Slashdot Mirror
Red Hat IPO Fiasco Worries E*Trade Stock Holders
An anonymous reader wrote in to say that earlier this morning, discussions about the Red Hat IPO fiasco started appearing on the E*Trade stock board at Yahoo. E*Trade stock holders are worried about class action suits, complaints to the SEC, and even cracking of E*Trade's servers. I've heard many things (nothing official yet) that all the
major outstanding issues will be resolved on monday. I still don't
know if I'm eligible, although I did get the letter.
I'm getting really frustrated with the net. I
/.,
spent more time online this weekend then I have
in a long while. The net as a forum is just
out of control. People posting nonsense for their
own gain. Flame wars that go on for pages with
no content added.
I realized the post that pointed back to
pointed to something I said. And the poster
totally butchered the meaning of what was
written. This is pretty upsetting and
frustrating. I feel like I can't post anything
anymore without the fear of being flamed, or
quoted out context. I can't find useful
information in discussions on anything without
wading through pages and pages of flame wars.
But I digress. I guess I'll be given a -1 for
being off topic here.
I hate to sound like on of those, "walk through
10 feet of snow to get to school" stories, but
I miss the days when being on the net meant you
had an account at a university or research lab, and
reading news meant figuring out rn, or if you
were lucky, trn.
I'm logging off. It's a beautiful day in
Tahoe.
./~christopher
I've been on vacation all week, what is going on with Red Hat & E-Trade? Can someone please post a link to something explaining what I missed? Thanks!
I received "the letter" from Redhat too. But I could not take them up on their offer to participate in their IPO. I wanted to, but because I am a Registered Representative with a member firm of the National Association of Security Dealers (NASD), I am not allowed to participate in what is called a "hot offering" (getting first crack at a desirable issue of stock).
Please note, I am at the bottom of the NASD food-chain (i.e. I'm a Customer Service Rep for a Mutual Fund transfer agency and I have to use NT) and the "hot offering" restriction applies as much if not more to those who outrank me. So much for the "Big Boys" argument one person was making.
As for the heartfelt arguments in the Salon article, please consider the brokerage's position. They are required to determine suitability before they can take one penny from you. Suitability has to based on your answers to questions about your financial situation and investing experience. If you are lacking in either area, the brokerage can't take your money.
What happens when the brokerage takes your money for an investment which is not suitable? Simple, they become law-suitable.
If what I've said seems ludicrous in a market which seems to have only an upward direction, I suggest you print this message, seal it in an envelope marked "Do Not Open Until the Dow Drops More Than 500 Points," then read it again.
Assuming E*Trade sticks to its guns and keeps
most Letter recipients from participating in the
IPO...
Couldn't a broker STILL make it possible for
all Letter holders to join in, by:
1. Starting up something like a mutual fund (this one would only buy RH stock, of course). 2. Sending everyone a letter allowing them to buy into the fund if they sign a waiver stating that they know the risks and fully accept them, and 3. Taking checks from everyone who signs the waiver and buying RH stock with the money?
You'd have a trained pro handling everyone's money, which ought to make E*Trade and the SEC happy. Everyone who deserves to participate in the IPO, could do so. The broker could even charge a nominal percentage for his or her services. Maximum happiness for minimal effort, at least in my imagination.
For what it's worth (how do you verify statements made by an anonymous coward?), I'm a trademark lawyer who doesn't even own any stock, much less know any brokers... I just hate to see people who deserve a chance to get in on this, be kept out of it. I hope SOME solution is found to reward people who've made it possible for me to do so many cool things with RH 6.0. Cheers...
Why not? What harm is there in owning stock in a company simply because you believe in it and wish to support the company and play some (small) part in its sucess? Surely this is "better" than simply treating the stock market as a "high class" form of gambling without having any "real" interest in the companies in which you are investing.
I think you are all confused.
E*Trade doesn't give a shit whether you lose your money on a bad investment. They do give a shit whether you are planning to "snap the IPO"; i.e., sell it 24-48 hours after buying.
The questionnaire lets them profile for IPO cowboys, plain and simple. Let's see, you have no investment experience, you have no other equity, you are interested in "aggressive growth"... What do YOU think E*Trade expects you to do when the stock doubles on day one?
You want your profile to say: Hello, E*Trade, I'm no cowboy, I'm a "buy and hold" kind of guy. Worked for me, anyway (yes, I got "the letter").
>Except for the poor saps who placed market >orders to buy when MPPP started trading and were >filled at $100...
poor saps? You mean morons... anyone who places a MARKET ORDER on an IPO deserves to be fucked over.
I almost always agree with the Linux masses, but this time I agree with the SEC. They set up a policy that is designed to prevent people from doing something *really* stupid. It is a good policy, and I imagine that it has save a good amount of people from losing thousands of dollars. Most linux users (That I know at least) know very little about the stock market, especially IPOs. These people should gain a little more experience before investing in one of the most risky transactions. I think that E*trade was wrong to go back and let any redhat letter person invest in the IPO, without trading experience. Redhat should have made this clear in their letter, but then again, no one gets a piece of misleading mail - do they?
Yup. I read through much of it, and it's alarmingly like the sort of crazed-cattle mentality with which the stock market is usually characatured (sp). "Hey, I heard that Linux was going to bring a class-action lawsuit against etrade" (paraphrased) was my personal favorite.
No wonder wall street does such bizarre things with tech stocks, if this is the level of computer literacy to be found there.
Hmmm can't spell today...
Suddest is supposed to say "suggest". :^)
--- Journals are boring; Go to my web page instead
> 've heard many things (nothing official yet) that all the major outstanding issues will be resolved on monday.
Does this mean that issue about the eligibility of non-US residents will be resolved too? That'd be great!
At least as far as the issue of US residency is concerned, it seems that E*Trade is more concerned that there might be foreign rules that might restrict them from doing business with foreign residents. If you are a non-US resident, try getting a certificate from your own regulatory body (most are quite cooperative) attesting that no such rule exists in your country, and fax it to E*Trade's compliance department (650 331 6806)
It seems that someone on slashdot.org is planning sabatoge already
;)
Um, I think he was just saying that it could be done, not that he would.
Hacker paranoia strikes again.
BTW if I hit submit fast enough, FIRST POST!
I think you can figure out how to email me
I think you can figure out how to email me
PGP Key:
Does anyone have an idea when the general public will be afforded the opportunity to invest in RedHat stock? How long does the IPO part take?
I wouldn't judge wall street by the posts appearing on Internet message boards. The real traders on Wall Street are busy processing _legitimate_ information and trading all day long. They don't have time to generate such crap and post on the Internet all day long.
Chalk up the message boards to 14 year olds with too much free time and a highly inflated ego. Either that, or chalk it up to the average literacy level in this country being 8th grade. I certainly hope the former, not the latter, is true!
The really good deals (moneymakers known in advance) are currently being reserved for the old hands who want to CONTROL the market.
Gee, you really have some AMAZING insight (*sarcasm*).
Well I say SUE 'EM NOW! SUE 'EM HARD! SUE 'EM TWICE!
Yeah, great idea. That way all the lawyers can get their snouts in the trough as well, and gum up the works for another decade. You live in the USA, land of guns and litigation, by any chance?
Any more earth stattering insights and bright ideas, Sherlock?
If you want to support RHS, buy their products and recommend them to others rather than fiddle-ass around with stocks. Good luck to all RH investors, anyway.
Eagles may soar, but weasels don't get sucked into jet engines.
Replies to your comments...
:)
Uhh...
1) Of course.
2) Actually... (See 3)
3) Recieving the letter does not GUARANTEE stock, but RH set aside 800,000 shares for the board of directors, family, and "friends of RH." The "friends of RH" were designated by recieving "the letter." We're guaranteed stock as long as we (as a whole) do not request 800,000 shares.
4) No problems here...
"The Letter" guarantees us a very good shot at shares. (99% or so, which is good enough for me.)
I currently have no clever signature witicism to add here.
Isn't that profile backwards? Surely the person who has a lot of investment experience, holds many different stocks is the one who has proven that (s)he is just doing it for the money rather than having a genuine interest in the running of the companies offering the stocks? Is the person who has no other stock but wants to buy into an IPO because they believe in the company not more likely to hold onto the stock for longer than someone who treats stocks simply as a financial investment?
As the AC poster of the 'first!' and 'second!' posts, I would like to also express my anger at this thoughtless censorship. The current post that appears first says at the bottom: "and if I hit submit fast enough, first!"
You can claim that "first post!", etc is nothing but meaningless trolling off-topic flame bait and delete them, but all you're really doing is deciding what Slashdot readers should and shouldn't see -- and that's censorship. [Remember, supporting freedom of speech means fighting for people who says things you don't like].
Unfortunately, the way things turned out now, they might actually have increased the probability of just such a backlash. Just imagine, what happened if a few months from now, suddenly various assorted programs on your favorite RedHat CD started to prompt you with the following questionnaire before accepting to run:
Computer Experience
Computer Usage Objectives
Affiliations
For the following questions, "immediate family" includes parents, mother- or father-in-law, husband or wife, brother or sister, brother- or sister-in-law, son- or daughter-in-law, children, and any other person who is supported, directly or indirectly, to a material extent by the proposed software user. Please take all other user(s) of your computer into consideration when responding.
- Are you or any members of your immediate family employed by Red Hat or Microsoft? Yes/No
- Are you or any members of your immediate family a senior officer or executive of Andersen Consulting, Arthur Andersen, or any other software consultancy company? Yes/No
- Are you or any members of your immediate family involved, directly or indirectly, in the the purchasing and selling of software for Andersen Consulting, Arthur Andersen, or any other software consultancy company? Yes/No
- Are you or any members of your immediate family a developer in respect to this Open Source Program? Yes/No
- Are you or any members of your immediate family employed by the landshark of your Linux distribution maker, or by your computer store? Yes/No
By submitting this Computer User Profile, I am certifying that the above information is true to the best of my knowledge, and that hamsters are gonna fly out of my ass. I also acknowledge that I will receive the man pages and howto's from this software packageIt would be fairly easy to do this: in the Makefile of your program, test whether it the compilation is being run from within rpm -bb. Note down the date of the compilation, and two months after that (to avoid early detection before the CD ships), start firing up the silly questionnaire. But only if the system has some distinctive Red Hat sign, such as the
Penguins are very strange animals. Never ever dare to wear a red hat when visiting a penguin colony. Penguins like red hats so much that once you show them one, you have to give it to them. And if a penguin can't get the hat, it'll try at least to do everything it can to rip it to shreds.
Say no to software patents.
By probabilities alone, and without outright ripoffs, the stock market is a sure way for the rich to get richer, and the poor get poorer. Assume for the moment that the rules are not stack against you, and you have 50% chance to lose and a 50% chance to win in every transaction. After enough transactions, only the person with more money has the chance to recover from temporary loses. The person with less money (once bankrupt) will not be able to continue; for him, the loses are not temporary: once you are out of money, your are our of the game. And therefore, even if the stock market is totally unbiased, the rich is sure to win and the poor is sure to loose.
We have just seen how the stock market makes the rich wealthier, but being wealthier does not in itself give you greater fortunes. There is a long distance between the ability to possess goods and the ability to make good (beneficial) use of your goods. What good is for a carpenter to have plenty of wood, but not able to find work? Or for someone to have plenty of money but his mind is no better than than of a child ?
Suppose further, I made money on the RHAT stock. Will this be a benefit? I did receive the letter, but I will not use it. Even if this made money, it will teach me that money do not have to be earned, just steal them. This is not a good guide for my life since I do not plan to spend it collecting coins.
( Now explain all that to my wife...)
Disclaimer: short selling is a very risky operation. Do it only if you can afford to lose. Don't do it if the $1000 in your E*Trade account are all your life savings.
Say no to software patents.
The profile is strictly to determine the likelyhood of the potential investor being unable to withstand a failed investment. If you have never invested before, and have just cleared your bank account of the money you need to pay the rent because your friends are saying it's a sure thing, they want to be sure to tell you, "Ain't nothing sure, bud. The stock could go down from the initial price. It's happened before. It'll happen again. And we don't want you crying to us and crying to the government about how you got ripped off, and now you are destitute."
The profile has nothing to do with RedHat's view of the Linux community. The folks at RedHat are also hoping the stock price goes up, so they can cash in on their large investment of time and energy, so they want as many people as possible looking to buy the stock, especially after the IPO, because that's where the real money comes in.
Pin the spig.
Er..doesn't class action lawsuits require a, um, class of people to agree to sue?
Nope. All they require is that a class exists and that some members of that class (no matter how few), are willing to bring the action.
Although originally a good idea, most class action lawsuits are merely licences for lawyers to print money. Quite often with a judge on the take as well....
Ok, first my opinion is the mistake was miscomminucation between RedHat and Etrade, nothing more. Etrade has a set of rules and guidelines for customer's investing in IPO offerings (whether I agree with them or not). RedHat should've checked out what those guidelines were before blindly sending out emails to individuals and telling them to sign up to accounts.
Now what sorta stinks is Etrade's policy, first they do not tell you when the IPO is going to be offered. You have to make a general guess, and sit in front of your computer and refresh the IPO current offering's page. You have about two hours to fill out a ten question profile to see if you qualify. These restrictions have loosened a bit, so more might get in. Etrade "suggests" you hold the stock for at least 30 days, but will not restrict you from selling earlier than 30 days. Be warned if you sell within 30 days, it might effect your chances of future offerings. Companies want long term investors, and they are not going to allow Etrade to offer IPO if Etrade customer's are wannabe day traders.
Also remember Etrade wants you to invest at least 100 shares or $1000 minimum (I am not TOTALLY SURE ON THIS NUMBER but close). If you don't have that kind of money my recommendation is if you have some friends you REALLY TRUST! go in together under one account. Preferbly in the name of someone with some long term trading background, as they will more likely be accepted for IPO offerings. Just say "Hey I got $500, you got $500 let's pool are money together and buy". I would agree beforehand on when to sell, (ie when it hit's $62 a share or drops by $5 whatever comes first).
Whatever you do, don't let the system get you down, and prevent you from making the investments you want. It's to easy to say "Screw this, this is a pain in the ass". Just remember, the system was designed by the Rich, for the Rich. Joe's (and Jane's) like us just have to work harder within the system, and we can do it.
Awesome!
News flash: *Everybody* treats stocks "simply as a financial investment" and does it "just for the money". *Nobody* buys stock because they "believe in" the company. The exceptions to this lose all their money in the marketplace pretty quickly, so you can safely ignore them.
The only issue is whether the investment is long-term or short-term. So no, I do not think I have that profile backwards. An inexperienced investor with small capital reserves is much more likely to cash in (if the stock rockets) or panic and sell (if the stock plummets). Either of these make the stock volatile, which is not what the underwriters want to see.
...ends where my right to invest in my retirement begins.
Just a clever reminder that many IPOs aren't licenses to print money, although most of them are anticipated to be just that.
This is about much more than interest...
Why do the record clubs give you 11 free records ?
Why does Frys advertise a great price on a stereo when the have only one scratched one in stock ?
This is NO DIFFERENT. When I read the letter, after an initial burst of enthusiasm, I realized that it was probably just a bunch of cheap PR, a way to snag a bunch of new clients. If it was completely on the level, then you could submit your "profile" without even having an account. Hell, you fill out almost all of the same info just to get your account.
The mistake here, which jittery newsgroup people have picked up on, is that the just cheesed off one of the most intelligent, vocal and extremely well connected segments of the population. A brokerage relies on people's trust to remain in business, a massive outcry of zillions (perhaps even if misdirected) of could kill E*Trade.
As far as trust goes, I must admit, it wasn't very impressive to recieve an e-mail confirming reciept of my money followed the next day by another informing me that my money had not been recieved and "was I still interested?"
FWIW, if they are so concerned about me losing money in unwise trades, why did they grant me a margin account ?
MGM
much like some of the posts on slashdot, yes?
Buy they'll buy and sell within a few hours in swift profit taking! The BARBARIANS! How dare they want to MAKE QUICK MONEY in the market?! Only the BIG FIRMS can do that, not you PEON SCUM!
wow...it took you THIS LONG to FIGURE OUT the very simple CONCEPT of CAPITALISM? ever hear of the SAYING "you have to HAVE MONEY to MAKE MONEY?" what about "the RICH get RICHER while the POOR get POORER?" what - you thought these were JUST SAYINGS? there IS some TRUTH behind THEM, as i SEE you've figured out ON YOUR OWN.
if you DON'T like the CONCEPT of capitalism, don't take part in a CAPITALIST SYSTEM. and NO, you CANNOT make some NEW RULES - the game has BEEN PLAYED this way for TOO LONG now - there are TOO MANY people with PLENTY OF MONEY who do not want to play by NEW RULES. they have MANIPULATED them well enough to not want to RELINQUISH them for the sake of EVERYONE ELSE.
btw - how do you TYPE with so many CAPITALISED WORDS interspersed? not only is it ANNOYING to read, but also TO TYPE.
"First [second, third, fourth.. I've seen those too] post!!!" is rather annoying. It's not something many people (anyone?) wants to read. I keep my threshold at -1 anyway, so I still see it, but it doesn't contribute to the conversation to say that you were the first to post. They aren't censored, they're marked. You can still read them by setting your threshold to -1.
-- Ace
THIS SHOULD BE REMEMBERED BY ALL!!!!!!!
A CORPORATION IS A LIVING ENTITY, LIVING IN PERPETUITY, BUT WITHOUT A HEART!!!!!!gj2@
Your lawsuit is not against E*Trade but against
Red Hat for those that didn't sign a release with
Red Hat to allow them to use the item you worked
on. It should be a class action suit.
Red Hat screwed all of you!!!!!!! They could have issued stock options to you. They could have given
you treasury stock. Red Hat just SCREWED all of you. All of you should contact an Attorney who specializes in Corporate Law. You will win more than what you would have made off of the stock.
Remember, A Corporation is a living entity, living
in perpetuity, BUT without a HEART!!!!!gj2@
The problem is that if the average person is allowed to get in on IPOs, they won't go up anymore. If all the stock is bought by slashdotters with no stock trading experience who are looking to sell out immediately (within the same day), there's no reason for the stock to go up in the first place. Everybody wants to sell, so the stock goes down.
The only reason IPOs go up is that people who are planning on holding on to the stock buy most of the IPO shares, not a bunch of slashdotters.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
good timing on mentioning that
On the other hand, it IS a "set-aside". It appears that E*Trade is attempting to have as few "Red Hat hackers" as possible buy shares so that their own "fat cat" investors (i.e., those who make more than $x of trades with E*Trade per month) can get in on the early IPO stuff.
:-(.
Red Hat is probably furiously trying to figure out how to get E*Trade's pie off their face at the moment...
Oh. I got the letter. But currently all I'm invested in is credit card debt from my last two job moves, so no IPO for me even if I were willing to lie on the questionaire
-E
Send mail here if you want to reach me.
You don't need brains to invest in ETrade. Only a credit card.
Since when do you need a credit card to invest with E*TRADE? From what I saw, all you need is a signature and a check for at least $1000.
For more information, click here.
I agree. I used to follow the Yahoo Finance boards all the time but there is no meat. Only rah-rah-rah'ers or shorters trying to start a public scare. Any FREE stock discussion board is suspect in my opinion.
The problem isn't that they're restrictive -- the problem is that their restrictions are ridiculous. Investing $1500 of my savings in an IPO -- even a particularly risky one -- is not the same as day trading with borrowed money.
--
--
--
By probabilities alone, ... And therefore, even if the stock market is totally unbiased, the rich is sure to win and the poor is sure to loose.
This is utter bollocks. Even a small investor who invests for the long term, spreads risk, and does not speculate is guaranteed a better return over decades than leaving money in the bank or whatever.
There is a long distance between the ability to possess goods and the ability to make good (beneficial) use of your goods.
No shit, Sherlock. However you have to have resources first to make good use of them. you of course may not be able to use them effectively, but speak for yourself, please.
Even if this made money, it will teach me that money do not have to be earned, just steal them. This is not a good guide for my life since I do not plan to spend it collecting coins.
Why is it theft? If I were you, I wouldn't collect coins either, but I'd try to look at things from a more rational viewpoint. money's not evil, only its misuse. If you deserved the letter, you deserve to share in RHS's success.
( Now explain all that to my wife...)
Good luck, you're going to need it.
Eagles may soar, but weasels don't get sucked into jet engines.
Generally, it's been my experience* that lawyers identify good possible suits, and then go hunting for people who might fall into the class. If a lawyer thinks there is a good chance of this suit settling, or (*gasp*) winning, all of you folks who were invited to take part in the IPO may find yourselves receiving letters from some law firm, letting you know that you are in the class and that they have already filed suit on your behalf.
(* having been involved in the defense against a few class action suits)
You can be a genius of a trader, but because you don't want to spend literally valuable time learning a "some assembly required" operating system, and use NT instead, does that therefore make you a moron?
Oh, cut it out. There have been some legitimate questions raised regarding inconsistent and bizarre handling of this IPO by E*Trade. E*Trade should be forced to come up with an answer regarding a number of perfectly valid and reasonable questions regarding their suspicious handling of this IPO.
I had compiled a whole bunch of inconsistent statements that were coming out of E*Trade over the course of about 72 hours. It has to be a pretty wild stretch of imagination for all of them to be true. See http://www.concentric.net/~mrsam/etroubl e/ (shameless plug).
--
I realize that an exception might have been made in the case of the Red Hat IPO, given the reaction to the lockout. In response to the people who have been decrying this apparent attempt to keep from the People the ability to Cash In, it must be pointed out that, in light of the recent Atlanta shootings, any relaxation of the requirements for online traders is unlikely to happen in the near future. Maybe this is a Good Thing.
A lot of filthy topical humor (think "John-John didn't shower first 'cause he figured he'd just wash up on the beach") is spread by traders, which is how everybody in the country hears the same jokes at roughly the same time.
Not to mention all those lovely WATS lines -- eh, that was another lifetime, never mind.
Its not the SEC stuff that bothers me. What bothers me, is the fact that E-Trade lied. I spoke with no less than three seperate operators on E-Trade's Red Hat IPO Hotline the very day I recieved my letter, and asked all three the same set of questions just to be sure I knew what I was getting into. One of those questions was, "You realize, the vast majority of us are college students, about 18-24 years old, with very little money, and very little investment experience. Is this going to be a factor when it comes to our eligibility?"
That turned out to be a lie.
I've had an account with E-Trade since January -- I had damn near $7,000 in my account at the time I filled out the Eligibility Profile.. Hell, i've even traded on IPO stocks in the past!..My entire damn portfolio is always been made up of tech-sector/internet stocks. But yet, I failed E*Trade's eligibility profile. Now, it seems, the damn company has given people the green light for its customers to *lie* on the eligibility profile in order to get in. Fsck that, lying makes you just as bad as the assholes who require you to do so in the first place. I reserve the use of my middle finger for situations like these. I'd be real curious to hear from someone who did get past the eligibility profile without lying. I'd bet anyone five bucks to a donut that getting in without lying is impossible.
Silly me. I should have started trading high-tech stocks when I was four years old, and made my first million by age six.
Bowie
PROPAGANDA
Bowie J. Poag
Bowie J. Poag
etrade passwords are a maximum of 6 chars,
and only alphanumeric +$.
Why 6?
Claiming FIRST POST is about as irritating as it gets. It's sorta like saying "i rule and you all suck" to a bunch of people, who will then proceed to ignore you. And it's a random bunch of people who moderate down. Also, the other guy had much more to say than just "FIRST POST!!!!!". not much there that makes it relevant enough to consider a "Free Speech" argument.
Give me a break. Most of those who were turned down weren't planning to buy a large block, they maybe wanted 100 shares. So maybe a lot of those the letter went to aren't experienced. Do you think any of them aren't aware that they could lose the $1000-$2000 their investment would cost them? That's the way it works for any stock purchase. None of those who've posted stories about trouble with E-Trade's questionair appeared to be in such financial straights that losing that amount would be financially ruinous. I fully support informing potential investors of the risks, but once informed they ought to be able to make up their own minds about what to invest in. I can think of several types of investments that would pose far more risk than buying a 100 shares in an IPO. The options you mention in the title of this thread being one of them.
I agree with the sentiment - restricting IPO's to "established" people should be made unconstitutional. This is becoming more of a hairy issue with these days of internet hype, where perceived "internet" stocks trade at multiples of thousands (and even negative thousands) and where suitably hyped IPOs often realise a 400% or more rise in the first hours of trading.
;-)
The implications in the comments are, however, totally misleading.
The practice of buying IPO shares and selling them the same day for quick profit is known as "flipping" and that is the one thing the underwriter is seeking desparately to avoid. If this was widespread, the IPO would nosedive, wiping untold millions off the market cap of the newly floated company, possibly causing its demise. Not really a success for the underwriter.
If you monitor the IPO live, you'll probably see that it takes a few hours before the first shares are sold and bought on NASDAQ, and the volumes will be tiny - these shares will only be traded in order to establish the price, which will fluctuate wildly throughout the day.
In theory, the purpose of the IPO eligibility selection is to filter out people likely to flip the stock. Anyone who has a reputation ofr it is highly unlikely to be approved.
Large institutional investors want to hold the stock for a decent period (6 months +) and see it flourish for capital growth.
Eek! Capatalism on Slashdot..........
Does nobody ever buy stock in a company so that they can turn up at the stockholder's meetings, raise items at the AGM and vote?
> I can think of several types of investments that would pose far more risk than buying a 100 shares in an IPO.
Yeah, one example of a more risky investment would be to short EGRP. You'd lose if (despite consumer dissatisfaction) it went up again. However, interestingly enough, you don't need to fill out any fricking questionnaire to do this. It's a strange world we live in...
Red Hat should have given the whole offer a little bit more thought before sending out the emails.
Giving away stock options rather than IPO shares would have solved the whole problem.
I imagine that they may have thought giving the opportunity to buy shares is best because at least they do make some cash from the sale, regardless.
If the distribution was in the form of an options package, there is no problem if the company goes bankrupt. It also prevents the un-evening of the playing field on the basis of financial discrimination, since everyone gets an equal portion.
As a side benifit, the added value of the options since they are puchased at a negligible price, would mean that fewer total shares need be given away... leaving more shares for the open market IPO - thereby more money for Red Hat.
A potential negative of giving out options packages is that there is a fairly large paperwork obligation - perhaps this is why Red Hat did not do it.
A W S ----------- QABO : BALA
My knowledge of economics does not permit me to judge whether the stock market is zero-sum game. Though to the casual observer it does appear to be a zero-sum.
I will aim my comment on the stock market average of 6-8% . over the last 100 years. Obviously, the assumption here is that past statistics are a good predictors of future statistics. A huge assumption, in my opinion -- especially when many of the independent variables governing the market are temporal in nature. Nevertheless, to keep the conversation flowing, I will not object on the underlying assumption. I will note though that the quoted 6-8% average represents the following idea: if I buy all traded stocks, and hold them for 100 years, only then will I be able to achieve similar rates. This could not be of practical guidance, I must confess.
Now I look to the right, at the bank rates of 2-4%. ( Same assumptions, as noted earlier, but, I will not be repetitive, and will not reiterate.) Bank returns are almost identical with those of the stock market, with much less risk and (presumably) greater predictability. I do find them more attractive.
oh come on. you sound like a peeved script kiddie. just what the hell do you think you are going to do?
Well, E*Trade released some time ago that they lost some 125 million dollars, god knows how this past quarter and they do not expect this event to change anytime soon. Personally, I would not invest with E*Trade if my life depended on it (which it probably would if I did) I could just imagine my 100 shares of Red Hat, which I had put the money away for - went poof because some dumbsh*t diddled around with the servers or otherwise the company went T.U.
...they thought that the participants in a class action lawsuit would be RIGHT? Hmmm? The usually covert old boys network has been brought into the LIGHT by this Red Hat IPO bondoogle. And the PUBLIC really took notice of this royal REAMING of the individual investor. Why shouldn't ANYONE with money to play in the market be ALLOWED to? For their own protection? For the good of the market? For the good of the economy? Yeah right. More like for the good of the BIG BOYS. The really good deals (moneymakers known in advance) are currently being reserved for the old hands who want to CONTROL the market. It's virtually a GIVEN that IPOs go up when they begin trading. This is as sure of a sure thing that there can ever be in the market. A week or more later, who knows? But in those FIRST FEW HOURS there's BIG MONEY to be made. And a whole EXCLUSIONARY system is set up to keep the little guy out. But lots of people were WATCHING this one, and them old boys are SCARED BIG TIME now that some long overdo sweeping changes will result. Buy they'll buy and sell within a few hours in swift profit taking! The BARBARIANS! How dare they want to MAKE QUICK MONEY in the market?! Only the BIG FIRMS can do that, not you PEON SCUM! Well I say SUE 'EM NOW! SUE 'EM HARD! SUE 'EM TWICE! It's time for some new fscking rules.
come up this stuff. Some one commented the
1 248&threshold=-1&commentsort=0& mode=thread&pid=127#213
following.
>Actually, somebody on Slashdot has already been >toying with the idea of sabotage: >http://slashdot.org/comments.pl?sid=99/07/30/145
>Interestingly, the victim here would be Red Hat, >not E*Trade. But Red Hat might turn around and >sue E*Trade over the poor handling of their IPO, >which triggered this whole mess.
This is utter nonsense. I think people are trying
to stir up a bunch of negative crap about EGRP
in order to short the stock. I hope this person
does and ends up loosing their shirt.
I am not clear on the details of this "fiasco." Could someone please enlighten? ;-)
It's people like you who give Linux such a bad rep.
Er..doesn't class action lawsuits require a, um, class of people to agree to sue? It seems to me that a bunch of geeks like myself to suing over what amounts to be nothing is pretty laughable.
The problem is that very money motivated individuals have problems understanding non-money motivated individuals.
The only thing that worries me is that a opportunistic lawyer could sucker a some into a lawsuit 'freeride', where they would bear the cost and you would get money (or consideration) if they won, and lose nothing if they lost. That seems to be where most supposed 'class-action' lawsuits come from these days.
jf
Any time you have an open forum of communication someone [or a lot of someones] will scream fuzzy blue mud about the fuzzy blue mud. :) This allows a group of people to demoderate useless complaning and crying down.
Complaining about the complaining is a true irony.
Your right people should have cooler heads about this. On the other hand you could talk untill your blue in the face and get nowhere.
Thats why we have moderators
But allass the complainners out weigh the moderators.
I enjoy a good rant myself.. but thats what a home page is for.....
I don't actually exist.
It's an IPO!!! There is risk associated with an IPO. It is dangerous for inexperienced investors who do not understand the risks to invest money, especially if it is not disposable income! Furthermore, anyone that is investing must realize that the stock may be re-priced before issuance, which would mean that you would have to pay more than $15 per share... better have enough to cover the stock being issued at about $20 per share!
I think that people are unfortunately looking at The Letter as being a stock option that one would get if they actually worked directly for the company. If that were the case... it would be a different story, and anyone that got The Letter would have a right to purchase stock.
Instead, what RedHat did was give people priority who have contributed to the OS movement. A nice gesture, but E*Trade should really stick to their guns to protect themselves in the matter.
Time will tell...
oh come on, you sound like a humorless prick. Get a life. Guess you're just one of those losers from the EGRP board.
Of course, if they were stock options, then they would be completely zero-risk. A stock option is a chance to buy stock years from now at today's price, so you can sell it and profit from the increased value. You can always choose not to buy it, and you don't pay a single cent.
But it's pretty damn obvious that buying stock during the Redhat IPO is, well, buying stock.
The thing to complain about is the E*Trade requirement that you open an account with a $1000+ deposit before you can find out whether you are eligible to invest. Is there any reason E*Trade can't just give people the eligibility survey before they send in a $1000+ check?
Eh, actually, there were a first, a second, and another first this morning when this story had ~10 total comments and they aren't there now, even at -1. To be a wiseass I set my threshold to -65536 and they still aren't there. Therefore, the posts must have been deleted or otherwise lost.
This is not the first time that posts have been deleted. This is not the first time I've said this. I'm not the same anon coward either.
The fact is, it seems that some posts are getting censored due to their lack of content. This is what moderation was supposed to do: Keep people from having to see moronic posts. However, people should still be allowed to view the moronic posts if they so desire.
- Perpetual Newbie
This is the wrong way of thinking.
First of all, for the facts...
The stock market has had an average annual rate of return of 8.4% since 1802. Since 1926 (still before the great depression) the market has returned 10.8% per year.
Compare this to 4.7% return from long term government bonds from 1802 and 5.2% since 1926.
While 4 percentage points per year does not seem like a lot of sacrifice for the safety of government backed bonds (or similarly, bank backed cd's), there is a large difference.
Stocks have the power of compounding on their side!!!
$10,000 of stock held at a 10.8% average annual return for 30 years = $216,867
$10,000 of long tern government bonds held at a coupon rate of 5.2% for 30 years (we are also going to assume that you are reinvesting your payments at the same rate, which would be dificult to do).
= $45,758
That is a big difference... and the 2% you would get in a savings account is even more dismal.
Now for the clincher.... If you are investing long-term, holding onto quality stocks (let's say those represented byt the S&P 500) is actually LESS risky than holding onto bonds or CD's (and especially a mere savings account)! The reason for this is inflation. Stocks are the only investment vehicles that have consistently beaten inflation over the years. By investing in bonds and CD's you may be actually losing money!
For instance, over the past 30 years, inflation has averaged a little over 5% per year!
Only quality companies, which have the ability to raise their prices along with inflation are able to give you a real return!
Buy great, solid companies like GE, Procter & Gamble, Coca Cola, McDonalds, Clorox, Merck and other such 100 year old growth companies and hold onto them for the long run.
Not only will your return be likely to beat the historical average, but you will not have to pay the year to year fees and capital gains taxes of mutual funds. Own the companies yourself!
If this thread is in overload, why is there only one page? (and will this comment appear on it or spawn a second page?)
I see even classic Slashdot is now pretty much unusable on dial up anymore.
How on earth did you get those numbers?
They are a little astronomical.
For better numbers, look at my earlier post (which were taken straight from my trusty ol' HP-12C)
1) The Stock Market. There has never been any guarantee that you will win, lose or break even.. Deal with it.
2) Even a cursory examination of the Etrade site makes it extremely clear that there is no guarantee that you will receive any shares whatsoever, in any IPO, no matter who you are.
3) I've read "The Letter", and it doesn't offer any guarantee of allocation. Only that you have a better chance, since you have a login, rather than being lucky enough to hit the magic window.
4) All of that being said, I think Etrade could be more honest about the way IPO's are done. For example, I did not discern from the site that A) Unless you are a "Experienced Trader", you can't get alerts that the IPO window for a certain company has opened. B) Since the window is only guaranteed open for two hours, they recommend that non-experienced traders go look every hour! That's what makes the RedHat letter so nice.
Once again, "The Letter" makes things a lot easier, but there was never a guarantee of allocation in any case. Stop the whining!
I tried to follow several stock boards on yahoo, but the endless holy wars about stocks and wild speculation about anything that happened to come to the various posters minds make them useless.
Most of the people that post either have lost lots of money on the stock and are mad or worship the company they are talking about for no reason.
The whole thing is just another example of the vocal minority that has nothing to do with what people as a whole actually think.
Nerd rage is the funniest rage.
wouldn't a moderation down be good enough for people who want read some funny things??
Jeez, compared to the sig to noise ration of these investment morons to, Slashdot looks like paradise! Half of em are spreading dis info in order to short the stock, a few honestly believe band of evil "hackers" are going to come out to destroy the computers, and some are just plain stupid. Then ETrade says extremely smart Linux programmers are "unfit to invest"?!?
Erik
Sorry if this seems a bit simple, but I've been looking at the stories of RedHat going IPO for a long time and got frustrated as I have absolutely no idea what all these IPOs are. I have found that they mean "Intellectual Property Owners" and believe they have something to do with stocks and such, but nothing else.
Could somebody please shortly explain what IPO is, what you can gain from receiving "the letter", who receives them etc?
I doubt, therefore I may be.
Well, your argument about the 50% makes sense if you're flipping a coin, but not if you invest in the market. When you flip a coin and loose, your money is gone. When you buy a stock and it goes down, you still own the stock. The stock can go back up. So, your argument makes sense if you day trade (an extremely risky method of 'investing'), or panic and sell immediately.
If fact in the long run, the average stock goes up a bit over 6% a year. So if you buy and hold a market fund you are all but guarunteed to make money *in the long run*. Why don't we look at some examples of long run investing.
Let's say a person makes $30,000 a year. If they put 10% of their post-tax income ($2100) in the market for 40 years at 6% (in an IRA), they'll have $314326.27. If they beat the market (not hard to do if you pick decent stocks and follow a buy and hold forever strategy) they can easily get 8%, leaving them with $521891.86. And they only put in 2100*40=$84000.
Now let's take the case of a person in the CS field. Let's say that start at $40,000, get a 2% raise annually, and again put 10% of their post-tax income in an IRA at 8%. At the end of their 40 years they'll have... $1,138,461.44
. Yes, that's right. 1.1 million dollars. They will also be making another $91,076.92 a year off of their investments. And all the while they just put 10% of their post-tax income into an IRA. And they could conceivably have more than that, like if their employer has a matching donation plan with the IRA, or if they put in a bit more than 10%, which is a rather low savings rate if you ask me. Now, this hypothetical person's income certainly doesn't qualify them as rich, but a wise investment plan can make them rich.
There are two ways to make a lot of money: either have a lot of money already or wait for a long time. Not everybody has a lot of money, but everybody has (or at least starts off with) a lot of time. Try reading "The Millionaire Next Door" if you don't believe me.
-----
Stock tip of the day: Buy Low Sell High.
So, where's the "screening profile" to pass if I want to buy RHAT on the first day of trading at $60?
Oh, I see. No problem with that. The problem is if I want to buy some at $20, because then my bid would interfere with some qualified investor who has an indication of interest at $12.
Fuck the nanny state. Overall I am actually quite pleased with the SEC -- 80% of the time, their attitude is "buy whatever you want, we just compel a shitload of disclosure, we make it available on www.sec.gov, and we recommend that you read it". But the IPO allocation game is one of the last holdouts of crony capitalism.
BTW, people who are bashing etrade, it was a lot worse before Wit Capital and E*Trade started letting little glimmers of light in.
Say no to software patents.
...than the ones who made and use the code? Besides even grad students can afford to risk $1000-$1500 (I just finished being one).
Doesn't capitalism by definition favor people with large amounts of capital? Perhaps you were looking for a system with a more populist slant?
Or alternatively, we could pass a lot more laws governing finance so that the little guys could get a "fair" chance to play the market. Oh but wait, that would be anti-capitalist and cost money to do, driving up taxes!
fear my libertarian propaganda
Well this turned out to be a fine mess!
I suddest people keep a cool head about this. Redhat's IPO ain't the beginning nor the end of Linux. And it's certainly not the beginning nor end of your careers either. An IPO is just that. An Initial Public Offering. A way for businesses to raise money through selling portions of itself to the public. It's *not* the ultimate solution to redeem yourself for years of selfless work. Hey, that's what selfless work is. Sometimes it's thankless too.
Red Hat is taking steps to do damage control here. Let's let them work this out. I suspect that in the end this will work out for most people who got "the letter". If we let it. You decide.
I'd also like to suggest that there might have been a slight, um, overreaction on the part of, oh, everybody. :^) Whether this was by tetosterone-laden teenagers or disgruntled programmers or corporate marketting agents spreading their FUD through covert channels, I think that, well, we need to keep this from escalating. Despite not getting the letter, I might want to invest in this company in the future. Actually, I might want to use Linux at whatever jobs I get in the future, too. This IPO will help. Screaming holy hell about being denied an opprotunity and writing angry letters to Wired and Yahoo! and Salon won't. I mean, it really really won't.
Well, I hope the best for Red Hat and all parties involved. Here's to a successful IPO, and World Domination(TM). :^)
--- Journals are boring; Go to my web page instead
... not "Intellectual Propety Owners".
Maybe that will aid your research.
Jay (=
Look guys... There are rules to IPOs, you all know that. These rules have existed long before the geeks got involved with this IPO. And these rules will continue to exist even after the Red Hat IPO.
The whole idea is to try and ensure people are responsible about this - not gambling their life savings away on a very speculative IPO or something. Sure, the survey method isn't 100% fair but what would be better?
If nothing else, let's all just be reasonable about this whole thing... Let's not spread rumors about hacking, attacking or whatever. It just doesn't make any of us look good. E*Trade screwing up, geeks crying and complaining and threatening attacks... It's all just silly.
Life goes on after the Red Hat IPO...