VMWare IPO: Misinformation Just Like the Old Days
VMWare’s Stock Rises 76% in IPO. The headlines say it, the anchors on CNBC repeated it a hundred times, and if you’re young or new to trading, you may be misled by it.
The implication is that you could have bought VMWare this morning and sold it this evening for 76% more. That would be, as we say down here, a damned lie.
VMWare opened at 52.00 per share. That’s about where your market order would have been filled (although there were quite a few prints up around 55.00 as well). VMWare closed at 51.00. You would have lost 2% of your money, and you would have been lucky. Back in the 90s, you would have lost much, much more on virtually any IPO. A good friend of mine lost a ton of money with a market order to buy an IPO at the open- the IPO of a little company called Yahoo!
The IPO of VMWare was “priced at 29.00″; the only people who could get it at that price (or lower) were the insiders, who got their shares before it was unloaded on offered to the public.
Pay no attention to the headlines or the cute anchor chicks getting all excited about them. Look at where you could have bought that IPO, and where you could have sold.
And stay away from these things.
jason said,
August 14, 2007 @ 8:47 pm
Great advice.
Do you have a background in philosophy? I’m curious, because your writing style is extremely elegant and scholarly, yet relevant. Honestly, I only read two trading blogs these days; I find your writings to go beyond the superficial, and delve, often subtlety, into deeper territory. Thanks for the wonderful blog and I hope your legal issues are now behind you.
Will said,
August 14, 2007 @ 11:12 pm
jason - Wow, I think that’s one of the nicest compliments I’ve ever gotten. No formal education in philosophy, and my story is far too long and boring to write here. But the fact that you notice that I’m (however awkwardly) trying to get at something deeper makes it all worth the effort. I’m not qualified to throw stones about anything (except maybe how to love your daughters the mostest), but I think our species is so caught up in superficial distractions and the sound of our own voice that we miss the real magic of life, even though it’s right in front of us.
The legal issues persist. The opportunists are holding out for trial, believing there’s something more to be gained from those little clearcoat scratches. I’m trying to stay focused on the positive (chances are it’ll settle), and to convince myself that even if they take everything I have with their frivolous lawsuit, I am in the fortunate position of having had vast experience with having nothing, and having nothing means having nothing to lose, and that, in the words of Kris Kristofferson, one of my favorite philosophers, is what freedom really is.
Thanks for the nice comment- you’ve made my day.
Dinosaur Trader said,
August 15, 2007 @ 8:44 pm
Will,
2 things… First I’ll echo jason’s comment about your writing. It’s the thing that attracts me most to your blog.
Secondly, I also wanted to wholeheartedly agree with this post. Lately, my blog has turned into a criticism of CNBC. They’ve been AWFUL during this downturn. I think they need to focus less on how their anchors look and more on what they know about the market.
Glad to see you’re staying positive,
-DT
-DT
Will said,
August 16, 2007 @ 12:26 am
Thanks DT. And yep, it looks like they’ve finally fallen all the way down to the lowest common denominator and are using the Jerry Springer approach: ratings thru hysteria with no pretense of content