The Rise and Fall of the Dragon

1808 – China, ruled by Qing Dynasty (by Emperor Jia-Qing, a son of Qian-Long, who marked the peak of Qing Dynasty) then was a most prosperous nation in the world, with estimated 60% of the world GDP.


1908 – China, still ruled by Qing Dynasty then was a nation threatened by 8-Nations Alliance and sub-colonized by these nations, it’s the era marked with the fall of Dynasty Qing 3 years later when Pu-Yi was the last emperor.


2008 – Summer Olympics Games to be held in Beijing. Will the history repeat itself where 60% GDP of the world is from China, a nation with 1.3 billion population?

IPO, Initial Public Offering or??

IPO which was a sure gain scheme during a boom time in 90s became an urban legend that you will definitely rewarded with handsome gain if you apply it. The legend happened most of the times during 90s. There were people lining outside the brokerage houses overnight in order to get the IPO form. Some even pay out some money in order to get an application form.

Euphoria against IPO made investors act without rationality. Take an example, VA Linux. When it was 1st day trading of the shares (9th December 1999) in NASDAQ, there was no trading that morning until the price soared $290 against its IPO price of $30. The stock peaked at $320 and closed at $239.25, a gain of 697.5% in a single day! What is its underlying value? It valued at a total of $12.7 billion ($12,700,000,000) when it reached its peak price on day one. The company history? Less than five years old, it registered a cumulative total of $44 million in revenue with loss of $25 million! If you are an investor looking for private company, will you invest in the company with lousy performance like this? Definitively not!! But, it happened in equity market!! What’s its price on 21st March 2006? $3.71.

While billion of dollars lost by the average Joe who handled their hard earned money to invest in “Next Microsoft”, who gain from this frenzy mania? The money invested would not evaporate in the air unless there are Martians who take it out, so who is the beneficiary of this IPO euphoria? The answer is very clear here.

Will same history repeat? I don’t know. Maybe it is worth while to look at the examples shown below:

Baidu (A 5 ½ year-old dot com company, the largest search engine in China) IPO which set on 5th August 2005 with the price of $27 per American depository share (ADS) saw its first closing price at $122.54. This translated to more than quadruples in its IPO price. On 21st March 2006 closing price was $49.40 compared to its highest price since IPO which was $153.98

Google (A 6 year-old dot com company) which was listed in NASDAQ (19th August 2004) with its IPO price of $85. On Tuesday, 21st March 2006 quote, its price was $339.92 compared to its all time high of $475.11. The pricing method of Google is a bit different. While most companies IPO price is set by their underwriters, Google used a Dutch auction to price the IPO. Such an auction lets potential buyers say what they're willing to pay and sets the price at the point where there are enough buyers to buy all the shares being offered. That's designed to make sure that sellers aren't settling for a way-below-market price and IPO buyers aren't getting a windfall.

Please bear in mind, investors are always look for the long term value appreciation, a short term price performance not necessary determined his investment judgment. It should be distinguished from the speculators. After all, speculators are looking for quick profit. To gain quick profit, there is no underlying business sense that determines its price movement. After all, as long as there are follies willing to pick up the stock at its sky rocket price, you are still gain. By investment judgment solely based on this merit doomed to be failed because you never know whether you are the last folly.
Should we change IPO from Initial Public Offering to Insiders Profit Only? Imaginative Profit Only? Or…..???

Technorati Tags: Investment, Initial Public Offering, IPO, VA Linux, Baidu, Google, NASDAQ, Microsoft, China

Job Hopper

An article of job hoppers in Shanghai, China, click here.Is this a case where it happened back to 12 years back in South East Asia, especially the so called "Asian Tigers" during that time? Will China heading to the same route as they did? Let's see...

12 Emperors of Dynasty Qing XII (The Last Emperor)

12th Emperor: Xuāntǒng 宣統 (Pǔyí 溥儀) 1908 - 1911

He took a title of the Emperor of Dynasty Qing after the death of his uncle, Emperor, GuangXu at aged of three. But in fact, he never had a chance to rule the dynasty.

After XinHai Revolution in 1911 lead by Dr. Sun Yat-sen, PuYi retained his title and special treatment as a royal member.

From 1925 until 1932, he became a puppet ruler of Manchukuo where the state created by Japanese as a preparation for the later invasion to China.

His later part of life was pitiful. From an Emperor of dynasty which once upon a time was the strongest super power in the power, he became a normal civilian. After World War II, he was captured by Soviet Red Army and he was put in the prison. After returning back to China where the nation was in Mao's ruling, he once again resided in a reeducation camp for 10 years. He died in 1967 of cancer and it marked the end of monarchy system started nearly 4000 years ago.



"People who deny history do not have his story."