Equities might not have even started to go up yet

Discussion in 'Wall St. News' started by ralph00, Dec 27, 2009.

  1. A 50% move off the March lows might just be chump change to what is ahead. For all the bears running around screaming "bubble" again, things have been pretty orderly. What happens when the great tech IPO machine cranks up? Short sellers or buyers of long dated treasuries might want to save what little money they have left and consider it. Nice piece from Paul Kedrosky about this ...


    Netscape, Yelp, and the Tech IPO Boom of 2010
    By Paul Kedrosky · Monday, December 21, 2009

    Walter Sobchak: Has the whole world gone crazy? Am I the only one around here who gives a shit about the rules? Mark it zero!
    - The Big Lebowski (1998)

    Yelp may have just turned down a half-billion dollar takeover offer from Google. Zynga does a crazy-big $180m funding. Not long ago, Twitter took another $100-million in financing, and now we learn it’s … profitable. In the immortal words of Walter Sobchak, has the whole world – or least every young and fast-growing technology company -- gone crazy?

    Maybe, but there could also be something important going on. It’s been so long since it last happened that most people will have forgotten, but there is often a reason why companies start doing strange things, like taking lots of money when they don’t need it, and like turning down appealing acquisitions. The reason? This thing called an “initial public offering” (IPO).

    Remember IPOs? Way back when your parents were messing about with technology stocks in the late 1990s, pretty much every company that could went public, mostly via Nasdaq IPOs. While many companies were bought rather than going public, we had a giddy and appealing period (for companies and their venture investors, as well as for some friends of Frank Quattrone) where you could make a ton of money selling your company’s stock in the public market. You didn’t need profits, nor did you need professional management, per se. You just had to be in technology, be willing to be listed, and voila, an eager investment banker would track you down and take you public.

    I’m wagering we’re about to enter a similar period in 2010. The last one was initiated by the Netscape IPO, one of the first commercial browser makers. Its IPO, less than two years after the company was founded, triggered an avalanche of similar offerings, and thus helped cause the dot-com episode that characterized the market’s madness of the late-1990s. All it would take to make it happen again is another Netscape moment, as it were.

    And what is a Netscape moment? It’s not just a moonshot IPO from a fast-growing company with all the right moves. It’s also a company that represents a cohort of IPO-able fast-growers, any one of which bankers can track down and take public once the initial companies are successfully public. “Get me another one of those!”, is what investors (and bank executives) will say to investment bankers after the first company in the cohort goes public. And bankers can be criticized for many things, but being slow to follow profitable orders is not one of them.

    It also helps if the companies represent a credible wave that investors can extrapolate to some giddy future. The biotech IPO boom was boosted twenty years ago by the belief that all those companies were going to cure cancer and make us live forever; the Internet IPO boom was driven by the belief that our lives would never be the same after the Net. This newest IPO boom (including some that should, in Walter Sobchak’s words, be marked zero) will likely be driven by a belief that the new ways we connect and communicate and play – social networks and mobile and games (and all of them together) – will change forever the ways money and time get spent worldwide.

    It may start with Twitter, or Facebook, or Zynga (or even Yelp), but an IPO wave is coming and all it requires is a Netscape moment. And when it happens, expect all these implausible recent financial events – from Yelp allegedly turning down a Google acquisition, to investors competing to put money into companies that don’t need more money – to make much more sense. There was another suitor for these companies, and that suitor was us. We just didn’t know it yet.
  2. S2007S


    Equities are up Hundreds and hundreds of percent over the last 8 months. Do you honestly think a few web 2.0 companies going public is going to drive the tech rally to new highs. Wow, if you think twitter and yelp are going to drive the economy to new heights I feel really sorry for you.
  3. spinn


    people think everything on the net is, and should be free

    how on earth do twitter and facebook make money, I do not think I have ever bought anything due to a web ad
  4. The point is that we could be in 1995 all over again. Folks then thought that the piper still had not been paid for the excesses of the 80s and that the multi-year rally in stocks was due for a major setback.

    Many thought the Netscape IPO was a sure sign that speculative excess had gotten out of hand and that a bell had been rung for a major top. It actually signalled the beginning of one of the greatest bull markets in history.

    I've just completed a book that has been discussed on this site - The Great Depression, A Diary, by B. Roth. Its was incredibly illuminating. Among many other things ...

    One, if you missed the boat on stocks in early 09, you'll not get another chance like that in your lifetime.

    Two, don't sweat number one too much, because there will still be plenty of breaks in the market where you will have the opportunity to get in.

    Three, unemployment will stay elevated for a long time. That doesn't mean business is bad or there isn't money to be made in stocks/commodities. It just means that the unfortunate unemployed happen to be in industries that are probably never coming back to what they once were. As new industries pop up. folks will migrate to them and unemployment will eventually recede.

    Fourth, people are ALWAYS worried about inflation - even in the depths of the greatest deflationary forces in history, folks were carping about inflation. Pay no attention.
  5. <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/yMpsttlXye8&hl=en_US&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/yMpsttlXye8&hl=en_US&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>
  6. LOL. Damn you beat me to it again.
  7. twitter is a joke\

    im shorting twitter at the open and covering at .50 whenever it gets there. I don't want to be greedy.

    I hardly ever use it, don't like it, and think its been well named for its users. twits
  8. S2007S


    Twitter, another one of those hyped up 2.0 companies that still does not have a long term revenue strategy.

    Twitter will be forgotten about just like every internet 2.0 company that comes and goes.
  9. #10     Dec 28, 2009