Today they just tipped over into insanity.
For instance, consider Facebook's purchase of Oculus. Nevermind that Minecraft's creator is cancelling his Oculus deal because Facebook "creeps him out", thus helping to drop Facebook shares by $6 Billion just today ($30 Billion drop this month).
Also ignore the performance of Oculus Innovative Sciences. It's up 4% today simply because it shares the same name.
What you should focus on is the 2-year old JOBS Act that Obama signed into law, and how it enabled the fleecing of small investors.
The fact that we are still deregulating Wall Street just a few years after 2008 is inexcusable. The fact that we passed this deregulation despite the SEC (which rarely opposes deregulation) saying it could lead to fraud, is inexplicable.
Consumer advocates were in disbelief when it passed.
"My guess is the Republicans cannot believe they have suckered the Democrats into taking up their idea that deregulation is the way to promote job growth. It flies in the face of what the Democrats were arguing just a couple years ago. It completely undermines what they are trying to do to shore up our system of financial regulation," says Barbara Roper, director of investor protection for the Consumer Federation of America.Bill Black called it a recipe for fraud, but that's wrong. There has to be laws being violated for there to be fraud. What the Jobs Act did was allow inexperienced investors to make dumb decisions without any legal protections.
Given all that, the results should not be all that surprising.
“Those almost 10,000 early investors on Kickstarter participated in one of history’s most lucrative funding rounds from the perspective of the people receiving the funding: a $2.4 million early-stage investment in what would become a $2 billion business in a year and a half, in return for 0.0% equity.”WhooHoo! 0.0% equity, suckers! Let the fleecing begin!
-- WSJ's Corporate Intelligence on Oculus's crowdsourced 2012 fund-raiser.
Since August 2012, nearly 10,000 people have donated money to Oculus VR via Kickstarter. Depending on how much they put into the company, these early backers got anything from a “sincere thank you” to a t-shirt to an early prototype of the company's signature headset, the Oculus Rift.Yay, crowdfunding!
As this Bloomberg article points out. This wasn't fraud. It was a scam. Like rust-proofing on a car or ordering something from a late-night infomercial. It's all legal, even if its morally wrong.
Consider this other news article from today.
Internet tycoon Kim Dotcom, whose site MegaUpload was shut down by US authorities in 2012, has announced plans to list his new file-sharing firm on the New Zealand stock market.Mr. Dotcom (Oh, irony! Where is thy sting?), will be paying his lawyers twice over; once to keep him out of jail, and twice to launch his IPO.
In January 2013, a year after the closure of MegaUpload, he set up Mega, which also allows users to host and share large files on the internet.
He is currently fighting extradition to the US over charges of copyright infringement on a "massive scale".
Mega's chief executive Stephen Hall said he intended Mega to be a listed company by the end of May.Yes, it doesn't surprise me at all that there are interested investors. Personally I think Mr. Dotcom should "crowdfund". It worked for Oculus.
"The rapid global growth of Mega has generated significant interest from potential investors," he said.
The other news story worth mentioning today is the launch of King Digital.
Shares in King Digital, the games developer behind Candy Crush Saga, have fallen as much as 15% on their debut at the New York Stock Exchange.The makers of Candy Crush didn't take off like so many of recent tech IPO's have done. Perhaps the problem is that unlike most other dot-com IPO's, King Digital actually makes money.
Ian D'Souza, a professor of behavioural finance at New York University, says the trend in tech flotations is beginning to look like the dotcom bubble of 2000.Those aren't the only signs of a bubble in tech stocks. A record amount of margin debt and sky-high prices are other indicators.
"One of the great indicators of a bubble is when young companies are trying to access the capital markets in great quantities," he says.
"We've seen a proliferation of these at an accelerating rate over the past six months."
Mr D'Souza says that nearly 75% of recent stock market debuts have been from loss-making firms.
In the months leading to the 2000 stock market crash, 80% of initial public offerings (IPOs) were of loss-makers.
"It's not just a hot market, it's an ultra-hot market if you compare it with pretty much the biggest bubble of all time from an IPO perspective," he adds.
Of course the Bitcoin Mania is more than enough proof for me.