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What Happened The Last 2 Times IPOs Were Outperforming The Market By This Much?
When the momentum chasing public greatly rotates to the IPO-du-jour, it would appear that bad things happen in the market. The last two times Bloomberg's IPO index doubled the market's performance (in 2007 and again in 2011) it seems it marked a euphoric top. Of course, based on 1998/99's IPO performance there is plenty more room to run since this time is different. Nevertheless, the volume of coverage allotted to this IPO or that IPO (and not just Twitter) is awfully reminiscent of the go-go days of yore (and we all know how that ends) - though you'll never be the bag-holder again right?
But of course - this is what everyone believes will happen...
Charts: Bloomberg
The Bloomberg IPO Index (US) is a capitalization-weighted index which measures the performance of stocks during their first publicly traded year. It includes all companies with a market value of at least $50 million at the initial public offering.
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The only thing that is different about this bubble from the last several is that the fed is no longer waiting for the hangover to set in to pour another stiff one. This time we die from alcohol poisioning and we are apparently a 700lb Irish guy with 4 livers.
Fat Belly Gut Bucket : http://www.youtube.com/watch?v=sHnBppccI0o
IPOs are nothing....look at the no PE Amzn
There are moar plus 400 PE stocks than I've ever seen
well said
Show me the way to go home.
I'm tired and I want to go to bed.
I had a few trillion drinks about an hour ago,
And they went straight to my head.
isn't that truth.
"When the momentum chasing public..."
What are you talking about? There is no "public" chasing anything.
Momentum chasing hedge funds, pension funds, mutual funds, algos...
Precisely. That was the whole purpose of the 401(k) blitz: get the "public" out of the market. Funnel the "nest eggs" into the captured managers' hands.
People like to gamble - widows/orphans included. Stocks are a vessel in which to gamble without it feeling like gambling (because it's not gambling...it's "investing" for your future)
Than again men LOVE to gamble. Just look at getting married. Getting married is no different than selling a call option against your wealth; 54% chance of losing 50% or more of your wealth in just a few years.
Odds are grim but a sucker is born every second.
well said....stay thirsty...
UH OH, CHONGO !
AH HA HA HA HA HA HA HA HA, You love the Banana Splits too?
The goal is to pop not drop. That's why FB in spite of hitting 50 is a flop. Simply put the issuer wants to not have to buy his own issuance. Wall Street et al had to "eat it" on the FB. I do agree the inverse is also true...when you do get that pop (Groupon, Tesla) you have "a success" but in need of context. I would not measure the well being of anything by how the IPO market is doing. Too much hit or miss. M&A is good...Apple, Verizon doing huge debt deals. But I would caution against "doom-ology." There is absolutely frothiness here...is this 1995? Or 1998? Hard to tell. No doubt it is not 1999 and not 1993. "In the end the bursting of a bubble is always destructive." Give the Fed credit...they did threaten after the Apple debt offering. In my opinion there was a material adverse reaction as well. That's a lot better than "how is one to know" and it did cost the Chairman his job.
Deja vu all over again.
Putin's seizing pensions. Kirchner's not feeling well. Things are speeding up.
Serious question: If you were stuck, would you take it on the chin for the extra 10% tax to completely get out of the system, or pony up & roll over to a Roth?
Before the O'bummer's election Andy Schectman of Miles Franklin told me he took the 10% hit & he's looking more prescient by the day.
Investing in IPOs for excessive returns. Short SP.