Did Big Government RUIN The Stock Market?

Chris criticizes the collapse of the vibrant IPO market from the 1990s, arguing that regulations like Sarbanes-Oxley and Dodd-Frank have paved the way for endless financing rounds and inflated valuations. He explains how private equity now chases exits over real market-driven public offerings, leaving American investors and entrepreneurs sidelined. www.watchdogonwallstreet.com

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.

Speaker 2 (00:16):
Bring back the ip Oh yeah, I want old school
Wall Street. I want to return of old school Wall Street. Well,
what's what's that going to take? Oh, well, we're going
to have to start a racing a lot of rules,
not just Dodd Frank, I'm going all the way back
to Sarbanes Oxley. That's right. And I called this, call

(00:38):
this this again. George W. Bush pushed this thing through
because we had the dot com collapse and you had
to do something. I had to do something. Congress had
to do something. And what they did was they wrecked
destroyed the ip O market. And again it hurt you.

(00:58):
It hurt you. There's a story talking about the IPO
market and the decline. They're saying in recent years. It's
not recent years. Okay, this is twenty five years, two
and a half decades. It's been wrecked. Fewer companies going public.

(01:19):
Let take a look at the amount of listed companies
today compared to the way it was back in the
nineteen nineties. The way companies were funded have completely changed.
And has it benefited Has it benefited investors American investors? No, No, Yeah,

(01:40):
there's been there's been some good ones. Sure, But let
me explain to you. We're gonna go back in time.
I want to talk about the way things work from
the younger people. Back prior to Sarbaines Oxley, prior to
repealing Glass Steegel. There was a myriad okay, many many
invests Smith Banks on Wall Street. Some were good, some

(02:04):
were crooked, you know from the movie Wolf on Wall Street.
There were other ones out there as well, but they
were more penny stock operators. Companies would take would raise money.
They go to Wall Street, this old school Wall Street.
Go there, raise money. This is what we want to do. Morgan, Stanley,
Goldman and all a lot of different firms, dl J,

(02:28):
so many of them brown brows have. There was so
many to go to. This was ourdea. They'd put together
a prospectus. Okay, they get intentions to the road show,
get people to fund it, and the stock would trade.
The stock would trade, some would make it, some would

(02:49):
And you know, I used to my desk would have
a pile of various different companies going public and it
wouldn't take me long. I could take a look at
the business, the business plan. I'd like, anything's gonna make it,
this one ain't gonna make it. And then during that time,
during the nineteen nineties, everyone was Google gaga over IPOs,

(03:09):
anything with a dot com attached to it. Fomo fomo
was I gotta get involved, got to get involved, getting
involved because hey, many of these companies would pop on
the first day they would, They'd be hyped up in
various different publications. The Internet was a new novel thing.
There were message boards out there, CNBC was on every television, everywhere,

(03:35):
every pizza part. And again everybody was all in because
everything was going up again. I knew that there would
be fallout because again people went nuts. They did stupid
things with their money. They were chasing companies that had
little to no value. But some did, some did. And
the difference between back then and today is back then

(04:00):
you could have gotten in. You could have gotten in
in the infancy stages of this company. You might not
have gotten in at the ip old price, or maybe
gotten a little bit of the IPO but you didn't
have to wait ten years. See how the investment banking
market works today with private equity, and how they go

(04:24):
about doing things is essentially they ladder these companies up
with multiple rounds of financing for years and years and years,
and they get more financing and another round of financing
and another round of financing, and the ultimate goal is
taking it public at what I feel is an absolutely

(04:46):
moronic valuation. And who buys that? That moronic valuation you do.
They're selling to you after they basically have run the
thing up to the moon. Need to get away from that.

(05:07):
We do that, I think we're going to have a
much more dynamic market. I love to see more companies
being able to go to Wall Street and say, hey,
here's my idea. I want to raise some money. Away
we go. It was an exciting time and didn't get
out of control. Damn straight we saw it coming broke

(05:28):
columns yield hold on Icarus in the stock market. Listen,
somebody's companies are good. But even some of the companies
that I avoided because I wasn't sure. I always give
the example Amazon, and I invite you to go online

(05:49):
and take a look at Jeff Bezos back in the
day with his cardboard Amazon signed at the wall, stuffing
boxes himself with books to ship out a lot of
retail online retail. Back in the nineteen nineties, I remember
ordering music from CD now. Yeah, I didn't like the

(06:17):
whole You know that again, kids are not confim of it.
There was a file they called it file sharing service
back then. It was called Napster. Eventually got put out
of business, and there was Kasa. There was another one too,
And I'm like, this is just stealing. They're just put
this stuff online and recording it of You're stealing people's music.
I said, this is not right, this is not fair.
You know. They eventually had to deal with that. I

(06:38):
think Metallica led the way on that one. But anyway,
not neither here nor there. There was CD now, there
was pets dot com. There was all sorts of companies
and I didn't know what was going to make it.
Now Amazon they figured it out, Hey why just sell books,
Let's sell everything, and then again went into other areas

(06:59):
of business Amazon website later on down the line. But
the reality is is at least you could got you
could have gotten in at a very very low price
back and they google all of these companies. That's no
longer the case. I am been searching for, you know,

(07:22):
various different VC funds, alternative investment funds for our clients,
and it's it's difficult. It's very hard for me to
kick the tires on these things to see what they
have in there and the various different rounds and where
they're at, and whether or not these things are going

(07:44):
to eventually even make it, they're going to be able
to be able to take them public. And these are
the market these companies to market at their own mark,
at least when they were trading, the market would dictate
what the share price was. And yeah, is it volatile, absolutely,
but that's okay. We need to get back to the

(08:06):
old way of doing things because, honestly, people, it makes
our country more dynamic, It makes Wall Street a hell
of a lot more fun. People. Is a myriad of
different ways that people can gamble their money away. And
we spoke to people all the time, even the IPOs

(08:28):
back then. You had to be a what they called
a sophisticated investor at that point in time to even
participate in some of these things. And yeah, there was
private placements in earlier rounds of financing, but nothing like today,
not this eight ten year nonsense that's going on basically
right now. And you know we're going to discuss this

(08:49):
at length this weekend on the radio show. The venture
capital market is it's getting ugly, folks. They're trying to
find wighs out. Everybody's looking for exits and they can't
find any watchdog on Wall street dot com