Partying like it’s 1999 – Initial public offerings are back in Silicon Valley

It's not like the $700B they inject is instantly accounted for. They bought $500B in bonds, which means that bonds have to be sold off again for that money to appear in the economy. They also bought $200B in mortgages, which means those need to be resold and cashed out of before that money shows up in the market.

QE basically artificially raises the value of assets, but those assets still need to be sold/traded for it to have an effect on the economy.

It's not instant.

contingencies• 6 years ago

This is uncharacteristically poor journalism from the Economist. The graph shows excepting 2009 and 2016 there has been effectively no significant downturn, whereas the title suggests an order of magnitude change in the last two years.

knolax• 6 years ago

I wouldn't say uncharacteristic. The economist has always been short on details and overflowing with unecessary snark.

9nGQluzmnq3M• 6 years ago

Unlike, say, HN comments?

supernova87a• 6 years ago

Agreed, the Economist's habit of laying out a few kindergarten-level facts and then extrapolating to what the world should do is pretty irritating. Enough that after one subscription I swore off reading them generally.

theptip• 6 years ago

Sorry, I'm not following your complaint -- the article leads with:

When the pandemic hit in March, initial public offerings, particularly those by technology startups, were predicted to be among the early victims. After all, who wants to go public in a once-in-a-century crisis? Quite a few people, it turns out. In the past couple of months ipos, which all but dried up until late May, have come back with a vengeance in America

And then presents a graph comparing YTD with previous years, showing more IPOs in 2020 YTD than any point in the last 15 years, with tech company IPOs in (eyeballed) the top quartile of the last 15 years.

I read this article as claiming:

1) The prediction was that IPOs would go down; they are not (any more).

2) IPO volume for YTD is historically strong, though not at '90s dot-com boom levels. (I'd have preferred their IPO volume chart to go back 25 years so that it showed the build-up to 1999, but that's a different complaint I think.)

Where are you getting the suggestion of an order of magnitude change?

xoxoy• 6 years ago

And Tesla just surpassed Walmart in market cap even though their total quarterly deliveries have been relatively flat around 80-90k per quarter for almost 2 years.

011000116• 6 years ago

It's an obvious short opportunity but how can you know how long the market will remain irrational?

ttul• 6 years ago

You can’t know.

api2• 6 years ago

Is it? Which company has more growth ahead of it? Wal-Mart is slowly digesting in the Amazon Saarlac pit like all retail.

Stocks are valued by growth unless they pay a lot of dividends, and dividends are rare today.

cryptica• 6 years ago

The market is rational, the monetary system is what's insane. If the Fed doesn't start raising interest rates, this insanity will only continue and intensify. Buying cryptocurrency is the purest, most direct, most effective way to benefit from the current madness.

The Fed is just going to keep printing as much money as is necessary to meet its full employment mandate (which is physically impossible at this stage due to automation). Employees all over the world are currently going round in circles and digging holes and filling them back up. Any white collar worker who takes their job seriously at this stage needs to wake up... What's going on is so obvious.

Just bring in UBI and abolish the Fed. Better have idle people getting paid to do nothing than busy people getting paid to pretend to do something and engaging in self-deception... And let's not forget all the people who can't get a job because their useless skills are not useless in exactly the right way as demanded by their equally useless employers.

I've seen many people get rich who have about the intelligence of a wild macaque and I've also seen very smart people struggling to make ends meet.

zipwitch• 6 years ago

"The market can remain irrational longer than you can remain solvent."

Here's a piece on the origin of the quote: https://quoteinvestigator.com/2011/08/09/remain-solvent/

sixQuarks• 6 years ago

This is what people have been saying about TSLA since it was a $200 stock. I'd be very careful.

hinkley• 6 years ago

Part of me is kicking myself for selling back in like March, but there is no version of me that would have made it past the first of the month without profit taking. I'll just have to console myself with the 200% profits I made instead of the 900% I could have made.

batt4good5• 6 years ago

And it looks like California is planning on keeping an ever larger portion of that oh so sweet founder IPO dough!...

godzillabrennus• 6 years ago

Good time to shelter in place in a tax haven now that your working remotely.

New Hampshire can be quiet lovely.

onlyrealcuzzo• 6 years ago

California is quite aggressive at taxing income from stock people were granted while living in California.

batt4good5• 6 years ago

I live and work in NYC but the company I'm employed by is based in CA. How fucked am I if I'm ever able to cash out my equity. Note, technically I'm a resident of NYC. If I don't have an office by next year, I've decided to move back to TX, or pick a spot in New Hampshire or Vermont.

dehrmann2• 6 years ago

The interesting game people will get to play is if Biden wins and Democrats control at least the House, do you hold onto your shares and hope the Democrats bring back the SALT deduction.

jedberg4• 6 years ago

They won’t bring it back. They don’t want the SALT deduction either. They just didn’t want to piss off their voters.

To be fair, getting rid of SALT was a good move. It makes the tax code more fair. There is no reason for the federal government to subsidize someone who lives in California or New York.

coliveira2• 6 years ago

The stock market is living in a dream land where it doesn't matter that the real economy is doing badly, they can count on nearly unstoppable supply of money flowing from the Fed. In this situation it is obvious that all stock prices will skyrocket, but the most probable outcome is a crash in 1929's style.

Partying like it’s 1999 – Initial public offerings are back in Silicon Valley

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