On February 1, Facebook revealed plans to raise $5 billion in the biggest internet initial public offering ever.
Soon after, the vast majority of Facebook's 845 million users clicked "like" on the soon-to-be IPO's wall post.
So, the big question remains: Does this salvo of social networking and micro-blogging sites really have a new "face"? One, for that matter, that won't turn into a sad, frowning emoticon from another tech boom gone bust?
According to many mainstream experts, the answer is YES. Here, a recent LA Times article titled "What Recession? It's Boom Times Again For Silicon Valley" vividly describes the dot-com epicenter as a place of soaring home values, Lamborghinis in the parking lot of LinkedIn Corp., rooftop parties, and six-figure starting salaries. The article goes on to make this very important distinction between the current frenzy for technology and the one of the late 1990s:
"This boom is not being driven by greedy investors pumping up shares of dot-coms to irrational levels on public markets, but private investors... These are all wealthy individuals who understand the gambles they are making. It's not like in the dot-com days when grandma was placing bets on IPO's"
But do "wealthy individuals" understand the gambles any better than "grandma"? Not necessarily: Often, the most affluent sources don't think independently of the herd.
This groundbreaking truth was the recent focus of EWI's April 2011 Elliott Wave Theorist. In that publication, EWI President Bob Prechter exposed the universality of herding via a series of charts showing how every subset of financial market participants become more bullish at peaks, and more bearish at bottoms.
Prechter's Theorist showed these historical charts of hedge fund and mutual fund managers' market participation:
So, in the end, the question is not about who foots the bill of the new tech IPO boom. It's whether those who do are investing at the start of a sustained and lasting uptrend.
Right now, the brand-new, February 2012
Financial Forecast gives you a unique insight into whether the "next big wave of" technology IPO's will continue to lift all tides -- or, come crashing down.
The Elliott Wave Financial Forecast uses the Wave Principle to prepare subscribers for likely intermediate-term market moves before they happen. Co-edited by Steven Hochberg and Pete Kendall, Financial Forecast is a monthly newsletter packed with wave analysis and commentary concerning important social and economic trends. With Financial Forecast by your side, you can identify when it's best to invest in a market, and when it's best to step aside. That way you can minimize risk and maximize opportunity.
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