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Do you have any of those black tulip bulbs that went for thousands? Ira
nwinski wrote:
> Tim and Lynn Lee wrote:
>
> > Of interest to all traders should be the article in Jan issue of
> > Vanity Fair on IPOs.
> > The writer compares it to the tulip bulb mania of the 1630s. I know
> > we have all heard it before but, companies that have bad business
> > plans and have never made money are coming out as ipos and are being
> > priced by the market
> > as though they are worth billions.
> >
> > People joining these companies are given stock deals that can make
> > them worth hundreds of millions on paper.
> >
> > Examples, theglobe.com and Netzero
> >
> > But as traders, we cannot short these stocks until they show weakness.
> > My friend thinks the best strategy is to wait until they fall 50% in
> > value then short them. When will that be?
> >
> > IPOs
> >
> > Ipo traders should take note. The trader featured in the article has
> > traded in and out of 260 ipos this year netting about 5 million
> > dollars. And he is buying the stocks after they start trading, not
> > getting them at the offering price.
> >
> > Amazing facts about the ipo market.
> >
> > This year twice as many ipos doubled in value the first day as in the
> > previous 25 years combined.
> > The average ipo is up 57% on its first day.
> >
> > So, it doesn't matter what the fundamentals are momentum is what is
> > being traded these days.
> >
> > Tim Lee
>
> What I want to know is, when a stock increases 200% or more on the
> intial day, and the underwriting firm keeps a block of stock for
> themselves, why isn 't there an investigation on the underwriter
> undervaluing the stock? Seems like a legal (?) way to steal if you ask
> me. Why are these internet stocks being priced at IPO so low and then
> rocketing up in price? It is the job of the investment
> banker/underwriters to fairly value that stock. Even given the high risk
> of these type of stocks,
> I can't see where an underwriter would need more than a 50% discount to
> cover their tush. Where the stocks have gone up 200% or more the first
> day, the companies should sue their investment banker for doing a bad job
> of valuation and therefore depriving that company of millions if not
> billions of dollars. Those companies that do not sue, should be sued by
> the shareholders for negligence. Am I off base on this or is the world so
> intoxicated on internet fever that they can't see what is right in front
> of them?
>
> Dumbfoundedly,
>
> Norman
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