Pete Kendall's Socio Times: A Socionomic Commentary

November 30, 2006
Taking a Page From Wall Street’s Go-Go Days
Maybe it was the giant set of video screens. Or perhaps it was the troupe of Tai Chi practitioners, moving through their forms amid the soft orange glow of the Mandarin Oriental ballroom in Manhattan’s Time Warner Center as onlookers sampled high-end liquor. Whatever the reason, Monday’s party to celebrate the launch of Doubledown Media’s Dealmaker magazine felt a bit like a return to Wall Street’s heady days of 1999 — or at least a hopeful attempt to conjure up that go-go atmosphere with a flourish of expensive swag.

The monthly magazine targets investment banking and private equity professionals. Like its sibling, Dealmaker has articles that celebrate the major players in the industry and the sybaritic lifestyle to which those in the business can aspire. Dealmaker’s launch comes as Wall Street firms are enjoying a boom in mergers and acquisitions activity, much of it driven by private equity funds making audacious bids for large public companies.

The launch party seemed to celebrate luxury brands as much as it did banking. Guests received gift bags loaded with Macanudo cigars and discount coupons for massages and wine tastings. They also contained custom-made Dealmaker fortune cookies, stuffed with quotes from Sandy Weill, the former Citigroup chief executive, and other industry notables.

Guests grazed at three food stations, piled high with exotic cheeses and refined Chinese dumplings.
New York Times, DealBook

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Doubling Down on M&A Boom Has a Familiar Ring
Category: MARKETS
By: Pete Kendall, December 1, 2006
Many people would say that takeovers and rumors of takeovers on individual stocks would distort the behavior of a market average. Look at [takeover target] UAL Corp., for instance. Shouldn't this failed takeover candidate have 'distorted' the Transportation average? On the contrary, the Wave Principle reflects a clear order in stock price behavior. The 'craziness' in this and other airline issues nicely reflected the character of a fifth wave. Occasional periods of fevered but selective speculation are part of the market's order, typically showing up in the final stages of a prolonged rise.
The Elliott Wave Theorist, November 1989

The Elliott Wave Theorist November 1989 quote came in the most heated phase of the another great takeover frenzy. It was followed by a plunge in the Dow Jones Transportation Average, one that the Transports did not recover from for more than three years. Today’s issue of The Elliott Wave Financial Forecast highlights several firms and industries that are similar focal points to current buyout boom. It also shows a chart illustrating the correlation between corporate takeovers and the stock market. The charts below show the same “coincidence” in each of the bull markets of the last century.



The flurry of recent deals, which carried the total for the year past that of 2000, is the kind of rapid fire merger news that accompanied peaks in 1901, 1929, 1968 and 2000. Another common occurrence at peaks is the establishment of magazines dedicated to fulfilling investor’s unquenchable thirst for information about peaking financial assets and strategies. Remember eCompany Now? Time magazine’s Internet business magazine debuted with the NASDAQ peak in the spring of 2000. Dealmaker appears similarly timed. Of course, The Industry Standard and Business 2.0 came out several months before the NASDAQ peaked in March 2000, so a continuation of the trend is certainly possible. But Dealmaker’s effort to “conjure up that go-go atmosphere” of the late 1990s, says that the top will come sooner than later.

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