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Non-Tech : Tulipomania Blowoff Contest: Why and When will it end? -- Ignore unavailable to you. Want to Upgrade?

To: KM who wrote (2175)	12/4/1999 11:27:00 PM
From: Mad2	Read Replies (1) \| Respond to of 3543

KM, Interesting commentary.......while timing a turn in the market is quite a inexact science, I tend to agree with the commentary provided in the article you posted, particularly 2000 PULLBACK? Yet many professional investors agree with the Perkins brothers that a shakeout is coming, possibly to be sparked by a post-holiday letdown. "We continue to expect the stocks in the group to be strong over the next few weeks but think it's likely that they will pull back early in 2000," Merrill Lynch analyst Henry Blodget wrote of e-commerce companies in a Nov. 29 research note. Best Regards, Mad2

To: KM who wrote (2175)	12/5/1999 12:28:00 PM
From: Sir Auric Goldfinger	Respond to of 3543

"The Internet Bubble" is Mr. Goldfinger's favorite book on Tulips. Tony Perkins is one connected dude and he knows how the game is played. More on IPO's from the times: "Examining Nuts and Bolts in an Age of Rocketry By GRETCHEN MORGENSON EW YORK -- Even in this stock market, which continues to break all records, nothing quite compares to the history being made in the market for initial public offerings. The buckets of money pouring into fledgling companies' shares and the delirium that surrounds new-issue trading today have never been seen before. This year, according to Sanford Bernstein & Co., capital raised in initial offerings will total more than $75 billion. That is roughly equal to the amount raised in new stock issues during all of the 1980s. Monster moves in these stocks on their first day public are also breaking records. From 1986 to 1994, the average first-day move in an initial offering was about 10 percent. Today, the average stock rises 60 percent on its first day. Many of these hot new issues are Internet concerns that operate in a sphere all their own: About one-third of those that issued shares this year paid more in investment banking fees than they booked in revenue in the most recent 12 months. Even old-economy IPOs rise sharply today. First-day gains on all initial offerings have totaled $29 billion this year, more than the gross domestic product of Bolivia. That is a hefty chunk of change for issuers to leave on the table. Many companies don't seem to mind; they like the buzz generated by a rocketing stock price and the investors who pile into the shares after they pop. Nevertheless, all is not well in IPO land. Steve Galbraith, the senior research analyst at Bernstein who compiled these stunning figures, says issuers and institutional investors are growing unhappy with the new-issue machinery. Many players see the big initial run-ups in these stocks as benefiting a few investors -- the lucky fund managers who get allotments in exchange for conducting fast and furious stock trading with the underwriting firm -- at the expense of the many. Big investors are restless, Galbraith says; he forecasts a change in the way IPOs are issued. For example, institutional investors, unhappy with small IPO allocations, may demand more Dutch auctions, in which investors put in their bids and get allotments based on supply and demand, the same way most United States Treasury bonds are sold. And some issuers, eager to pocket more of those first-day gains, wonder what services the investment bankers provide for their sky-high fees. Sure, bankers line up buyers when most investors are cool to initial offerings. But when the market is incendiary, as it is now, such support is unnecessary. Some small firms have tried to change the business. But while other parts of Wall Street undergo transformation, most initial offerings are still done the old-fashioned way: with high fees and allocations to favored investors. While fees charged to debt issuers have plunged in the past decade, those charged to equity issuers have stayed remarkably high -- about 4 percent of the deal. This cannot last. Galbraith thinks the investment banking powerhouses Goldman Sachs, Morgan Stanley Dean Witter and Merrill Lynch are most vulnerable to change and the lower underwriting fees it would bring. "You don't need to prop up these stocks; you need to open them up," he said. "The market is determining the price of these companies, and the issuer shouldn't have to pay as much for that."