I agree with both sides of this.... It is dificult to determine where the governing bodies should step in and protect us.
This IPO suitability is similar to the credit card companies in my view.
If you blow all your money, whether through a credit card or even an IPO two things can happen:
1) You pay.... and now you have no money. This could lead towards you going on wellfare = drain on sciety.
2) You do not pay.... screws up your credit rating, AND causes rates to increase for everyone else who does pay their debts.
While this may be stretching things a bit, you can see how all of these decisions *can* affect society. The motorcycle driver was also proven to possibly do the same.
So do you regulate all these things? What is the limit?
I guess they are doing pretty well right now. I do not think my life has been inconvenienced too much by regulating bodies trying to protect me from myself. But it can be annoying at times (for instance, social security), and I am not in favor of more regulations.
There IS a buyer for every seller. Company's that are market makers insure that there is a buyer for every seller. If there is not, they can get more shares from other market maker's in that securities inventory. If they can not, they can just stop trading. Market makers insure that things go smoothly by buying and selling to support the demand for each direction. BUT, they do not have to do it... they can merely just stop trading on that security for a while. These were not in place in the stock market crash of 1929.
So in a sense, market makers serve the same function as a specialist on the New York Stock Exchange, except for over-the-counter securities.
Arbitrage is different... these are individuals whom do it for profit.
If you are able to get any shares at the IPO, sell them that day. who cares if E-Trade looks down on that practice... when is the next time you will be able to get any shares of a "Hot Item"!? If you believe in Red Hat, wait a while and buy back some shares once the stock has settled down a bit.... then hold on to them.
From what I understand, Red Hat makes money four ways.
1. Commercially selling new and frequently upgrading versions of the Red Hat Linux OS.
2. Extending new products to make customers happy... for example their Commerce Server edition , which includes transaction subsystems and credit-card-security systems.
3. Develops and sells user-friendly documentation. how user-friendly these are is up for debate of course.
4. Ongoing telephone and e-mail support. and this is what they try and stress the most. That your average person will BUY Linux depends on the support and services he gets.
When it comes to investing, geeks generally lose a lot of money.
First: Most of you are idealists. You want the best technology available to succeed, and strongly believe that it WILL succeed. --- But we can all name countless situations where the best technology has failed miserably.
Second: You try too hard. The best organization in America when it comes to picking stocks is the NAIC, or Investor's clubs... which are mainly composed of old ladies who meet once a month to buy stock!
To quote Peter Lynch,
"If you spend 2 minutes a year studying the economy, you'll have just wasted a minute and half."
Pick a good company with a steady earnings and good prospects for growth, evaluate its fundamentals and buy it. Hold on to it, and if you can, buy more if the stock price drops.
That is how you can become rich with stocks. But that is way too easy for most geeks!!! :)
Remember, there is a buyer for every person selling (they just might not be willing to pay as much).
Most of the initial IPO purchasers are going to be institutional buyers, who are going to dump their shares into the public as fast as they possibly can. Our community here will make absolutely no impact whatsoever.
Splitting a stock is a choice of the company, it does not just happen. And no company has ever split their stock in the first month.
Believe me, even if the entire OS community decides to hang on, Red Hat's stock will still soar and fall.
Almost every single IPO that has had anything to do with the Internet has followed that pattern. If you sell, you are not going to be hurting Red Hat... I am sure they are expecting this volatility. In fact, it will help them in getting news and notoriety "Hot Stocks".
Red Hat wants to raise capital and get noticed. They stand no chance of insuring long-term stock price stability initially.
You can always buy the shares back later, when it settles down a bit, and then hold onto it forever.
Then you can own something you believe in, AND hopefully make a buck too:)
For those getting initial shares on E-Trade, I would strongly recommend selling them shortly after the IPO. Who cares if you black-listed by E-Trade... how many more times are you going to really get a chance at getting in on a great IPO!?
More importantly, stocks with few shares outstanding are volatile.
On the day of an IPO, you see the volume of shares traded to be in the millions. For instance when musicmaker.com came out, there were over 17 million shares traded. Well, musicmaker.com only issued 12 million shares!!! So many of these shares actually passed through dozens of buyers. This causes a stock to become incredibly volatile, when there is a lot of action with so few shares outstanding.
Intel, on the other hand, regularly sees 20 million shares traded in a day. While far from a predictable stock, you do not see such huge jumps because there are over 1.6 billions shares outstanding.
Low volume stocks are only more volatile when there are very few shares outstanding.
Yup... most brokerage firms like you to hold on to it for at least a week. (Though it does depend on how much your broker likes you;)
E-Trade actually forces you to keep them for two weeks. Although someone recently posted that you might be able to sell off 50% of your holdings initially. That is definitely what I would do.
Most pure internet plays are down between 30 and 50% from their year highs.
Unfortunately, this is probably not even close to enough.
Eventually, these companies are going to have to comply with reality. By owning stock, you own a share of that company. As time goes on, your share of that company is going to be priced according to the "real" value of that company and its actual earnings and profitability. Yes, new industries are priced on potential, but Amazon.com is not going to run Barnes & Nobles and Borders out of business. And that is what they need to do, TOMORROW to warrant such a lofty market capitilization.
Yes, the internet is going to change the face of the Earth, but so did the radio, the telephone, the computer and the car. Look at your history... the bubble burst on all of these industries after the initial speculation craze.
Wait a bit, and let some of these companies prove they can actually *make* some money... at least with your savings that are important to you.
Also, the opening sentence to the book was incredible. Just wish I could remember exactly what it was.... but i thought it instantly set a mood. impressive.
Keep in mind that Snow Crash was written well after Neuromancer.
And no teenage fantasies in Snow Crash???? Please!
I would say that Neuromancer is a much more mature read than Snow Crash... but sorry that most of the stuff Gibson was writing about had never been even *envisioned* yet, so he did not have the technical details too down.
It is unfortunate that you will not be able to flip them however.
Just about every single IPO I have watched and dealt with over the past two years has surged the first day, and then proceeded to drop consistently over the next few days and weeks.
Ideally, you could get it at the offering, sell, and then buy again after the initial surge.
It is interesting that IPO's have only had a 5% average annual return (from the secondary market) over the past ten years. Unfortunately, these are not the best things to be holding onto... now matter how novel the business is.
This is something completely different than your broker/consultant profiting on the spreads. That simply is not how it works.
The fact that a broker/consultant can get you a better price is one of the advantages of having a broker... not a method for him to make larger profits than you!
So you will be selling short when we hit a bear market eh? Well that is handy... Great thinking!
By something bad, I am speaking of a correction, crash or bear market.
Using a fundamental approach to buy, hold and accumulate, is extremely beneficial during a bear market. With this philosophy, you do not look at a crash or bear market as a time to sell, get out of the market or sell short... you view it as a time to accumulate. All of these great companies are now on sale, buy more!!!
With hindsight, we know that we should have bought when the market "crashed" in October 1987, falling to 1600 on the Dow. But how many of you would still have liked to have bought in August 1987 when the Dow was extremely over-valued at 2700, and held on during the crash (or even better, accumulating more)and still own those securities today when the Dow is over 10,000.
"Reacting" to a bear market or crash can often be the worst thing you do.
I lump day-traders with active-traders who have a high year-to-year turnover ratio in their portfolios. Mutual fund managers count in this (for me at least).
High diversification is ONE reason why fund managers perform meagerly. Another, is because they ARE active traders. The average mutual fund in America sees a 100% turnover per year. While they may not be trading high numbers per day (that would be a hedge fund), they trade too much to outperform.
We have also had 9 straight years of the greatest bull market in history. Essentially, you could have thrown your money at anything and made money. That is a reason why day-trading and online brokerage firms have prospered so well.
What will you be doing when we hit a bear market (and believe it or not, they are possible!) with your calculated risks? A broker is there to insure you do the right thing, but more importantly, he is available for you. With your online account, if something bad happens you run the risk of not being able to touch your assets for up to 60 days. That's right, 60 days.... check the small print of your agreement.
You ARE going to get rich with a fundamental buy, hold and accumulate method. It is a fact that this method, throughout the 500 years of stocks, is the BEST method towards becoming rich.
You are a beneficiary of an incredible Bull Market. That does not make you an expert in stocks.
Brokers are there (hopefully) to direct you towards the best growth with the least amount of risk. Historically, the best methods of investing involve next to no "trading". This explains why the best profesionally paid mutual managers rarely even beat the market averages.
Yes, good day-traders eventually make billions of dollars by taking advantage of market swings and short term jumps. Oh wait!! Come to think of it, I have not heard of a single person who has amassed a great fortune through active day-trading and jumping in and out of stocks and the market.
But I have heard of Bill Gates... the richest man in the world. How often do you think he is jumping in and out of Microsoft's stock? I have heard of Warren Buffet, the second richest man in the world. He owns approximately 8 stocks, and has NEVER jumped in and out of them.
Day trading is not the road to riches, despite what E-Trade tells you. No one in the history of the world has been able to outguess the market for any extended short-term periods of time. Do not fool yourself.
I would stress the greatest moment in "Rock" Rock as we know it that is. Elvis was very reasponsible for making a transition from Rhythm & Blues into Rock & Roll, but I would argue that no single accomplishment of his was the greatest moment in "Rock".
I downloaded a pirate version of the originol teasers for the movie, but I do not know anyone who actually downloaded the entire movie. I wanted to know as little as possible about the movie, so that when I did see it in a theatre, I would have a better experience (Whether my experience was that much better is open to debate). Were there that many people so desperate to watch a crappy version of the film just to say they "had seen it first". pretty lame.
Slashdot Mirror
I agree with both sides of this.... It is dificult to determine where the governing bodies should step in and protect us.
This IPO suitability is similar to the credit card companies in my view.
If you blow all your money, whether through a credit card or even an IPO two things can happen:
1) You pay.... and now you have no money. This could lead towards you going on wellfare = drain on sciety.
2) You do not pay.... screws up your credit rating, AND causes rates to increase for everyone else who does pay their debts.
While this may be stretching things a bit, you can see how all of these decisions *can* affect society. The motorcycle driver was also proven to possibly do the same.
So do you regulate all these things?
What is the limit?
I guess they are doing pretty well right now. I do not think my life has been inconvenienced too much by regulating bodies trying to protect me from myself. But it can be annoying at times (for instance, social security), and I am not in favor of more regulations.
There IS a buyer for every seller.
Company's that are market makers insure that there is a buyer for every seller. If there is not, they can get more shares from other market maker's in that securities inventory. If they can not, they can just stop trading.
Market makers insure that things go smoothly by buying and selling to support the demand for each direction. BUT, they do not have to do it... they can merely just stop trading on that security for a while. These were not in place in the stock market crash of 1929.
So in a sense, market makers serve the same function as a specialist on the New York Stock Exchange, except for over-the-counter securities.
Arbitrage is different... these are individuals whom do it for profit.
If you are able to get any shares at the IPO, sell them that day.
who cares if E-Trade looks down on that practice... when is the next time you will be able to get any shares of a "Hot Item"!?
If you believe in Red Hat, wait a while and buy back some shares once the stock has settled down a bit.... then hold on to them.
From what I understand, Red Hat makes money four ways.
1. Commercially selling new and frequently upgrading versions of the Red Hat Linux OS.
2. Extending new products to make customers happy... for example their Commerce Server edition , which includes transaction subsystems and credit-card-security systems.
3. Develops and sells user-friendly documentation. how user-friendly these are is up for debate of course.
4. Ongoing telephone and e-mail support. and this is what they try and stress the most. That your average person will BUY Linux depends on the support and services he gets.
I have said this before, and I will say it again:
When it comes to investing, geeks generally lose a lot of money.
First: Most of you are idealists. You want the best technology available to succeed, and strongly believe that it WILL succeed.
--- But we can all name countless situations where the best technology has failed miserably.
Second: You try too hard. The best organization in America when it comes to picking stocks is the NAIC, or Investor's clubs... which are mainly composed of old ladies who meet once a month to buy stock!
To quote Peter Lynch,
"If you spend 2 minutes a year studying the economy, you'll have just wasted a minute and half."
Pick a good company with a steady earnings and good prospects for growth, evaluate its fundamentals and buy it. Hold on to it, and if you can, buy more if the stock price drops.
That is how you can become rich with stocks. But that is way too easy for most geeks!!!
:)
Go to a full-service broker.
The extra money that you will pay for commisions initially is worth being able to speak with someone when you need to.
Remember, there is a buyer for every person selling (they just might not be willing to pay as much).
Most of the initial IPO purchasers are going to be institutional buyers, who are going to dump their shares into the public as fast as they possibly can. Our community here will make absolutely no impact whatsoever.
Splitting a stock is a choice of the company, it does not just happen. And no company has ever split their stock in the first month.
Believe me, even if the entire OS community decides to hang on, Red Hat's stock will still soar and fall.
Almost every single IPO that has had anything to do with the Internet has followed that pattern. If you sell, you are not going to be hurting Red Hat... I am sure they are expecting this volatility. In fact, it will help them in getting news and notoriety "Hot Stocks".
Red Hat wants to raise capital and get noticed. They stand no chance of insuring long-term stock price stability initially.
You can always buy the shares back later, when it settles down a bit, and then hold onto it forever.
:)
Then you can own something you believe in, AND hopefully make a buck too
For those getting initial shares on E-Trade, I would strongly recommend selling them shortly after the IPO. Who cares if you black-listed by E-Trade... how many more times are you going to really get a chance at getting in on a great IPO!?
More importantly, stocks with few shares outstanding are volatile.
On the day of an IPO, you see the volume of shares traded to be in the millions. For instance when musicmaker.com came out, there were over 17 million shares traded. Well, musicmaker.com only issued 12 million shares!!!
So many of these shares actually passed through dozens of buyers. This causes a stock to become incredibly volatile, when there is a lot of action with so few shares outstanding.
Intel, on the other hand, regularly sees 20 million shares traded in a day. While far from a predictable stock, you do not see such huge jumps because there are over 1.6 billions shares outstanding.
Low volume stocks are only more volatile when there are very few shares outstanding.
hope that helps...
Yup... most brokerage firms like you to hold on to it for at least a week. (Though it does depend on how much your broker likes you ;)
E-Trade actually forces you to keep them for two weeks. Although someone recently posted that you might be able to sell off 50% of your holdings initially. That is definitely what I would do.
Most pure internet plays are down between 30 and 50% from their year highs.
Unfortunately, this is probably not even close to enough.
Eventually, these companies are going to have to comply with reality. By owning stock, you own a share of that company. As time goes on, your share of that company is going to be priced according to the "real" value of that company and its actual earnings and profitability. Yes, new industries are priced on potential, but Amazon.com is not going to run Barnes & Nobles and Borders out of business. And that is what they need to do, TOMORROW to warrant such a lofty market capitilization.
Yes, the internet is going to change the face of the Earth, but so did the radio, the telephone, the computer and the car. Look at your history... the bubble burst on all of these industries after the initial speculation craze.
Wait a bit, and let some of these companies prove they can actually *make* some money... at least with your savings that are important to you.
Also, the opening sentence to the book was incredible. Just wish I could remember exactly what it was.... but i thought it instantly set a mood. impressive.
Keep in mind that Snow Crash was written well after Neuromancer.
And no teenage fantasies in Snow Crash???? Please!
I would say that Neuromancer is a much more mature read than Snow Crash... but sorry that most of the stuff Gibson was writing about had never been even *envisioned* yet, so he did not have the technical details too down.
It is unfortunate that you will not be able to flip them however.
Just about every single IPO I have watched and dealt with over the past two years has surged the first day, and then proceeded to drop consistently over the next few days and weeks.
Ideally, you could get it at the offering, sell, and then buy again after the initial surge.
It is interesting that IPO's have only had a 5% average annual return (from the secondary market) over the past ten years. Unfortunately, these are not the best things to be holding onto... now matter how novel the business is.
This is something completely different than your broker/consultant profiting on the spreads. That simply is not how it works.
The fact that a broker/consultant can get you a better price is one of the advantages of having a broker... not a method for him to make larger profits than you!
So you will be selling short when we hit a bear market eh?
Well that is handy... Great thinking!
By something bad, I am speaking of a correction, crash or bear market.
Using a fundamental approach to buy, hold and accumulate, is extremely beneficial during a bear market. With this philosophy, you do not look at a crash or bear market as a time to sell, get out of the market or sell short... you view it as a time to accumulate. All of these great companies are now on sale, buy more!!!
With hindsight, we know that we should have bought when the market "crashed" in October 1987, falling to 1600 on the Dow. But how many of you would still have liked to have bought in August 1987 when the Dow was extremely over-valued at 2700, and held on during the crash (or even better, accumulating more)and still own those securities today when the Dow is over 10,000.
"Reacting" to a bear market or crash can often be the worst thing you do.
That is because the movie script was written before the books.
The idea that Lucas had all 6 episodes written was a publicity stunt essentially.
It is unbelievable how ignorant the above statements are.
This is absolutely not how things work.
It is not called the fill... it is called the spread.
Brokers do not make any money off the spread... PERIOD.
Everything you have said is completely false.
I lump day-traders with active-traders who have a high year-to-year turnover ratio in their portfolios. Mutual fund managers count in this (for me at least).
High diversification is ONE reason why fund managers perform meagerly. Another, is because they ARE active traders. The average mutual fund in America sees a 100% turnover per year. While they may not be trading high numbers per day (that would be a hedge fund), they trade too much to outperform.
We have also had 9 straight years of the greatest bull market in history. Essentially, you could have thrown your money at anything and made money. That is a reason why day-trading and online brokerage firms have prospered so well.
What will you be doing when we hit a bear market (and believe it or not, they are possible!) with your calculated risks? A broker is there to insure you do the right thing, but more importantly, he is available for you. With your online account, if something bad happens you run the risk of not being able to touch your assets for up to 60 days. That's right, 60 days.... check the small print of your agreement.
You ARE going to get rich with a fundamental buy, hold and accumulate method. It is a fact that this method, throughout the 500 years of stocks, is the BEST method towards becoming rich.
You are a beneficiary of an incredible Bull Market. That does not make you an expert in stocks.
So you have see the E-Trade Ads huh?
Bravo!
Brokers are there (hopefully) to direct you towards the best growth with the least amount of risk. Historically, the best methods of investing involve next to no "trading". This explains why the best profesionally paid mutual managers rarely even beat the market averages.
Yes, good day-traders eventually make billions of dollars by taking advantage of market swings and short term jumps. Oh wait!! Come to think of it,
I have not heard of a single person who has amassed a great fortune through active day-trading and jumping in and out of stocks and the market.
But I have heard of Bill Gates... the richest man in the world. How often do you think he is jumping in and out of Microsoft's stock? I have heard of Warren Buffet, the second richest man in the world. He owns approximately 8 stocks, and has NEVER jumped in and out of them.
Day trading is not the road to riches, despite what E-Trade tells you. No one in the history of the world has been able to outguess the market for any extended short-term periods of time. Do not fool yourself.
Have you tried opening an account with an are Goldman Sachs?
They are the lead under-writers after all.
Plus, you will not have to go through an automated system in order to get the shares that you have been offered.
I will never hide my dislike for on-line brokerage firms. I feel that they are very misleading and send people down the wrong road towards investing.
I would stress the greatest moment in "Rock"
Rock as we know it that is.
Elvis was very reasponsible for making a transition from Rhythm & Blues into Rock & Roll, but I would argue that no single accomplishment of his was the greatest moment in "Rock".
I downloaded a pirate version of the originol teasers for the movie, but I do not know anyone who actually downloaded the entire movie. I wanted to know as little as possible about the movie, so that when I did see it in a theatre, I would have a better experience (Whether my experience was that much better is open to debate). Were there that many people so desperate to watch a crappy version of the film just to say they "had seen it first".
pretty lame.