The valuations of IPOs done in the last year or so is simply astounding. Despite huge valuations for companies of dubious quality, virtually all are rated 'buys' by the major brokerage houses. Why is this? I suspect there are many, many conversations like this happening these days:
Head of Investment Banking (we'll call him Tim): Fixed income is pretty difficult these days. And capital intensive. We really need to be doing more in equities. Specifically IPOs.
Head of Equity 'Research' (let's call him Mike): Despite the Chinese wall between us, I hear you.
CEO of company (Ralph): We are all part of a team. And the way bonuses are going to be calculated is based on the combined performance of...