In the ongoing debate about whether or not there is a bubble in technology investment, the optimists make the argument that the IPO market is nothing like it was in 1999. This would seem to be a good sign that Wall St. doesn't have the same appetite for speculation that it used to have. Though this is part of it, there may be more to the story. There's evidence that speculation hasn't actually gone away, but rather it has moved to darker corners of the financial markets. Trading volume in penny stocks is at all time highs, much larger than it was back in 2000. Perhaps the reason that Wall St. hasn't embraced the IPO market isn't a lack of risk taking, but structural flaws hindering this market. Venture capitalists are complaining that government regulations, such as Sarbanes-Oxley, are making it too costly to go public. Though one would expect VCs to blame the government and regulations for their woes (as opposed to poor investments), they may have a point. In the last year, several US companies have actually gone public in London, where they can avoid US regulations. Instead of being positive about the weak IPO market, perhaps it's a bad sign, as investors must seek out riskier investments, liquidity is pushed overseas, and VCs are saddled with lower returns.
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