Scary Thought: Busiest IPO Week since Aug 2000 (Days before the Real Crash)

IPOs have been on a tear this year in what has been defined as a “healthy IPO market” where just about anything at just about any valuation can get dumped into the lap of the public, including conservative-sounding funds that America’s worker bees hold in their meager and vulnerable retirement accounts.

This week, 25 companies are expected to sell their shares to the public, according to Dealogic, which would be the busiest week since August 2000, which was of course the month during which the S&P 500 just about re-touched its March 2000 peak. The Nasdaq too had recovered part of its dizzying losses since March and had pushed back above 4,000. In the general frenzy, telecom stocks hit new highs.

Everyone was soaking up the hope that the crash that had started in early March was already over. Then at the end of August, the markets just let go, and this time, they seriously crashed. August had been the last hurrah for IPOs, before reality once again settled in, and they just died. The losses for those folks who ended up with this stuff were extraordinary as many of these stocks went on to zero, and their names are now forgotten.

So now we see the scary headline in the Financial Times, harkening back to the glorious moments of those good old days: “US IPO market eyes busiest week since 2000.”

Companies are expected to raise about $7 billion this week. The largest deal is GE’s credit-card spinoff Synchrony Financial, which would raise $3.1 billion and give it a valuation of about $20 billion.

Full steam ahead. The Fed is still printing, though tapering, ZIRP is still in effect, and hype still carries the day. Does anything else matter? No. The market is in full IPO momentum. It’s a window that opens only for a short time once every now and then, a time when anything goes, when no one asks questions, when everything has to be sold, when money grows on tree, and when the only risk on the horizon is the risk of missing out.

We know how it will end: in tears! Because it always does. We just don’t know when.

A bubble is easy to discern despite the Fed’s rhetoric that it cannot be discerned. What’s hard is pinpointing the moment it tops out. But that’s precisely what everyone wants to know in order to cash out before it implodes. Lacking reliable scientific indicators of when to get out, everyone has their own list of ersatz indicators. And I just added a new one to my list, concerning the startup and IPO bubble. You can’t make this up! Read…. Sign of Top? Banana Republic Trots out ‘Startup Guy’ Look

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  4 comments for “Scary Thought: Busiest IPO Week since Aug 2000 (Days before the Real Crash)

  1. matt
    Jul 28, 2014 at 4:21 pm

    Does the Hindenburg ring a bell Wolf?

    • Jul 28, 2014 at 6:17 pm

      I’m too young to remember … just some vague images of it all going up in flames.

  2. tom kauser
    Jul 30, 2014 at 7:15 am

    Oh the humanity ladies and gentleman! I happened to be watching opening bell and caught the funniest thing when Bob Pisani exclaimed that there were several IPO’S withdrawn because there were too many going at once! you may be on to something. If you thought clueless before than too many IPO’S is a sure bet that money is drying up fast? Too many IPO’s THE HORROR!

  3. tom kauser
    Jul 30, 2014 at 7:25 am

    I remember the day it snapped in 2000 all right! I got in a fist fight with a good friend over his positions and he has since lost everything. It still haunts me. Cant remember BILL GATES dumping tech stocks on the courthouse steps? Or the FED DUMPING AIG’s portfolio in 08? The FED was up to its forehead in manipulations even then! I remember watching the buy on AIG come in to get out of the short all weekend long THE BID and ASK screen looked like a slot machine! The Fed is in complete control and is LOVING IT!

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