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John Tamny of RealClearMarkets.com argues retail investors shouldn't have been able to invest in the Facebook IPO because they couldn’t afford it.
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500 and -- The FaceBook IPO debacle has been a black guy for the markets and a lot of people lost a lot of money on it to.
Our next guest blames the retail in the best of the little guy.
It's now is John Tammany of real -- markets you don't blaming the little guy surely -- saying the little guy should never been in there in the first place aren't.
Yeah that's exactly -- it's not the little guys fall if it is the fault of this assumption really going back to the first Internet IPO boom.
Where they said that not and -- not enough of the retail investor that this was that the shares were to thinly allocated to the big and rich.
They said that was a problem twelve years ago if you look at it FaceBook IPO is a 25% retail allocation.
When you're going to have a bad IPO you're gonna have a -- offering if you put so -- shares in the hands of people who can't afford to lose money on it you.
Is that -- way of looking at it I mean this is ready to democratize nation of investing at the ground floor level.
And you know like hit because basically you'll -- the little guy can't afford it.
Bruyette can't afford it I mean every time they try to make an economy more fair they make it more unfair and you're seeing a lot of people lose money that they they shouldn't lose well how do you know they can't lose it we can't afford -- -- dinner while.
-- -- as evidenced by by this selling that's going on by the people that are are going to do basically file suits against FaceBook for having lost money people or our.
Face -- fact that IPOs -- very risky.
And when I was back and when I was a Goldman Sachs in the last Internet boom they were very clear about who got IPO shares.
You had to be very rich so that you would not sell the shares anywhere near the IPO.
Or you had to be a largest.
You don't feel should be allowed to go to casinos I mean would you say that people have to have a well test before they walk into a casino 'cause you can certainly walking and -- gambling your whole life savings away.
Especially -- can't afford it I mean it's it's sort of the same principle.
I'm not I'm not saying there should be any rules or any sort of wealth has from -- if he wants successful IPOs.
If you want ones that tend to do better in the after market once they start trading.
The worst way to do it is to democratize them I don't want any losses Stewart and Stewart can can -- tell you but.
If you're going to do this expect to have a lot more FaceBook IPO is when you try to democratize.
Ownership -- another very -- -- -- share I don't think he was to democratize nation itself.
I think -- the markets -- I would aren't they couldn't they could yet he was overpriced in the first place in the big -- -- -- and FaceBook itself and the market didn't look there was a problem.
Actually trading the stalks the that was the problem not the democratize animation showing.
Well but I think you'd be surprised I think if they didn't -- way in which they did -- whereby it -- any retail allocation went people who were expressly told.
You'll not be selling the shares anytime soon.
And then the institutions that got allocations were told it's expected the you'll by many multiple -- shares.
-- higher pricing up at the bottom line too much supply too expensive.
Too much out there anyway it was typical supply and demand people looked at it went now and sold it back.
OK but why why was there so much supply and I don't think -- -- being asked if if you're going to have a 25% retail allocation.
Of people who were not be required to hold on the shares you're gonna have that supply too much supply -- you talked about what.
And it just -- wanted to make as much money as they possibly can admit push the envelope too far.
And.
Maybe so but once again if you if you look back to the way they used to do you IPOs before all this.
Unfairness Eliot Spitzer stuff that it's not -- that only the rich get access to these public offerings.
Back then the allocate those who were allocated to were told if you sell your shares anywhere near the day of the IPO you'll never get an allocation again.
This was a good thing in the -- insured the kind of run -- that that that companies generally want after the IPO after the floating in the shares are John examined as interesting discussion of one week after the big event FaceBook is at 32 as opposed to 38 normal John thanks a lot.
