaman
AgShaman's picture

*(Harrumph)*

I remember the 1st dot com bubble burst....it wasn't that damn bad!

I actually enjoyed a decade's worth of eating Top Ramen, peanut butter and crackers, and spam sandwiches....while living in a tent in the mountains.

It builds character....and promotes the hoarding of precious metals.

Look at me now....I'm hoping to sign papers and close on Ted Kaczynski's old cabin anyday now.

Keep gamblin' "Bits-sez"....and you'll get yours as well (Party like it's 1999!)

"Smoke 'em if you got 'em"  - Bill Clinton

Thu, 06/16/2011 - 14:48 | 1375375 mynhair
mynhair's picture

Pound thru 1259, you pig!

Thu, 06/16/2011 - 14:52 | 1375407 qussl3
qussl3's picture

Resilient mutha isnt it.

If we do crack tmr, next tues will be VERY interesting.

Thu, 06/16/2011 - 14:54 | 1375401 XenoFrog
XenoFrog's picture

"Most of these companies don't even have earnings per share, so we won't have to be constrained by that methodology for quarters to come."

Your kid is going to fail the state test, so if we just don't test him, he won't be a failure!

 

haha

Thu, 06/16/2011 - 14:55 | 1375403 falak pema
falak pema's picture

I love this post. Out of nowhere the US capital class suddenly recognises its been shitting around about its holy of holies once again : the high tech sector, once again in levitation.

Surprising that nobody saw this coming in USA. It was reported last week after around two weeks prior earlier, in french press. We are all selective in our view of things and subject to our own value systems.  

Love to hear comments on this from the experts of hi-tech. What have the Rating companies been doing in their sectorial analyses?

Thu, 06/16/2011 - 15:12 | 1375468 NotApplicable
NotApplicable's picture

Why fluffling, as always.

Thu, 06/16/2011 - 15:23 | 1375498 falak pema
falak pema's picture

Well those rating companies do so much more than "fluffing" the greeks wouldn't you say..I love this selective vision of global capitalism...Lets hear your fluff on that.

"Stuffing" is more appropriate. DEEP and painful. But fluffing will have to do I guess in the US. 

Thu, 06/16/2011 - 14:52 | 1375409 GFORCE
GFORCE's picture

When Carlyle, Glencore and Facebook talk IPO, it's gotta be the top.

Thu, 06/16/2011 - 14:53 | 1375411 10kby2k
10kby2k's picture

Shit. I wanted Pandora to wilt under the radar, because Groupon has NO chance for long term success. Groupon = WebVan

Thu, 06/16/2011 - 15:04 | 1375431 oogs66
oogs66's picture

On bright side after getting zero allocation on linked and pandora - which I would have flipped on the open - I will get pitched hard on group on since
The banksters friends don't want in :D

Fri, 06/17/2011 - 03:10 | 1376841 natty light
natty light's picture

Pud needs to start a new fuckedcompany 2.0.

Thu, 06/16/2011 - 14:58 | 1375425 DonnieD
DonnieD's picture

GM feels left out.

Thu, 06/16/2011 - 15:06 | 1375442 mynhair
mynhair's picture

Bears puke out again.  Buy AAPL.

Thu, 06/16/2011 - 15:09 | 1375472 Truthiness
Truthiness's picture

Pandora in freefall - currently down 17%

$14.40 last ticker

ouch.

Thu, 06/16/2011 - 15:45 | 1375604 hedgeless_horseman
hedgeless_horseman's picture

13.10, but who is counting?

Thu, 06/16/2011 - 15:51 | 1375625 Truthiness
Truthiness's picture

The Pandora employees! "Honey, looks like it will have to be a 1br instead of a 3br!"

Thu, 06/16/2011 - 15:36 | 1375585 Construct
Construct's picture

Taking negativity to the moon I see ZH. Whatever did anyone on this forum ever create? 0.

Thu, 06/16/2011 - 15:44 | 1375594 hedgeless_horseman
hedgeless_horseman's picture

Three companies, hundreds of jobs, and a little bit of wealth.  What about you, douchebag?

Thu, 06/16/2011 - 15:52 | 1375628 Construct
Construct's picture
Oh right, stupid! retarded! me. I am sure ALOT of CEOs spend most of their time writing comments on ZH.
Fri, 06/17/2011 - 05:08 | 1376890 i-dog
i-dog's picture

You didn't answer the question!

BTW, some [semi-] retired CEOs do spend time writing intelligent comments here (and they can spell, too!) ... which is more than I can say for the trolls. Troll.

Thu, 06/16/2011 - 17:33 | 1375906 TruthInSunshine
TruthInSunshine's picture
by Construct
on Thu, 06/16/2011 - 15:36
#1375585


Taking negativity to the moon I see ZH. Whatever did anyone on this forum ever create? 0.

 

There's always yahoo finance boards (are they still active), or Jim Cramer's forums, or IBD, or tulips&itulipstoday, or MomoToday.com, right?

There's a seat for every ass, Mr. Hopium.

Thu, 06/16/2011 - 17:49 | 1375940 Construct
Construct's picture

The IPOs of today are very different then during the 'IT-Bubble'. During the IT-Bubble the IPOs had no business plans no revenue & certainly no profits. Today you have business plans, revenue & profit in place. Might not be as high as McDonald's but so what? This is the purpose of the stock market to introduce capital to new corporations with good business models.

Thu, 06/16/2011 - 19:49 | 1376181 XPolemic
XPolemic's picture

Wow, that might be just good enough to go into ZH Friday afternoon humour.

Linked In at open:

EBITIA: 13mio

Market Cap: 4bio (at $45 a share)

P/E: 307

Effective yield (return on equity): 0.3%

Inflation Adjusted return on capital: -2.3%

I can see why investors should be flocking to that one.

But what about capital growth??!!! I hear you cry:

YoY increase in EBITIA 1.46, compounded over 10 years = 44 times growth == 572mio

Assuming market cap stays constant (ha ha) 4bio/572mio = P/E of 7 = return on equity of 14%. It's just that you have to endure 10 years of losses to get there.

But hey, if it sounds like such a great deal, jump right on in!

 

Thu, 06/16/2011 - 17:30 | 1375907 XenoFrog
XenoFrog's picture

When you run across some positive news, let us know. I'd really like to hear some good news after several years of this shit.

Thu, 06/16/2011 - 15:47 | 1375620 falak pema
falak pema's picture

Three hundred douche bags, Millions of layoffs and a never ending hole of debt...I work for the FED!

Thu, 06/16/2011 - 15:49 | 1375631 Downtoolong
Downtoolong's picture

..that has not prevented an underwriting syndicate comprised of the TBTFs to make billions in underwriting fees.

This is the big moral crime underlying it all.  First, they reduce the yield of bonds and other previously safe investments to near zero. Then, when every investor gets so desperate for yield they will buy any crap to try and get it, the TBTF banks dish it out to them in unlimited quantities for a hefty fee. So much easier than creating real economic value.

BTW, 20 minutes has passed so it’s time to update the chart again. P just printed $13.30.   

Thu, 06/16/2011 - 16:03 | 1375666 nantucket
nantucket's picture

the worst part of the whole effin deal is that the banks had enough capital to absorb ALL LOSSES in the original fiasco of 2008/2009.  It would have wiped out all equity and haircut bondholders by 40-60%.  But our wise overlords chose to keep bondholders whole and make you and i pay for it.  SWEET!

Thu, 06/16/2011 - 16:21 | 1375711 Cynical Centaur
Cynical Centaur's picture

So Pandora Media is just your average loser IPO (Average Return -19.5%, P -19.0%), at least of this bunch...

Middle men, as it seems, always make their cut.

 

Thu, 06/16/2011 - 17:14 | 1375824 swissinv
swissinv's picture

Common - you can talk about a burst bubble when you see Linked In below $10 - NFW, LNKD trading at $68 (and this by a running out QE2)

Thu, 06/16/2011 - 17:26 | 1375892 TruthInSunshine
TruthInSunshine's picture

Patience, grasshopper (do not take offense; I am not trying to sound condescending, but merely lifting a fabled line from Kung-Fu).

The new internet stocks are no better than the old.

It's all the same, recycled scam, with different terms & buzzwords, and it will end exactly the same way - with or without the alleged bottomless bowl of QE.

Some claim I'm pessimistic or cynical, but I swear that I'm only healthily skeptical and realistic.

And on that whole QEx to infinity thing, it's one of the most crowded trades, or anticipated trades, that I've yet to see in quite some time, IOW everyone is piling on the same side of the boat, IOW herd mentality runs strong on that meme, etc.

Usually, those majority votes in the world of equities and all things rigged and Ponzified end badly. But who knows....

Thu, 06/16/2011 - 17:46 | 1375939 swissinv
swissinv's picture

I woudn't short any of these nor any other high beta stocks before OT2 is coming (and I'm quite confident that Greece is not a show stopper)... People are getting distracted and forget that the biggest Ponzi and risks are with the USD -> All assets are dawmed to go up (when priced in USD)

Thu, 06/16/2011 - 17:33 | 1375911 Sokhmate
Sokhmate's picture

Aaaaaaaaand it's (will be) gone, it's (will be) gone it's all gone

Thu, 06/16/2011 - 17:34 | 1375913 tradewithdave
tradewithdave's picture

That's how Dave rolls...

Feb. 18 call

www.tradewithdave.com/?p=5372

Thu, 06/16/2011 - 19:34 | 1376165 prophet
prophet's picture

Why does YOKU get so little coverage?

Thu, 06/16/2011 - 21:34 | 1376379 prole
prole's picture

If anyone has a historic chart of GM from start to finish I would love to see the link... (and I can't use GIS because it's a virus trap.)

Thu, 06/16/2011 - 21:41 | 1376394 Buck Johnson
Buck Johnson's picture

I bet Pandora's CEO won't come back on CNBC anytime soon.

Thu, 06/16/2011 - 22:31 | 1376485 Baptiste Say
Baptiste Say's picture

Facebook management are morons. If they listed 2-6 months earlier they could have probably raised an easy $20 billion and had a $100 billion market cap, then they could have all quit, converted to commodities, retired to the Bahamas and laughed at the morons who bought when shtf.

 

In this world the only ones who are more stupid are Groupon management who rejected a $7 billion offer from google for their stupid webpage.

Do NOT follow this link or you will be banned from the site!