Ever Thought About Going Public? 4 Good Reasons Why NOW is the Right Time
By Judith Campbell
1. Ride the Market Wave—as reported in this month’s CNNMoney.com, Warren Buffet told the world what he’s doing in this frightful market. The Oracle of Omaha has “been buying American stocks” both personally and with investor’s funds. His advice, “be greedy when others are fearful.” Most economists agree that the stock market has already factored in all the bad economic news, and then some. At current levels there is remarkable pressure on the market to go higher, even in the face of horrible economic news. Just recently the Dow gained 11.3 percent in just one week. This was the best weekly performance since October 1974, over 30 years ago. “We are definitely near the bottom here,” said Marvin Rowe of Going Public. “The market might still go lower, but one thing is for certain, it will go higher. Clearly, companies that go public when the Dow is only 7,500 are better off than those that went public when the Dow was over 14,000.”
2. End of the Recession in Sight?—recessions in recent history have lasted only 8 to 16 months. “I think that we are almost a year into this recession,” said Robert Barbera, chief economist at ITG, as quoted in the October 31, 2008 edition of msnbc.com, “So, you could have it ending in the middle of next year and it would be a record length recession" And although this is likely to be a worse-than-normal recession, the government’s enormous unprecedented bailout plans are bound to have a positive impact on credit markets, housing, and the ailing economy in general, early next year.
3. The Sky is Not Falling—doom and gloom as a reaction to major market corrections is natural…but is it logical? It’s plain to see that logic is thrown out with the bathwater during major economic and market downturns, and replaced by emotional fear. Or maybe people simply forget that this has happened repeatedly throughout history, in 1929, 1987, 1997, Sept 11, 2001, and 2002 and the market has always made new highs. “Fear is normal, but the fact is, the economy and stock market will come back”, said Gregg E. Jaclin, partner of Partner of Anslow & Jaclin, LLP, a New York securities law firm, “and I believe that in the future it is going to surpass previous highs.”
4. The Presidential Effect—in addition to the fact that most analysts believe the battered stock market has nowhere to go but up next year no matter who is in the White House, truth is the broader markets have realized larger gains during the terms of Democratic presidents. Moreover, the stock market has an apparent four-year cycle, as described by Yale Hirsch, a noted market historian, in his Presidential Election Cycle Theory. His theory reveals that the stock market does well in a presidential election year, not so well the following year, then goes on to improve until the next presidential election. This pattern has been held up for the greater part of the century (although it’s being tested by the terms of President George W. Bush).
Companies that go public now will have the wind at their backs as the Dow makes its way past its 2007 high, as it surely will. So if you want to go public, but market conditions have you trembling at the thought, take Warrant Buffet’s advice…the timing couldn’t be better.
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