IPOS CAN QUICKLY LOSE THEIR INITIAL CHARM
We noted with interest "The boom in IPOs" (Cover Story, Dec. 18), which recounted examples of wondrously successful initial public offerings of common stock. We would like to serve as wet blankets.
The issue for investors is whether those buying stock in these offerings actually do better than they would if they bought seasoned common stock, already public for several years. The answer: While in some cases they certainly do, in aggregate they do not.
You correctly noted that IPOs tend to jump in price during their first day of trading--and that stock bought after the initial jump tends not to be a good investment in the long run. But you also concluded, or at least suggested, that IPOs are good investments if bought before the jump. That is true only if you sell soon at the higher price. If you hold for five years, you will likely do worse than if you had bought seasoned stock. On average, you will still make a profit, but not as much as you would have in seasoned stocks.
Jonathan A. Shayne
Shayne & Co.
Larry D. Soderquist
Director of the Corporate &
Securities Law Institute
NashvilleReturn to top
START THOSE ALASKAN DRILLS
I'm glad your story on the opening of the Arctic National Wildlife Refuge (ANWR) was a Commentary, because it ignored the factual arguments for opening the ANWR ("High noon on the Alaskan tundra," News: Analysis & Commentary, Dec. 11). It never mentioned that in 10 years--the time it will take to tap the Arctic coastal plain's oil in an environmentally safe way--America will need the oil. It never mentioned that oil production from Prudhoe Bay is declining by 4% to 5% a year and that America will likely be dependent on foreign sources for 75% of its oil by 2010, as opposed to 51% now.
It certainly never mentioned that the tiny "footprint" of development--just 2,000 acres out of the 19 million-acre refuge--will have almost no effect on the calving grounds or migration routes of the Porcupine caribou herd, upon which the Gwich'in Indians depend. Nor is there any evidence that it will harm any other species in Alaska. Any fair review will show that oil exploration can occur without damage to the environment and with significant benefit.
Frank H. Murkowski (R-Alaska)
Chairman, Senate Energy &
Natural Resources Committee
WashingtonReturn to top
A LUMP OF COAL IN OREGON'S STOCKING
The larger part of the story was missing in "Yuletide bounty in Oregon" (Economic Trends, Dec. 18). While it's true that individual taxpayers received a "present" of about $100 each because of our kicker law, that represented only about 6.27% of our state tax bills. The same law put something under the tree for corporations, too: More than half of their state income-tax liability.
Meanwhile, our state universities have high tuition, large classes, and reduced course offerings. Schools continue to suffer from a 1990 Prop. 13-clone property-tax-limitation measure. The elderly, the mentally ill, and children in need are not getting the help they deserve. This Yuletide bounty looks more and more like a lump of coal.
Bentley B. Gilbert Jr.
Salem, Ore.Return to top