Jump to content

Are IPOs a leading indicator? If so the end may well be nigh


Recommended Posts

It has often been observed that high levels of M&A and IPO activity occur in the run up to a major stock market reversal as buying companies is the last refuge of CEOs desperate to keep the "growth" going and devoid of any other ideas for investment.  This time around there has also been a massive share buy back endeavor.  IPOs tend to flock when valuations are high but eventually investors get wary and so do underwriters.  Recent IPOs haven't done that well, remember Poundland?  Then again the record of IPOs being profitable for all but the people who turn it over quickly is quite poor, maybe that is because they happen near the top of a market.  If all that is true then perhaps a drying up of IPOs could be a signal of a down turn?

 

Here is a quote from a recent Elliott Wave International article:

 

"...the IPO market is comatose, with just twelve U.S. offerings so far this year. The amount raised via IPOs in the first quarter of 2016 is the lowest total since the fourth quarter of 2008, during the depths of the Great Credit Crisis."

 



Link to comment

Hi  you make an interesting point about buying companies being the last refuge of CEOs, which made me recall something that happened to me a few years back.

I used to work for an American technology company in the late 90's whose executives were being handsomely rewarded by the issue of lucrative share options. As we approached the millennium, growth started to slow and the share price waned. The executives decided that the answer to this problem was to start acquiring smaller companies, giving the appearance of growth and boosting share value and, most importantly, maintaining the share option gravy train.

Cue the demise of the dotcom bubble, and in 2002 the company I worked for went downhill to the point of going bust and was acquired by a competitor. A lot of us lost our jobs. Even worse, the CEO who presided over this debacle managed to maneuver himself into the position of receiving a huge payment from the acquiring company for his services in facilitating the takeover. Needless to say, my cynicism has never fully recovered. 

Since then I have always felt that the awarding of pay/bonuses should never be based on share price - it only encourages manipulation. It would be far better to base executive's remuneration on profits. But alas, I don't run the world - and as far as I can tell, today's company bigwigs are depressingly similar to those of yesteryear

Mac.

Link to comment

They are exactly the same  and I have had similar experience as your have in some of the FTSE 100 and Dow companies.  The other big scandal in the making this time is share buy backs and other nefarious actions that manipulate earnings at quarter and year end.  When the dust settles on the next big crash and if it is a big one, as I expect (not just in the markets but the wider global economy) then there will have to be a clear out and lasting change in the way big business is run from central banks to the commercial banking system to the listed companies themselves.

 

For trading though it is an accident waiting to happen and we can profit from it if we can spot when the worm has turned and get on board. 

Link to comment

Archived

This topic is now archived and is closed to further replies.

  • image.png

  • Posts

    • DogeDay always brings back memories of 2019 when my friends were diving into Dogecoin and joining farming activities. That's why I'm excited to explore the Bitget DogeDay giveaway event. Plus, with tomorrow's BTC halving, the excitement is doubled!
    • As a meme fan, I have been waiting patiently for the Bull trend that happened to BTC recently to get to all the alts and so we can have what we had back then in 2021 to happen again, but time the strength of the uptrend has not been able to match up with what I am expecting and I do hope that the halving will help, but looking at the hype that is usually expected from the meme community. I don't think I'll be able to wait for the trend to resume and so I am taking more steps ahead of the game, taking up all the opportunities I believe would help the price-trend of my holdings, especially for the DOGE memes and I have found this DOGEDAY event ongoing and it really made a lot of sense to me, because if we look at how the DOGE coins have performed in the past. I believe if we can have a Bitcoin day to celebrate the first cryptocurrency, then we should be able to have a DOGEDAY too looking at the success rate of the meme and the support from the community. For me, this is something special that is worth the energy, vibes and hype and worth participating it. There are different sections to the event, which include the Twitter part, where Bitget is sharing $3,00 to those participating( https://twitter.com/bitgetglobal/status/1780495739984150962Twitter Post ) and the telegram event, and I believe this will favour those that love to bet on the price of coins. They are sharing 100BGB tokens for this and the Discord event has a 90BGB token to be shared.  If we can have Bitcoin's day, then this DOGEDAY should be observed in all the DOGE communities and I will admonish meme lovers to observe events like this because it reflects the nature of memecoin and the hype around it.
×
×
  • Create New...
us