Name: Market Trends- Ali Baba
Uploaded: 2014-09-11
Duration: 2 min 9 s
Description: Market Trends- Ali Baba

IPO's are back, that's usually a sign of a good market, but it's got some people nervous, I'll tell you why. Initial public offerings have raised 40 billion dollars this year, that's the most since 2000 when the dot com boom when bust and that's before the big one. Later this month Alibaba. The Amazon of China is expected to raise $ 24 billion. That'll raise the IPO ante by half. Also coming down the pipeline are Box. The Cloud storage company and peer to peer lender Lending Club. And the deals are getting a good reception. Shares of IPOs are up more than the rest of the market this year. IPOs tend to be riskier investments, so the fact that investors are buying into these deals means that they're pretty optimistic about the economy and the market. But the rapid pace of these deals will also make some people nervous. Many economists believe that the market is driven more by supply than demand [ MUSIC ] And when there are more IPOs, there are more shares for people to invest in. And like in any market, when there is more of something, in this case stocks, prices tend to fall. But it's not as clear cut as that. Companies are also buying back a record amount of their own stock. That's in part balancing out the number of new shares that are being created by IPOs. Also take a look at the companies that are riding into the market along with Alibaba, their far from sure bets. Over the past three months, 75 % of all companies that have sold stock in IPO's have never made a penny in profits. That's not a great sign for the IPO's but it might be better for the rest of the market. The riskier these deals are, the less likely you'll have average investors buying in. Remember, it's not too long ago that that tons of average investors bought into Facebook's IPO, and that deal was a dud for over a year. Bad news for anyone who bought into that deal, but the good news it, it may have diffused the IPO bomb from blowing up the rest of [ MUSIC ]