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News Link • Economy - Economics USA

Stock Market Tapped Out?


Pandora shares make spectacular plunge below IPO ... It didn't take long before Pandora went from music to investors' ears to the stock market's version of fingernails on a blackboard. The money-losing online music service became the latest initial public offering to "break," or fall below its offering price. The stock closed its second day of trading at $13.26, undercutting its $16 offering price, so even the privileged investors who bought into the IPO now have losses — if they didn't sell in time. – USA Today

Dominant Social Theme: It is not a trend. Stocks are a good buy and always have been.

Free-Market Analysis: The Pandora IPO came out higher than expected and then went up on the open until it was US$10 more than the initial US$16 offering. The excitement was tremendous. Bloomberg TV literally covered the price action of Pandora every 15 minutes or so for the entire day. The entire episode represented a kind of sub dominant social theme: "Stock trading is back, baby, and the action is hot!"

The Pandora IPO may have provided us with the last gasp of activity in what may soon be a prolonged bear market. The results of QE2 are fading and without more monetary inflation the US stock market is probably doomed to collapse like a gradually deflating paper bag, which is inevitable anayway BECAUSE of all of the monetary inflation to begin with. It is just a matter of WHEN the music stops, that's all.


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