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MarketWatch First Take
May 19, 2011, 1:09 p.m. EDT
By MarketWatch
CHAPEL HILL, N.C. (MarketWatch) "” Make no mistake: The stock market is nowhere near as overheated today as it was in the latter stages of the Internet bubble in 1999 and early 2000 "” notwithstanding LinkedIn Corp.'s highly successful initial public offering.
LinkedIn's stock tops $100, more than double its $45 IPO price, as the professional networking site begins trading on the New York Stock Exchange.
Consider one indicator of an overheated market: the number of IPOs that, like LinkedIn /quotes/comstock/13*!lnkd/quotes/nls/lnkd LNKD +1.59% so far Thursday, doubled in price during their first day of trading. Read about LinkedIn's debut.
According to Jay Ritter, a finance professor at the University of Florida who researches the IPO market, there were 115 such IPOs in calendar 1999. In the first quarter of 2000, there were 48 more "” a pace equivalent to 192 a year.
This year, in contrast, according to Scott Sweet, senior managing partner at IPO Boutique, there was just one before Thursday. That was Qihoo /quotes/comstock/13*!qihu/quotes/nls/qihu QIHU +3.98% , the Chinese Internet company that came to market in late March. Its first-day return was 134%.
To be sure, these comparisons with the top of the decade-ago Internet bubble don't mean that LinkedIn's shares aren't themselves overheated.
Indeed, those shares could very well be forming a mini-bubble all their own.
But it takes more than one bubble to create a frothy market.
"” Mark Hulbert
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"MOEX USA Corp. has agreed to hand over $1.07 billion to settle claims from the Deepwater Horizon disaster http://bit.ly/kQ03zJ" 11:21 a.m. EDT, May 20, 2011 from MarketWatch
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