“Why profits don’t matter” – Published in summer 2007 – heard the same in 1999, hearing the same now. People never learn.

1999 – Why profits don’t matter for IPOs

The Wall Street Journal has a heads-up article in Monday’s paper that says the percentage of companies going public this year that aren’t yet profitable is higher than at any time since the dot-com bubble. (The article, here, is available for free.) The paper notes that there are differences from seven years ago, primarily the number (there are fewer) and diversity (more industries are represented) of IPOs. Still, the large presence of unprofitable companies asking investors to take a chance on them is rightly seen as a warning sign.

REVERSION TO THE MEAN IS A FORCE OF NATURE

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