Salon on the Red Hat IPO Eligibility

Definitely the hot topic this week. Salon is running a quite passionate article written by a hacker who was rejected by E*Trade to participate in the RH IPO in august. his story reads like many of the emails I've got in the last couple days. Hacks don't have liquid net worth, so they're being rejected on that grounds? Its a good piece.

Comments

The road to hell is paved with good intentions.

[Lord Kano]

I'm sick of being told that I'm being protected from myself.

In my state you have to get a fscking license to buy grain alcohol because some idiots died from drinking too much booze (it's usually vodka that people overdo it with, yet grain gets the blame). So statewide only bars and people with political clout can get the license to buy grain alcohol, and we're tole that this is to protect our college age "kids" from themselves. If some asshole wants to put a 750ml bottle of Ever Clear into a beer bong and fry his brain, I say let him/her do it. There's just more

In many states, like my own, we are required to wear seatbelts in our cars. I was an avid seatbelt wearer before the law was passed anyway, so it didn't alter my behavior in any way. But I think that it's horseshit to make it mandatory for adults to "Buckle Up". If someone doesn't want to use a seatbelt and gets turned into hamburger, fine that was his/her choice. It just causes the nations average IQ to go up.

Motorcycle helmets are also mandatory in my state. I remember a local radio/TV personality (John Cigna sp?) was a rather outspoken opponent of mandatory helmet laws until he went headfirst into a brick wall (a la Gary Busey) and the helmet kept his brain on the proper side of his skull. I don't hear him talk much about how those laws are unfair now. BUT, if he wanted to ride without a helmet he should have been able to. If someone is reckless enough to do 60mph down the freeway without head protection, the world might better off without them.

Now back to the IPO, this is the lamest of the "protecting people from themselves" cases that I have seen in years. In the other examples that I listed above the protection is only against something bad happening to the individual, what I mean is that nothing "good" or "great" can come from buying grain alcohol (except maybe a good game of "get the girls drunk"). This however not only protects inexperienced investors from the potential pitfalls of an IPO, but it barrs people from reaping the potential benefits of the IPO. The IPO gives many people who were influential and hard-working in the open source community the opportunity to gain something for all of their hard work. Other people are making money off of Linux, who not the people who helped make it what it is today?

LK

To be fair to E*Trade

[Skyshadow]

I don't think we should be using a broad brush to paint E*Trade as the bad guy here. Not allowing people with very little investment experience and not a whole lot of liquid wealth to participate in a risky investment like an IPO doesn't seem too cruel to me.

I mean, everyone seems to have the impression that an IPO like RedHat just can't lose. That is wrong, wrong, wrong. Look at what happened to MP3.Com (ticker symbol MPPP); they've been in a tailspin since the day their stock started trading.

Very few of us /.'ers qualify as even remotely savvy investors, so I can see E*Trade taking steps to protect us. It's like telling your boss that he probably shouldn't have "pre$ident" as his password. He might not like having a more difficult to remember password, but you and I both know that its for his own good and for the security of the entire company.

So, give E*Trade a break. We geeks like to think we know everything, but this is an area where a lot of us are pretty much lost.

Besides, I think DSCM is a better investment right now. =)

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Why I am mad.

[mhatle]

The reason why I am upset with this is that I wanted to spend my money on these shares. Not to get rich and sell them in a day. I plan on holdering on to 50% or more of these shares for the long term (5+ years).

It is the same reason why I go to Best Buy and buy Red Hat Linux. I have a fast enough connection, I know what I'm doing.. but I still buy the package because I want to support Red Hat.

Now I suddenly have the opportunity to buy Red Hat "before" the general population. I might make some money, I might not. I personally don't care about that aspect of the investment. The investment that I am making is in Red Hat as a company, not the price of a few shares.

I am not upset at Red Hat. I'm am only partially upset with e-trade. The reason? Because their "know your investor" doesn't know their investor. The problem is that a LOT of the investors with this IPO are like me. They want a piece of the pie for the long term, they have money they are willing to lose. And, if you are not willing to lose your money you shouldn't invest in the stock market at all. Thats what banks are for.

--Mark

That's Why There's Rules

[Aaron M. Renn]

So this guy empties out his safe deposit box and bets all the money he's saved to pay off his student loans on Red Hat stock? That's the reason E*Trade has these rules. Investing is risky. Putting all your money into one stock believing it's a sure thing is sheer folly. Some IPO's have fallen flat. Even net stock Quokka (or something like that) went down, not up after it's IPO this week. The previous article on the Red Hat road show brought to light what appears to be a lack of enthusiasm about Red Hat's business model among sophisticated investors. People are treating stocks like tulips these days and brokerages are establishing rules to help keep people from getting burned. If all these hackers lost their meager savings in Red Hat, you can believe that they'd also be bitter about the whole thing. At least this way they still have their money.

Now I'll be the first to admit that most of my investment is tied up in shares of the company I work for. (A double no-no since I already work here, I should diversify into other investments in case the company has a downturn and I not only lose my stock investment, but my job as well). But I am taking a calculated gamble knowing that I have invested no more than I can afford to lose. If my stock ends up worth $0, it will hurt, but I won't be losing my whole life's savings and it won't jeopardize my ability to service my debt load (which is just my mortgage). You've got to take a hard look at this stuff and be willing to plop down your money knowing there is a chance you might lose a lot of it.