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Why Wall Street Wants Google to Fail
Sam writes "The most anticipated initial public offering in years threatens to derail a cherished gravy train, where underpriced shares are handed out to favored investors and grateful CEOs."
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As much as the media hype surrounding this offering has tried to present the image that the little guy can take part it simply is not true.
Most of the brokerages that will be offering this to the "public" still require substanital assets in the account, most with a 100,000 dollar min.
Instead, the underwriters, led by Morgan Stanley and Credit Suisse First Boston, will get 3%
All very nice, reputable people who really don't deserve to be treated like shit. I mean, they'd never to that to anybody themselves would they?
"A door is what a dog is perpetually on the wrong side of" - Ogden Nash
Second, why are they demanding share prices in the $100 range when Ebay/Yahoo (company's with more value) are priced significantly less than that?
As a day trader, I'm sure you know that the price of the individual share has no individual impact on the total value of the company at all.
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The original article explains exactly why market analysts are trash-talking Google and the upcoming IPO: They don't want the Dutch auction system to cut them out of the picture.
Your claim that Linus made millions using precisely this system is incorrect. Yes, Linus was allowed to buy stock at bargain basement prices, and he earned a ton when the various Linux companies IPO'ed. The difference is, Linus was closer to an employee than to a traditional investor.
Here's the way I understand the situation, and please correct me if I'm wrong: When a company says, "We're expecting to go public at $5 a share, but we'll let Guybrush Threepwood buy a thousand of them at $1 a share," then the company is agreeing to give up $4000 of the money they could have received from the IPO. But when a stock brokerage says, "We're expecting this IPO to be worth $5/share, but we'll tell them to offer the shares for $4 so our investors will love us," they're taking 20% of the money that should have been obtained from IPO and putting it directly into investors' pockets. That's underhanded, and maybe even technically illegal. But it's what brokers do to keep their investors coming back for more.
You want the truthiness? You can't handle the truthiness!
The "stock market" is heavily involved in deliberate government corruption.
The Bush administration has been appointing heads of government agencies who reduce the role of those agencies. After they destroy the effectiveness of the agencies, they go back to running their businesses, and the corruption gives them more profit.
Another way they corrupt government is to starve the agencies of operating funds.
For a discussion of starving the SEC (U.S. Securities and Exchange Commission, regulates the stock exchange), see this article: Keeping the SEC on a Starvation Diet. The corrupters don't want their stock manipulations discovered. They want more of this: Enron fraud, this: WorldCom fraud and this: Tyco fraud.
This is all part of extremely widespread corruption in the U.S. government. Even the 3 movies and 34 books linked in this article are not enough to tell the story: Unprecedented Corruption: A guide to conflict of interest in the U.S. government.
They are corrupting the IRS (U.S. Internal Revenue Service, collects taxes), too. The corrupters definitely do NOT want their tax returns to be audited, so they arrange that there is not enough money for audits: Bush Request for IRS Not Enough, Report Says
They are corrupting the patent office the same way. That's why there are so many crazy patents.
Sure it is. It is just an observational science rather than an experimental science, which means that it takes much longer to test ideas as you can't do controlled experiments. Some economic theories have become well founded over time (although they are certainly incomplete). The evidence for other ideas have far to few data points and far to many external factors to come to any real conclusion. Of course short of hard data, one wants to have at least a best guess answer, and noone seems to be able to say "I don't know", so more subjective judgement is often put on top of the science. Which is fine except for the few egotistic idiots that will try to treat their best guess as scientific fact, but what can you do?