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Initial Public offering is a one which takes a private company, public. IPO is also an income or resource for an existing company listed on one of the exchanges to spin off or create a new company from its close relative company. It all sounds pretty straight forward.

Reasons for going public:

The most evident reason for a private company to enter the public market is raising instant liquid assets by way of offering shares in the company. Most private companies would choose to avoid the entire burden of complying with reporting and other regulations, but from time to time a company needs to expand or generate large sums of money to keep up with competition. The reasons are the advantage of offering a chunk of the company without losing control of the company.

IPOs Past and Present:

Before the acts of a few bad apples like Enron, WorldCom and others IPOs flourished on Wall Street. From the mid 1990s to the early 2000s each day brought a new public contributing to the market place. Some weeks two or three new IPOs were introduced to the public market place. There were essential compliance issues to deal with and prices to set and then the IPO hit the market and the exchanges determined what to do with the new kid on the block. Millions and now and then more could be generated on the first day of trading.

That was then and now there is Sarbanes-Oxley a piece of legislation that was supposed to prospectively cure the market place of cooked books, fraud and make the investor feel more secure. There are aspects of this curative piece of legislation that has provided for more transparency in corporate America. The auditor independence section makes great sense. It seems like common sense you want your auditor to not have a conflict of interest. The area of corporate responsibility for subordinate acts of fraud, errors and omissions makes perfect sense. Disclosure regarding debt and other poor actions involving the company almost seems like a redundancy with other securities laws.

The effect of the Sarbanes-Oxley and other methods to cut out bad apples is that it costs a great deal of money to take a company public these days. There is the need to hire top notch consultants and extra staff to comply with the ever increasing paper work and interior structural changes. It is not a bad piece of legislation, but it is troublesome for a heretofore small private company to be able to afford. The net effect is that the IPO is an infrequent event on Wall Street. There may be other reasons in addition to Sarbanes-Oxley.

In recent times, the Blackstone Group introduced an IPO to the market place. It was priced well, but overall the event was lackluster. It generated some 20 billion dollars, but all of the hopes were overstated from the hoopla that preceded the offering. Perhaps we have simply become worn-out.

The IPO is a launch of a newbie. The era of “what’s next,” may be part of our gilded past. It could be a good thing for the market place or it could signify a final epitaph to the Horatio Alger story which was overstated in the first place.

Stock Market refers to the equities where actually stocks and derivatives are traded. In USA, stock market is in New York City. Also in Hong Kong, Hamburg, London, Paris, Canada and others there are major stock markets that influence each other and impact the world stock market.

The New York Stock Exchange may have stocks listed that are listed on other major Stock Markets. A company headquartered in Amsterdam may be listed on multiple stock exchanges. Many foreign organized companies are listed on the New York Stock Exchange. There is a tremendous value for foreign companies to be listed on an exchange in the U.S. The exposure and knowledge of a foreign company has a face on the New York Stock Market.

An example would be a China stock Baidu. These information and search technology company has grown in leaps and bounds since it was introduced on the New York Market. Sometimes all it takes is making a good impression to stock analysts and a good review by key people to give the foreign company a boost.

The reality of the Stock Market today is its world wide integration of investors, companies and alliances that create an unprecedented dynamic. Thus far this United Nations of the financial markets has produced an unspoken treaty of like minds. The main objective is to create a win-win scenario for all of the world players in the Stock Market.

Any investor wherever located may hold a substantial stake in any given equity no matter where the equity is traded. The Stock Market is a very large private club that anyone can join with the only admission ticket is the price of a single share of stock.

The term equity should be broadly interpreted. There are equities that involve the manufacturing of products and goods, but a product can be intellectual or an entity like insurance. Banks are equities and financial brokers are all traded on the various exchanges. An investor may own gold stocks, mining companies and equities that package these equities into a corporate entity. The only limitation is that if the investor is interested in owning the commodity or trading in the futures market the Chicago Mercantile or other commodities exchanges is the investing tool.

In other words you may own a bank as an equity who may have bonds and other commercial paper that may trade on the commodities exchanges, but you can’ t buy a commodity as a stock. If you want a commodity like wheat, currency, corn, gold, silver or the like you need to look to the commodities exchange.