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Force Majeure Markets~ How long can this Alice in Wonderland Market ignore the numbers?
Calls from long-lost friends and countrymen to plunge into Sci/Tech came quickly and urgently out of the wilderness woodwork. The Sci-Tech IPO got larger than the underwriter’s wildest hopes, with dreams of sugarplums dancing in customer heads.
Sci/Tech did not see its IPO price again for a long time and subsequently disappeared.
A Chinese Fund in the Caymans now uses the Sci Tech name.
After a few of these bipolar cycles from overvalued optimism to undervalued pessimism, most people quit the market money game or learn the lesson.
What helped learn the hard lesson, was a call from a little old widow who had read the article and invited me over for tea in 1986.
Although very elegant in her bearing and manner, it was clear from the condition of her clothes and apartment she had fallen upon hard times amidst Silicon Valley billionaires.
She served tea and biscuits. We politely got acquainted before she pulled out her portfolio statement. It was full of 1983 overvalued blue-sky high tech flyer IPOs that plunged to earth or bankruptcy by 1986, taking her considerable life savings with them to her personal money hell.
I did not have the heart or cruelty to tell her the companies, investment bankers and brokers made out well by selling near the top. The crass saying on Wall Street was three out of four ain’t bad.
(Last year corporate insiders sold securities 62 times what they bought, far more than 1983, 1987, 1999 or 2007.)
The name of her broker and prestigious investment-banking firm were on the statement.
I asked her what they said after the stocks fell out of bed.
She said they told her to stay in it for the long-term. She was in her 80s and alone. She apparently did not know the little Q or lack of price meant terminal bankruptcy.
She said in fact that many of her holdings had disappeared from the statement and she did not know what to think.
