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Red Hat Software Businesses

Red Hat IPO Fiasco Worries E*Trade Stock Holders 134

Posted by CmdrTaco from the stuff-to-read dept.
An anonymous reader wrote in to say that earlier this morning, discussions about the Red Hat IPO fiasco started appearing on the E*Trade stock board at Yahoo. E*Trade stock holders are worried about class action suits, complaints to the SEC, and even cracking of E*Trade's servers. I've heard many things (nothing official yet) that all the major outstanding issues will be resolved on monday. I still don't know if I'm eligible, although I did get the letter.
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Red Hat IPO Fiasco Worries E*Trade Stock Holders More

Red Hat IPO Fiasco Worries E*Trade Stock Holders

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  • I'm getting really frustrated with the net. I
    spent more time online this weekend then I have
    in a long while. The net as a forum is just
    out of control. People posting nonsense for their
    own gain. Flame wars that go on for pages with
    no content added.

    I realized the post that pointed back to /.,
    pointed to something I said. And the poster
    totally butchered the meaning of what was
    written. This is pretty upsetting and
    frustrating. I feel like I can't post anything
    anymore without the fear of being flamed, or
    quoted out context. I can't find useful
    information in discussions on anything without
    wading through pages and pages of flame wars.
    But I digress. I guess I'll be given a -1 for
    being off topic here.


    I hate to sound like on of those, "walk through
    10 feet of snow to get to school" stories, but
    I miss the days when being on the net meant you
    had an account at a university or research lab, and
    reading news meant figuring out rn, or if you
    were lucky, trn.

    I'm logging off. It's a beautiful day in
    Tahoe.

    ./~christopher
  • I've been on vacation all week, what is going on with Red Hat & E-Trade? Can someone please post a link to something explaining what I missed? Thanks!

  • Redhat IPO Probs -a Little Perspective (Score:2)

    by Anonymous Coward
    I received "the letter" from Redhat too. But I could not take them up on their offer to participate in their IPO. I wanted to, but because I am a Registered Representative with a member firm of the National Association of Security Dealers (NASD), I am not allowed to participate in what is called a "hot offering" (getting first crack at a desirable issue of stock).

    Please note, I am at the bottom of the NASD food-chain (i.e. I'm a Customer Service Rep for a Mutual Fund transfer agency and I have to use NT) and the "hot offering" restriction applies as much if not more to those who outrank me. So much for the "Big Boys" argument one person was making.

    As for the heartfelt arguments in the Salon article, please consider the brokerage's position. They are required to determine suitability before they can take one penny from you. Suitability has to based on your answers to questions about your financial situation and investing experience. If you are lacking in either area, the brokerage can't take your money.

    What happens when the brokerage takes your money for an investment which is not suitable? Simple, they become law-suitable.

    If what I've said seems ludicrous in a market which seems to have only an upward direction, I suggest you print this message, seal it in an envelope marked "Do Not Open Until the Dow Drops More Than 500 Points," then read it again.

  • A possible solution? (Score:1)

    by Anonymous Coward
    Assuming E*Trade sticks to its guns and keeps
    most Letter recipients from participating in the
    IPO...
    Couldn't a broker STILL make it possible for
    all Letter holders to join in, by:
    1. Starting up something like a mutual fund (this one would only buy RH stock, of course). 2. Sending everyone a letter allowing them to buy into the fund if they sign a waiver stating that they know the risks and fully accept them, and 3. Taking checks from everyone who signs the waiver and buying RH stock with the money?
    You'd have a trained pro handling everyone's money, which ought to make E*Trade and the SEC happy. Everyone who deserves to participate in the IPO, could do so. The broker could even charge a nominal percentage for his or her services. Maximum happiness for minimal effort, at least in my imagination.
    For what it's worth (how do you verify statements made by an anonymous coward?), I'm a trademark lawyer who doesn't even own any stock, much less know any brokers... I just hate to see people who deserve a chance to get in on this, be kept out of it. I hope SOME solution is found to reward people who've made it possible for me to do so many cool things with RH 6.0. Cheers...
  • Why not? What harm is there in owning stock in a company simply because you believe in it and wish to support the company and play some (small) part in its sucess? Surely this is "better" than simply treating the stock market as a "high class" form of gambling without having any "real" interest in the companies in which you are investing.
  • I almost always agree with the Linux masses, but this time I agree with the SEC. They set up a policy that is designed to prevent people from doing something *really* stupid. It is a good policy, and I imagine that it has save a good amount of people from losing thousands of dollars. Most linux users (That I know at least) know very little about the stock market, especially IPOs. These people should gain a little more experience before investing in one of the most risky transactions. I think that E*trade was wrong to go back and let any redhat letter person invest in the IPO, without trading experience. Redhat should have made this clear in their letter, but then again, no one gets a piece of misleading mail - do they?

  • Hmmm can't spell today...

    Suddest is supposed to say "suggest". :^)

  • > 've heard many things (nothing official yet) that all the major outstanding issues will be resolved on monday.
    Does this mean that issue about the eligibility of non-US residents will be resolved too? That'd be great!
  • This is not a SEC rule, but merely an E*Trade "house-rule". See my earlyer comment [slashdot.org] about this matter.

    At least as far as the issue of US residency is concerned, it seems that E*Trade is more concerned that there might be foreign rules that might restrict them from doing business with foreign residents. If you are a non-US resident, try getting a certificate from your own regulatory body (most are quite cooperative) attesting that no such rule exists in your country, and fax it to E*Trade's compliance department (650 331 6806)

  • It seems that someone on slashdot.org is planning sabatoge already
    Um, I think he was just saying that it could be done, not that he would.
    Hacker paranoia strikes again.

    BTW if I hit submit fast enough, FIRST POST!
    I think you can figure out how to email me ;)
  • Does anyone have an idea when the general public will be afforded the opportunity to invest in RedHat stock? How long does the IPO part take?
  • The General Public will be able to participate in the purchase and sale of RedHat stock the day of the Public Offering. It's not clear what day that will be. All the hooplah here is because certain investors (myself included) expect the pre public offering price to be significantly lower than the high price and low price on the first day of trading. Thus, if one can get in before day 1 of trading, some money can be made.

    If you just dig the idea of owning RedHat, wait until a week or so after the offering, when most of the hype has bled out of the stock, and buy it.

    For an interesting historical look at a successful IPO, and the weeks after, take a look at the first month of ebay pricing. It dropped for the first two weeks, and then took off again. For a look at a stock that probably won't do that, check out Be's stock (BEOS). My bet is that BEOS is going to sit where it is for a while.

  • Re:General public trading (Score:1)

    by Anonymous Coward
    The stock opens for public trading on the day of the IPO. That's why it's called an initial PUBLIC offering.

    However, generally the opening price is much higher than the IPO price - thus why people try to get in on IPOs. Often, the shares can be sold near immediately for a profit.


    Note that if you don't know what an IPO means, you probably shouldn't be investing.



  • E*TRADE allows people to submit "conditional offers" to buy stock in an IPO about a week before it starts trading. There's a very small window to place the offer -- only about two hours or so. I only hope they won't be Slashdotted during that period, since I really really want that stock. I opened an E*TRADE account with that sole purpose in mind.
  • The really good deals (moneymakers known in advance) are currently being reserved for the old hands who want to CONTROL the market.

    Gee, you really have some AMAZING insight (*sarcasm*).

    Well I say SUE 'EM NOW! SUE 'EM HARD! SUE 'EM TWICE!

    Yeah, great idea. That way all the lawyers can get their snouts in the trough as well, and gum up the works for another decade. You live in the USA, land of guns and litigation, by any chance?

    Any more earth stattering insights and bright ideas, Sherlock?

    If you want to support RHS, buy their products and recommend them to others rather than fiddle-ass around with stocks. Good luck to all RH investors, anyway.
  • Replies to your comments...

    Uhh...

    1) Of course.

    2) Actually... (See 3)

    3) Recieving the letter does not GUARANTEE stock, but RH set aside 800,000 shares for the board of directors, family, and "friends of RH." The "friends of RH" were designated by recieving "the letter." We're guaranteed stock as long as we (as a whole) do not request 800,000 shares.

    4) No problems here... :)

    "The Letter" guarantees us a very good shot at shares. (99% or so, which is good enough for me.)
  • Isn't that profile backwards? Surely the person who has a lot of investment experience, holds many different stocks is the one who has proven that (s)he is just doing it for the money rather than having a genuine interest in the running of the companies offering the stocks? Is the person who has no other stock but wants to buy into an IPO because they believe in the company not more likely to hold onto the stock for longer than someone who treats stocks simply as a financial investment?
  • Hey, some people are trying to stir up a bunch of crap in order to short. So, all of us who got an E*Trade account, but got bounced after having gone through a bunch of crap, let's use our $1000 for an interesting "investment": let's short EGRP! If enough of us participate, it should be beautiful to watch...

    Disclaimer: short selling is a very risky operation. Do it only if you can afford to lose. Don't do it if the $1000 in your E*Trade account are all your life savings.

  • The profile is strictly to determine the likelyhood of the potential investor being unable to withstand a failed investment. If you have never invested before, and have just cleared your bank account of the money you need to pay the rent because your friends are saying it's a sure thing, they want to be sure to tell you, "Ain't nothing sure, bud. The stock could go down from the initial price. It's happened before. It'll happen again. And we don't want you crying to us and crying to the government about how you got ripped off, and now you are destitute."

    The profile has nothing to do with RedHat's view of the Linux community. The folks at RedHat are also hoping the stock price goes up, so they can cash in on their large investment of time and energy, so they want as many people as possible looking to buy the stock, especially after the IPO, because that's where the real money comes in.
  • Er..doesn't class action lawsuits require a, um, class of people to agree to sue?

    Nope. All they require is that a class exists and that some members of that class (no matter how few), are willing to bring the action.

    Although originally a good idea, most class action lawsuits are merely licences for lawyers to print money. Quite often with a judge on the take as well....

  • Ok, first my opinion is the mistake was miscomminucation between RedHat and Etrade, nothing more. Etrade has a set of rules and guidelines for customer's investing in IPO offerings (whether I agree with them or not). RedHat should've checked out what those guidelines were before blindly sending out emails to individuals and telling them to sign up to accounts.

    Now what sorta stinks is Etrade's policy, first they do not tell you when the IPO is going to be offered. You have to make a general guess, and sit in front of your computer and refresh the IPO current offering's page. You have about two hours to fill out a ten question profile to see if you qualify. These restrictions have loosened a bit, so more might get in. Etrade "suggests" you hold the stock for at least 30 days, but will not restrict you from selling earlier than 30 days. Be warned if you sell within 30 days, it might effect your chances of future offerings. Companies want long term investors, and they are not going to allow Etrade to offer IPO if Etrade customer's are wannabe day traders.

    Also remember Etrade wants you to invest at least 100 shares or $1000 minimum (I am not TOTALLY SURE ON THIS NUMBER but close). If you don't have that kind of money my recommendation is if you have some friends you REALLY TRUST! go in together under one account. Preferbly in the name of someone with some long term trading background, as they will more likely be accepted for IPO offerings. Just say "Hey I got $500, you got $500 let's pool are money together and buy". I would agree beforehand on when to sell, (ie when it hit's $62 a share or drops by $5 whatever comes first).

    Whatever you do, don't let the system get you down, and prevent you from making the investments you want. It's to easy to say "Screw this, this is a pain in the ass". Just remember, the system was designed by the Rich, for the Rich. Joe's (and Jane's) like us just have to work harder within the system, and we can do it.
  • Or even worse, look at quokka.com which closed on the first day of the ipo well *below* the opening price! I hope this hoopla and bickering doesn't result in the Redhat IPO becoming a dud from the start.

    As an aside, what is the strategy at Quokka.com? I'm moderately interested in the stuff they cover and check on the Trango expedition every so often. But, is the general public so interested in adventure sports that it's efficient to advertise heavily on billboards, buses and soap operas? It seems insane to me.

  • Just a clever reminder that many IPOs aren't licenses to print money, although most of them are anticipated to be just that.
  • "First [second, third, fourth.. I've seen those too] post!!!" is rather annoying. It's not something many people (anyone?) wants to read. I keep my threshold at -1 anyway, so I still see it, but it doesn't contribute to the conversation to say that you were the first to post. They aren't censored, they're marked. You can still read them by setting your threshold to -1.
  • Your lawsuit is not against E*Trade but against
    Red Hat for those that didn't sign a release with
    Red Hat to allow them to use the item you worked
    on. It should be a class action suit.
    Red Hat screwed all of you!!!!!!! They could have issued stock options to you. They could have given
    you treasury stock. Red Hat just SCREWED all of you. All of you should contact an Attorney who specializes in Corporate Law. You will win more than what you would have made off of the stock.
    Remember, A Corporation is a living entity, living
    in perpetuity, BUT without a HEART!!!!!gj2@
  • Everyone made money, except the ones who bought it when it became generally available, in which case they lost 40% of their money in one day.
  • The problem is that if the average person is allowed to get in on IPOs, they won't go up anymore. If all the stock is bought by slashdotters with no stock trading experience who are looking to sell out immediately (within the same day), there's no reason for the stock to go up in the first place. Everybody wants to sell, so the stock goes down.

    The only reason IPOs go up is that people who are planning on holding on to the stock buy most of the IPO shares, not a bunch of slashdotters.
  • I'd bet that there were more than a few slashdotters who tried (not me, thank you!), thinking hmmmm... it's IPO price is $28 - cool!

    You can be a genius of a programmer, but because you don't know how the stock market works, does that therefore make you a moron?
  • Redhat makes no money past their IPO price - so if they go public at $14 a share, that's what they bring in. Private investors and banks make the real money - as well as employees who have equity. If you want to show support and play a part of their sucess, go buy their software and give it to your friends.
  • On the other hand, it IS a "set-aside". It appears that E*Trade is attempting to have as few "Red Hat hackers" as possible buy shares so that their own "fat cat" investors (i.e., those who make more than $x of trades with E*Trade per month) can get in on the early IPO stuff.

    Red Hat is probably furiously trying to figure out how to get E*Trade's pie off their face at the moment...

    Oh. I got the letter. But currently all I'm invested in is credit card debt from my last two job moves, so no IPO for me even if I were willing to lie on the questionaire :-(.

    -E
  • You don't need brains to invest in ETrade. Only a credit card.

    Since when do you need a credit card to invest with E*TRADE? From what I saw, all you need is a signature and a check for at least $1000.
  • Whoa.. don't read so much into that one phrase:) I completely understand the inaccuracy facet of IPO offerings, my intent was only to prepare those not familiar with Etrade's process not to be shocked by the fact that they have to Refresh a Web page "today (Monday)" at work:)

    And yes it is the "ultimate Book operation", I agree wholeheartedly:)
  • They don't deny you via the postal service. That's done via the web page. Same goes for rejecting your application -- it's done instantly, so I reallllly doubt a human ever sees it.

    --

  • Oh yeah, that guy sure proves that this system works.

    The problem isn't that they're restrictive -- the problem is that their restrictions are ridiculous. Investing $1500 of my savings in an IPO -- even a particularly risky one -- is not the same as day trading with borrowed money.

    --

  • If that's the case, why don't they ask how much you're planning to invest? I'm not a multimillionaire, but a few thousand dollars just means I'll have to wait several more months to buy that digital camera I've been wanting.

    --

  • here [slashdot.org]

    --

  • That's nice, but this isn't an SEC rule. It's something E*Trade made up, in response to the directive that they must "know their customers".

    And no, I'm not a stock market expert, but on the other hand, I'm not stupid. I'm not going to invest more than I can afford to lose.

    --

  • lucky you -- the e*trade test doesn't ask you anything about credit card debt.

    --

  • By probabilities alone, ... And therefore, even if the stock market is totally unbiased, the rich is sure to win and the poor is sure to loose.


    This is utter bollocks. Even a small investor who invests for the long term, spreads risk, and does not speculate is guaranteed a better return over decades than leaving money in the bank or whatever.

    There is a long distance between the ability to possess goods and the ability to make good (beneficial) use of your goods.

    No shit, Sherlock. However you have to have resources first to make good use of them. you of course may not be able to use them effectively, but speak for yourself, please.

    Even if this made money, it will teach me that money do not have to be earned, just steal them. This is not a good guide for my life since I do not plan to spend it collecting coins.

    Why is it theft? If I were you, I wouldn't collect coins either, but I'd try to look at things from a more rational viewpoint. money's not evil, only its misuse. If you deserved the letter, you deserve to share in RHS's success.

    ( Now explain all that to my wife...)

    Good luck, you're going to need it.
  • Generally, it's been my experience* that lawyers identify good possible suits, and then go hunting for people who might fall into the class. If a lawyer thinks there is a good chance of this suit settling, or (*gasp*) winning, all of you folks who were invited to take part in the IPO may find yourselves receiving letters from some law firm, letting you know that you are in the class and that they have already filed suit on your behalf.

    (* having been involved in the defense against a few class action suits)
  • Stop the whining!

    Oh, cut it out. There have been some legitimate questions raised regarding inconsistent and bizarre handling of this IPO by E*Trade. E*Trade should be forced to come up with an answer regarding a number of perfectly valid and reasonable questions regarding their suspicious handling of this IPO.

    I had compiled a whole bunch of inconsistent statements that were coming out of E*Trade over the course of about 72 hours. It has to be a pretty wild stretch of imagination for all of them to be true. See http://www.concentric.net/~mrsam/etroubl e/ [concentric.net] (shameless plug).
    --

  • I realize that an exception might have been made in the case of the Red Hat IPO, given the reaction to the lockout. In response to the people who have been decrying this apparent attempt to keep from the People the ability to Cash In, it must be pointed out that, in light of the recent Atlanta shootings, any relaxation of the requirements for online traders is unlikely to happen in the near future. Maybe this is a Good Thing.

  • Its not the SEC stuff that bothers me. What bothers me, is the fact that E-Trade lied. I spoke with no less than three seperate operators on E-Trade's Red Hat IPO Hotline the very day I recieved my letter, and asked all three the same set of questions just to be sure I knew what I was getting into. One of those questions was, "You realize, the vast majority of us are college students, about 18-24 years old, with very little money, and very little investment experience. Is this going to be a factor when it comes to our eligibility?" ..All three E*Trade operators said no, that the Eligibility Profile would have "no bearing at all" on our ability to at least participate.

    That turned out to be a lie.

    I've had an account with E-Trade since January -- I had damn near $7,000 in my account at the time I filled out the Eligibility Profile.. Hell, i've even traded on IPO stocks in the past!..My entire damn portfolio is always been made up of tech-sector/internet stocks. But yet, I failed E*Trade's eligibility profile. Now, it seems, the damn company has given people the green light for its customers to *lie* on the eligibility profile in order to get in. Fsck that, lying makes you just as bad as the assholes who require you to do so in the first place. I reserve the use of my middle finger for situations like these. I'd be real curious to hear from someone who did get past the eligibility profile without lying. I'd bet anyone five bucks to a donut that getting in without lying is impossible.

    Silly me. I should have started trading high-tech stocks when I was four years old, and made my first million by age six.

    Bowie
    PROPAGANDA [themes.org]
    Bowie J. Poag
  • Claiming FIRST POST is about as irritating as it gets. It's sorta like saying "i rule and you all suck" to a bunch of people, who will then proceed to ignore you. And it's a random bunch of people who moderate down. Also, the other guy had much more to say than just "FIRST POST!!!!!". not much there that makes it relevant enough to consider a "Free Speech" argument.
  • Although I usually don't reply to ACs, this link gives part of the story:

    Here [cnnfn.com]. Essentially, Wired kept trying, and nobody would buy. Failure.
  • I agree with the sentiment - restricting IPO's to "established" people should be made unconstitutional. This is becoming more of a hairy issue with these days of internet hype, where perceived "internet" stocks trade at multiples of thousands (and even negative thousands) and where suitably hyped IPOs often realise a 400% or more rise in the first hours of trading.

    The implications in the comments are, however, totally misleading.

    The practice of buying IPO shares and selling them the same day for quick profit is known as "flipping" and that is the one thing the underwriter is seeking desparately to avoid. If this was widespread, the IPO would nosedive, wiping untold millions off the market cap of the newly floated company, possibly causing its demise. Not really a success for the underwriter.

    If you monitor the IPO live, you'll probably see that it takes a few hours before the first shares are sold and bought on NASDAQ, and the volumes will be tiny - these shares will only be traded in order to establish the price, which will fluctuate wildly throughout the day.

    In theory, the purpose of the IPO eligibility selection is to filter out people likely to flip the stock. Anyone who has a reputation ofr it is highly unlikely to be approved.

    Large institutional investors want to hold the stock for a decent period (6 months +) and see it flourish for capital growth.

    Eek! Capatalism on Slashdot.......... ;-)
  • Red Hat should have given the whole offer a little bit more thought before sending out the emails.

    Giving away stock options rather than IPO shares would have solved the whole problem.

    I imagine that they may have thought giving the opportunity to buy shares is best because at least they do make some cash from the sale, regardless.

    If the distribution was in the form of an options package, there is no problem if the company goes bankrupt. It also prevents the un-evening of the playing field on the basis of financial discrimination, since everyone gets an equal portion.

    As a side benifit, the added value of the options since they are puchased at a negligible price, would mean that fewer total shares need be given away... leaving more shares for the open market IPO - thereby more money for Red Hat.

    A potential negative of giving out options packages is that there is a fairly large paperwork obligation - perhaps this is why Red Hat did not do it.


  • Well, E*Trade released some time ago that they lost some 125 million dollars, god knows how this past quarter and they do not expect this event to change anytime soon. Personally, I would not invest with E*Trade if my life depended on it (which it probably would if I did) I could just imagine my 100 shares of Red Hat, which I had put the money away for - went poof because some dumbsh*t diddled around with the servers or otherwise the company went T.U.

  • Well, opening price is different from the IPO price. Note MP3, which opened at like $100, and dropped all day. The IPO price on MP3 was like $28. The first day close of $60 something meant
    everybody made money. I don't know the store on Quokka.com, however, so YMMV. And, yes, many IPOs fail, (remember Wired's IPO a few years ago?) the market rejects them, and everyone gets screwed.
  • Just had a look over at the conversation on Yahoo.

    I know these greed-driven types from my time at a swiss research institute. Had one topic only during dinner:

    Stocks, stocks, stocks.

    And worse than ancient augures that tried to forecast the future from a chicken's innards or the flight of a swallow. Alas the pseudo scientific explanation of the day was quite entertaining often..

    Obviously they are scared like hell that some brothers and sisters here could leave more interesting tasks (moving satelites, inserting y2k bugs, using the military network for fun &c) and turn their attention to their cheap internet stock trading infrastructure.

    Tempting, very tempting..

  • come up this stuff. Some one commented the
    following.

    >Actually, somebody on Slashdot has already been >toying with the idea of sabotage: >http://slashdot.org/comments.pl?sid=99/07/30/1451 248&threshold=-1&commentsort=0& mode=thread&pid=127#213

    >Interestingly, the victim here would be Red Hat, >not E*Trade. But Red Hat might turn around and >sue E*Trade over the poor handling of their IPO, >which triggered this whole mess.

    This is utter nonsense. I think people are trying
    to stir up a bunch of negative crap about EGRP
    in order to short the stock. I hope this person
    does and ends up loosing their shirt.

  • Don't you think this was all
    planned in advance by the BIG
    FISH eat LITTLE FISH capitalist
    mongrels?

  • Class action lawsuits (Score:3)

    by John Fulmer ( 5840 ) on Sunday August 01, 1999 @09:47AM (#1771705)
    Er..doesn't class action lawsuits require a, um, class of people to agree to sue? It seems to me that a bunch of geeks like myself to suing over what amounts to be nothing is pretty laughable.

    The problem is that very money motivated individuals have problems understanding non-money motivated individuals.

    The only thing that worries me is that a opportunistic lawyer could sucker a some into a lawsuit 'freeride', where they would bear the cost and you would get money (or consideration) if they won, and lose nothing if they lost. That seems to be where most supposed 'class-action' lawsuits come from these days.

    jf

  • The IPO is when the stock is released to the masses. Currently, it's in the hands of an investment bank and other investors. That's where the money is...

    Look at MP3.com. It went public at what? $20 or $28? That's what the investors bought it for. If you had an e-trade account and put in a buy order, you'd probably have gotten it near it's peak (near $100? $96?) This past week, all you really do with the MPPP you bought is try to cut your losses, otherwise be prepared to be in it for the "long haul".

    And lastly, even though Redhat will be publicly traded, you'll either need a broker or an online investment account to get access to it. Brokers will laugh at you if you try to buy stocks one at a time. Online brokers seem to require a deposit between $1000 and $5000 to get started and then just charge a small commission on each trade.
  • Any time you have an open forum of communication someone [or a lot of someones] will scream fuzzy blue mud about the fuzzy blue mud.
    Complaining about the complaining is a true irony.
    Your right people should have cooler heads about this. On the other hand you could talk untill your blue in the face and get nowhere.
    Thats why we have moderators :) This allows a group of people to demoderate useless complaning and crying down.
    But allass the complainners out weigh the moderators.

    I enjoy a good rant myself.. but thats what a home page is for.....
  • There are so many things wrong with your first statement, I don't know where to begin. Yes, if you proceed under your assumptions, you may be right, but nowhere is it written that the stock market is a zero-sum game (for each winner there is a loser, etc).

    Look: The plain reality is that for the last 100 years, the stock market has averaged 6-8% gain, including the crash of '87 and the great depression, and your bank account returns 2-4%. You do the math.

    I won't dispute your point two, but might I suggest that HAVING financial security is undoubtedly better than NOT having it.

    None of this is relevant to RHAT, of course!
  • It's an IPO!!! There is risk associated with an IPO. It is dangerous for inexperienced investors who do not understand the risks to invest money, especially if it is not disposable income! Furthermore, anyone that is investing must realize that the stock may be re-priced before issuance, which would mean that you would have to pay more than $15 per share... better have enough to cover the stock being issued at about $20 per share!

    I think that people are unfortunately looking at The Letter as being a stock option that one would get if they actually worked directly for the company. If that were the case... it would be a different story, and anyone that got The Letter would have a right to purchase stock.

    Instead, what RedHat did was give people priority who have contributed to the OS movement. A nice gesture, but E*Trade should really stick to their guns to protect themselves in the matter.

    Time will tell...
  • IPO's are probably one of the easy ways to make money on the Internet nowadays. (Well, first you have to make it to the IPO, but...) Almost every Internet company to go IPO in the last few years has done incredibly well on the market (for a while, anyway), except for the aforementioned MP3.com. but 100 bucks is a really high starting price. I'd say that Red Hat would do well on open trading.
  • Now what sorta stinks is Etrade's policy, first they do not tell you when the IPO is going to be offered. You have to make a general guess, and sit in front of your computer and refresh the IPO current offering's page.

    Well... check around. Does any brokerage know when an IPO will happen with any long term accuracy? No. It is up to the IPO backers when it actually does fire off. Watch the news much? Ever hear of IPOs being withdrawn? That happens too, when the backers can't get enough shares bought before the IPO or feel that there won't be enough interest in the IPO. It *HAS* happened rather recently, to some tech companies.



    Face it (or don't), the Stock Market is the ultimate Book operation in the US. It is perfectly legal. Since it is someone else's game, you *have* to play by their rules. They will not change. You will have no voice in changing them (maybe, if you're net worth approaches a few $bill US, then maybe you can sit at the table). They are not open for "democratic" debate.



    RedHat probably assumed one thing, E*Trade another. E*Trade admitted a few things about its IPO "approval" process, or decided to look the other way for the RH one. Why is RedHat doing it? Why is it so hard for people accept that maybe RH *REALLY DOES* mean on throwing at least some bone back to the people that have helped make RedHat what it is now (i.e., the Linux community developers), and nothing more?



    I wish I had gotten the letter. I do hope on buying some RH stock eventually. Sure, it might benefit me. But ultimately, with companies, stock holders wag the dog. If enough pro-Linux people own RedHat stocks, then maybe, just maybe, RH will continue the way it is (for better or for worse), because they will be beholden financially more to them, rather than PHBs and bean-counting accountants and MBAs. At least if I do own some stocks, and I thought RH was stinking up its annual meeting, I can voice my opinion, among other things, at the shareholder's meeting, and have FAR more voice than anything that could be posted on Slashdot.



    Owning stock in a company is about as close to democracy as the corporate world gets.

  • Underwriters of a new offering, (e.g., the investment banks like Goldman Sachs) "make a market" for the shares, that is, they do the following:
    a) buy the shares that the company wants to issue
    b) sells the shares to the public

    Consequently, the underwriters have a great deal of incentive to underprice the offering. Insiders inherently have the same conflict of interest.

    Auctions, of course, provide a more efficient way of matching buyers and sellers. At least one investment bank is now offering IPO on an auction basis. If not for the conflict of interest of insiders, this method would become the preferred method of issuing new stock.
  • One thing that I feel the need to mention is that RedHat is NOT an internet stock in the context of the others. Companies like mp3.com and what not don't actually OWN anything. They own a webpage in essence. RedHat has actual capital. They produce a product. I would never invest in a website. It is non tangible (sp). At least if redhat were to go under (doubtful), They would have something to actually sell off to get money back to the investors. Of course this may be total bs, but this was how I always percieved the "Internet" stocks.
  • Whatever gives you the impression that /.ers, of all people, would go for a quick profit on RHAT? Many, perhaps most, support Linux and what RedHat is doing, and want to hold a part of that and support it, not make a quick buck off it.

    Slashdotters are not exactly "the average person".
  • This is the wrong way of thinking.

    First of all, for the facts...

    The stock market has had an average annual rate of return of 8.4% since 1802. Since 1926 (still before the great depression) the market has returned 10.8% per year.

    Compare this to 4.7% return from long term government bonds from 1802 and 5.2% since 1926.
    While 4 percentage points per year does not seem like a lot of sacrifice for the safety of government backed bonds (or similarly, bank backed cd's), there is a large difference.
    Stocks have the power of compounding on their side!!!

    $10,000 of stock held at a 10.8% average annual return for 30 years = $216,867

    $10,000 of long tern government bonds held at a coupon rate of 5.2% for 30 years (we are also going to assume that you are reinvesting your payments at the same rate, which would be dificult to do).

    = $45,758

    That is a big difference... and the 2% you would get in a savings account is even more dismal.

    Now for the clincher.... If you are investing long-term, holding onto quality stocks (let's say those represented byt the S&P 500) is actually LESS risky than holding onto bonds or CD's (and especially a mere savings account)! The reason for this is inflation. Stocks are the only investment vehicles that have consistently beaten inflation over the years. By investing in bonds and CD's you may be actually losing money!
    For instance, over the past 30 years, inflation has averaged a little over 5% per year!

    Only quality companies, which have the ability to raise their prices along with inflation are able to give you a real return!

    Buy great, solid companies like GE, Procter & Gamble, Coca Cola, McDonalds, Clorox, Merck and other such 100 year old growth companies and hold onto them for the long run.

    Not only will your return be likely to beat the historical average, but you will not have to pay the year to year fees and capital gains taxes of mutual funds. Own the companies yourself!


  • Trust me, it is a zero-sum game.

    Yes, the assumption that past returns are a prediction of future performance is in on its face wrong. And it certainly holds true for last year's performance on Amazon, etc. But it holds true for the bank returns as well. Bank returns during the great depression were certanly less than the 2-4% I quoted you!

    It is also very easy to "buy the market". Invest in a S&P500 fund, or a Russell 2000 fund. These funds usually track market returns within a tenth of their actual rate. This is a very sensible way to invest.

    As to your preferring 2-4% to 6-8% -- well, I can't comment on that. Why don't you plot out a graph of $10,000 invested over thirty years at the two rates, and tell me which YOU'D rather retire with!

    (the answer is 2,310,000 at 4%, 10,020,000 at 8%, but keep in mind that inflation is taking back 1-3% a year, so in 30 years the 2.3 mil isn't going to be nearly as attractive as it sounds now!)

    Obviously, if your tolerance for risk is so much less that you can only invest in a bank account, that is certainly what you should do. But realize that your returns will be substantially less.
  • If this thread is in overload, why is there only one page? (and will this comment appear on it or spawn a second page?)



  • How on earth did you get those numbers?
    They are a little astronomical.

    For better numbers, look at my earlier post (which were taken straight from my trusty ol' HP-12C)

  • The Truth For Those Who Dare To Read (Score:2)

    by Anonymous Coward
    1) The Stock Market. There has never been any guarantee that you will win, lose or break even.. Deal with it.

    2) Even a cursory examination of the Etrade site makes it extremely clear that there is no guarantee that you will receive any shares whatsoever, in any IPO, no matter who you are.

    3) I've read "The Letter", and it doesn't offer any guarantee of allocation. Only that you have a better chance, since you have a login, rather than being lucky enough to hit the magic window.

    4) All of that being said, I think Etrade could be more honest about the way IPO's are done. For example, I did not discern from the site that A) Unless you are a "Experienced Trader", you can't get alerts that the IPO window for a certain company has opened. B) Since the window is only guaranteed open for two hours, they recommend that non-experienced traders go look every hour! That's what makes the RedHat letter so nice.

    Once again, "The Letter" makes things a lot easier, but there was never a guarantee of allocation in any case. Stop the whining!
  • I tried to follow several stock boards on yahoo, but the endless holy wars about stocks and wild speculation about anything that happened to come to the various posters minds make them useless.
    Most of the people that post either have lost lots of money on the stock and are mad or worship the company they are talking about for no reason.

    The whole thing is just another example of the vocal minority that has nothing to do with what people as a whole actually think.
  • wouldn't a moderation down be good enough for people who want read some funny things??



  • And some think /.ers are immature (Score:3)

    by ErikSev ( 10724 ) on Sunday August 01, 1999 @09:58AM (#1771730) Homepage
    Jeez, compared to the sig to noise ration of these investment morons to, Slashdot looks like paradise! Half of em are spreading dis info in order to short the stock, a few honestly believe band of evil "hackers" are going to come out to destroy the computers, and some are just plain stupid. Then ETrade says extremely smart Linux programmers are "unfit to invest"?!?

    Erik
  • Actually, it's out-of-the-box Redhat 5.1 that gives Linux a bad rep.
  • Obviously I should add a [Fe] next time :)
  • "The first day close of $60 something meant everybody made money."

    Except for the poor saps who placed market orders to buy when MPPP started trading and were filled at $100...
  • This is utter nonsense. I think people are trying to stir up a bunch of negative crap about EGRP in order to short the stock. I hope this person does and ends up loosing their shirt.

    Amen, brother.

    It all turns down to advanced gambling with some more machiavelistic players, trying to change the odds.

  • I placed an order at my bank here in Vienna, Austria to buy some Red Hat shares at the IPO.

    No, I cannot buy them directly, because I sit in the European Union and don't have an account in the US and yes, I will have to pay higher commission (about 2.5% overall).

    But I can order the shares at the time of the IPO (which date is known) and at the IPO price (which margins are known).
    The remaining question will be, how many shares - if any - I'll get. I hope I'll get a lot, because I am a believer in Linux and RedHat.
  • Sorry if this seems a bit simple, but I've been looking at the stories of RedHat going IPO for a long time and got frustrated as I have absolutely no idea what all these IPOs are. I have found that they mean "Intellectual Property Owners" and believe they have something to do with stocks and such, but nothing else.

    Could somebody please shortly explain what IPO is, what you can gain from receiving "the letter", who receives them etc?
  • Well, your argument about the 50% makes sense if you're flipping a coin, but not if you invest in the market. When you flip a coin and loose, your money is gone. When you buy a stock and it goes down, you still own the stock. The stock can go back up. So, your argument makes sense if you day trade (an extremely risky method of 'investing'), or panic and sell immediately.

    If fact in the long run, the average stock goes up a bit over 6% a year. So if you buy and hold a market fund you are all but guarunteed to make money *in the long run*. Why don't we look at some examples of long run investing.

    Let's say a person makes $30,000 a year. If they put 10% of their post-tax income ($2100) in the market for 40 years at 6% (in an IRA), they'll have $314326.27. If they beat the market (not hard to do if you pick decent stocks and follow a buy and hold forever strategy) they can easily get 8%, leaving them with $521891.86. And they only put in 2100*40=$84000.

    Now let's take the case of a person in the CS field. Let's say that start at $40,000, get a 2% raise annually, and again put 10% of their post-tax income in an IRA at 8%. At the end of their 40 years they'll have... $1,138,461.44
    . Yes, that's right. 1.1 million dollars. They will also be making another $91,076.92 a year off of their investments. And all the while they just put 10% of their post-tax income into an IRA. And they could conceivably have more than that, like if their employer has a matching donation plan with the IRA, or if they put in a bit more than 10%, which is a rather low savings rate if you ask me. Now, this hypothetical person's income certainly doesn't qualify them as rich, but a wise investment plan can make them rich.

    There are two ways to make a lot of money: either have a lot of money already or wait for a long time. Not everybody has a lot of money, but everybody has (or at least starts off with) a lot of time. Try reading "The Millionaire Next Door" if you don't believe me.


    -----
    Stock tip of the day: Buy Low Sell High.
  • Yup, whoops, shame on me :-) I got all caught up in the joy of replying and didn't check my math.

    But your post caught the crux of the matter anyway.
  • Yesterday afternoon, E*Trade has reached a historic low of 28 9/16. This broke the psychological barrier of $30 which has been held since beginning of April. Congratulations to all you shorters! Now, carefully examine its price [yahoo.com] and don't forget to cover if necessary. Always specify a limit on your trades.

  • Ye gods!!! (Score:4)

    by Surazal ( 729 ) on Sunday August 01, 1999 @10:25AM (#1771747) Homepage Journal

    Well this turned out to be a fine mess!

    I suddest people keep a cool head about this. Redhat's IPO ain't the beginning nor the end of Linux. And it's certainly not the beginning nor end of your careers either. An IPO is just that. An Initial Public Offering. A way for businesses to raise money through selling portions of itself to the public. It's *not* the ultimate solution to redeem yourself for years of selfless work. Hey, that's what selfless work is. Sometimes it's thankless too.

    Red Hat is taking steps to do damage control here. Let's let them work this out. I suspect that in the end this will work out for most people who got "the letter". If we let it. You decide.

    I'd also like to suggest that there might have been a slight, um, overreaction on the part of, oh, everybody. :^) Whether this was by tetosterone-laden teenagers or disgruntled programmers or corporate marketting agents spreading their FUD through covert channels, I think that, well, we need to keep this from escalating. Despite not getting the letter, I might want to invest in this company in the future. Actually, I might want to use Linux at whatever jobs I get in the future, too. This IPO will help. Screaming holy hell about being denied an opprotunity and writing angry letters to Wired and Yahoo! and Salon won't. I mean, it really really won't.

    Well, I hope the best for Red Hat and all parties involved. Here's to a successful IPO, and World Domination(TM). :^)

  • Don't you watch the news dude? Hackers are everywhere, and they control everything... If it weren't for the urgent need to protect children from the evils of the internet like the Bible, we'd be going after them!
    You don't need brains to invest in ETrade. Only a credit card.
    I think you can figure out how to email me ;)
  • ... not "Intellectual Propety Owners".

    Maybe that will aid your research.

    Jay (=
  • On the other hand this nicely illustrates why ETrade has felt the urge to use some filtering process. Of course lots of people want to make a quick buck, don't caring if the company sells sliced cows or produces free software.

    Too bad their scheme created anger among a crowd of what I think will be devoted share holders.

  • E*Trade IPO - Let's Be Responsible (Score:1)

    by Anonymous Coward
    Look guys... There are rules to IPOs, you all know that. These rules have existed long before the geeks got involved with this IPO. And these rules will continue to exist even after the Red Hat IPO.

    The whole idea is to try and ensure people are responsible about this - not gambling their life savings away on a very speculative IPO or something. Sure, the survey method isn't 100% fair but what would be better?

    If nothing else, let's all just be reasonable about this whole thing... Let's not spread rumors about hacking, attacking or whatever. It just doesn't make any of us look good. E*Trade screwing up, geeks crying and complaining and threatening attacks... It's all just silly.

    Life goes on after the Red Hat IPO...
  • Nope. It is about companies going public, meaning becoming a company whose shares are traded at a stock exchange.

    And nothing new, this happens since a long time now. In the 17th century e.g. there was a big tulip speculation craze going on in the Netherlands..

    And nothing inherent evil, as it is a good means to acquire capital for young companies that have good ideas but not sufficient money.

    What blows this all out of proportions is that today stocks have become a common means of investion, not to say a public sports. And of course people love the sure bet this combined with the utterly overhyped Internet stocks gives us this crazy circus.

    I read some interesting interview with AMD chief Saunders two weeks ago, who was pissed that his company, which produces complex goods has less stock value than some Internet search engine.

    Let's hope the Internet bubble bursts soon.

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