Wall Street was perfectly happy to create a supply of stock to meet any demand, no matter how unhinged from reality.
Wall Street didn't "create" stock. Large firms, as they always have, acted as a conduit through which companies sold their stock. In this case, stock in companies most of which wouldn't have had any hope of being seriously considered as IPO candidates as recently as seven years ago.
The retail and institutional public alike, seeing the success of the first few issues, bought into the hype; hype not only created, as some would have it, by brokerage salespeople, but by magazines and media pundits far and away from Wall Street as well.
Supply and demand, guy. Retail and institutional interests wanted 'em, and, the traditional barriers of prudence disappeared. I don't blame the firms, inasmuch as selling some of the crap they did, anymore than, say, I blame an appliance salesman for selling a willing buyer a grossly inferior product - even if the salesman knows it's inferior. If he lies about it, well, that's another issue, but then again...the customer is, or should by all rights be aware that, ultimately, he's talking to a salesperson, right? LOL.
In fact, there are many books out there about how to read a balance sheet or scrutinize a prospective investment. I'd not know where to look, other than Consumer Reports, as to how to select an appliance wisely.
Caveat emptor, anyone?
And so, in they plunged, in droves and without regard to long established fundamental metrics. And, many got stuck. If these stocks had continued north for the last year and a half, would anyone have taken the companies serious if they said that, because their issues were priced at X and currently traded at X*20, they deserved a schoolground type "do over" having left money on the table?
Who forced people to buy these issues?
Where was the gun, real or figurative, to their collective heads? Or could it be that there's some biased doctrine that - a la trading curbs when the market falls - permits only success, whereas failure must be mitigated?
In fact, because the staggering majority of individual investors couldn't purchase them until they opened for trading, often at a huge premium to the offering price...who forced retailists to buy them in the open market?
And who forced them to hold those issues as they precipitously came back down to earth?
If the canned answer to that is "analysts," well, if a stranger walked up to you in the street and said only, "Buy <some stock>," and walked away...would you? I certainly wouldn't.
Responsibility. I know it must be scary, but it's the only way to grow. :)
LP. |
