The statisitics don’t lie: Back in
the swinging heyday of the bull mar-
ket, you could throw a dart at almost
any IPO and walk away a happy
investor.       I’ve followed the IPO market for
the past seven years and seen the
good, the bad and the ugly. In 1999,
a remarkable Wall Street greeted a
remarkable 486 IPO’s. The pace
remained hot in 2000, with 406 new
companies launching on the stock
market.       But during that bubble, I also saw
a lot of companies that clearly
weren’t ready to make their stock
market debut. Many of these start-
ups lacked an experienced manage-
ment team, positive cash flow and
even a basic marketing plan. But
many investors didn’t seem to care.
Investors were more than eager to
buy anything shiny and new. Those
who got in early did end up making
a lot of money.       But when the bubble burst in
March 2000, taking the IPO market
down with it, many more lost their
shirts. Between 2001 and 2003, the
IPO market was the worst in recent
memory, with just 83, 70 and 68
IPO’s respectively. But as the econo-
my and stock market beefed up
again, IPO activity rebounded in
2004 with 216 debutants. So far in
2005, 126 companies have floated
on the stock market. But in today’s
market will those same companies
make it? Will investors be pouring
money into those offerings with the
same vigor as before? Probably not.
Investors are much more wary these
days. IPO giving way to
M&A—with a great
opportunity in the
online trading world This means greater market consol- idation, more M&A’s and stronger,
better investments. Many of the com-
panies that debuted back in the bub-
ble days are now looking for a way
out. Those who didn’t cash out either
sold their company for a loss, went
bankrupt, or are still desperately try-
ing to offload the dead weight. Mark
Cuban was one of the lucky ones. In
1999, he sold his startup company,
Broadcast.com, to Yahoo and bought
the Dallas Mavericks.       Take a look at the online trading
industry itself—and with TD
Waterhouse and DLJdirect, two com-
panies that IPO’d in 1999. After the
bubble burst, TD Waterhouse decid-
ed to take the company private.
Ameritrade has now acquired TD
Waterhouse for US$2.9 billion.
Harrisdirect bought out DLJdirect.
And E*Trade recently announced
that it’s buying Harrisdirect for
US$700 million. There’s a reason for
this—consolidation. The number of
big players in this industry alone is
getting smaller but stronger. It’s all
about survival of the fittest.       And I’m betting there’s more con-
solidation on tap for the online trad-
ing industry. Specifically, I’m betting
that Charles Schwab & Co.
(SCH:NYSE) will be one of the
biggest moneymakers for investors.
The good news is that whether it’s a
buyer itself or a buyout candidate, both its fundamentals and technicals
make it a strong buy. From a niche market
to the norm: Profit
from the growing
popularity of online
trading       Over the past decade, online trad-
ing has changed dramatically. What
was once a niche retail market in the
mid 1990’s is now the trading choice
for many investors. In 1997, there
were 3.1 million online trading
accounts. Last year, that figure had
ballooned to around 37 million by
2004.       The reasons are simple. Online
trading is convenient, easy and
cheap, saving investors a ton of
money in brokerage fees. Unlike a
full-service broker who charges com-
missions of 2% to 3% of the dollars
traded, online brokers get paid a
regular salary. And let’s face it. The
best brokers aren’t the MBA’s who
excelled in business schools or the
college business majors who wanted
careers in investment banking;
they’re often the unscrupulous sales-
man who could sell you used cars or
insurance just as well as they can
sell you stock. If you lose money on
a trade, the clever broker does not
apologize; instead he tries to sell
you on another investment, one that
will supposedly guarantee that you
will not only recoup your losses but
also make a profit. All very crafty
and not in your best interests. And
with technological advancement, Click your way to trading riches: As the online
trading boom continues, buy this US$14 stock
now and scoop 40% gains when it hits US$20
by January 2006 by Siu-Yee Ng Next 6 M & A    W E A L T H   O P P O R T U N I T Y   -   P A R T   2