r/investing
How much liquidity is actually in the market?
Questions if the market can absorb the massive liquidity drain from upcoming mega-IPOs and offerings by Google, SpaceX, and AI startups.
- Massive upcoming IPOs and share offerings could drain significant liquidity from the public market.
- Capital requirements may exceed the 2021 peak, potentially causing a liquidity drought.
With Google dropping 85 billion of new shares, SpaceX getting ready to IPO and sell 75 billion, and Anthropic and OpenAI filing their S1s to go public "soon" there's at least 160 billion that needs to be "bought up" if the IPOs sell at their target price, and a total of 320 billion if we assume Anthropic and OpenAI choose to raise similar amounts (85 + 75 + 80 + 80 billion)
The largest year of IPOs so far has been in 2021 with $303 Billion done in a year. This means this year will likely top that by around 20 billion
We did it in 2021, albeit when interest rates were low and money was cheap, but is this a significant amount of capital for the total public market? Or is it large but not much more than a drop in the bucket in terms of total public market?
Obviously the money has to come from somewhere, but understanding the size of the ocean helps measure the size of the drought
Markets have been fake since quantitative easing started in 2009. Nothing has made sense since.
All i know is that currencies got devalued, barely any actual growth since years.
So your claim is that inflation adjusted revenue and profit has not gone up since 2009 across the market?
Source: his ass
Is that a growth asset or just a bottomless money pit
It's even stronger than what you said - S&P has been growing at average 8.6% in inflation adjusted since 1986, last 40 years (11.5% CAGR average). But I suspect some people will claim that real inflation is like 11% - because, vibes.
what a stupid thing to say
ADVT of US markets is 1 trillion for equities. Total MC of all US equities is 75 trillion. While these are big ipo's in relative terms its realative small compared to overall equities.
If you include the bond market including debt securities and money market accounts, the IPOs are a drop in the bucket
Trading volume is not a good indicator for true liquidity. Most of that volume is HFTs trading back and forth superfast, and most of the rest of it is just shifting positions. You gotta look at total capital flow, which is closer to something like 1-10 billion per day.
Obviously the money has to come from somewhere
IPO money comes from the underwriting banks, not "the market". By the time these shares hit the exchanges, they were already paid for by the banks that underwrote the IPO.
There are exceptions, like Google's initial IPO, but those are rare.
No, the investment banks sell the IPOs to their institutional investors. Heaven forbid they buy it themselves! Oh no.
Pension funds, insurance companies, endowments, money managers, sovereign wealth funds, etc.
That is where the money comes from. If an individual investor is able to buy IPO shares at the offering price, that is a sign of a weak IPO.
then how come the spaceX IPO is not going to individuals? there is no way all these funds are dumb enough to value it and buy it at 1.7T..
They are only selling a tiny sliver of the company.
This keeps the price high.
That’s why they need to change the rules so that 401(k) money can be injected there.
I’m beginning to understand that 401k was created not because of good will for the government to protect citizens retirement but for wallstreet to profit of it
They were championed as a 3rd leg to a stool for a persons retirement with a pension and SS as the other 2. Early on that is what their proponents championed.
Instead companies phased out pensions and transitioned purely to a 401k.
Why do you think when billionaires offload millions/billions of stock at a time, it's always through dark pools or off market block trades?
Answer is unlimited. Its as far as the eyes can see
The US equity market is roughly $50 trillion and 320 billion is real money but its less than 1% of the pool. The 2021 comparison is the right concern though, not the absolute size,rates are higher now so the marginal buyer is more selective and crowding multiple mega IPOs into one window competes for the same institutional allocation budgets.
US — one detail easy to miss — idk hat？ — but us timing still feels off?
Trillions in money mkt accts
Last I saw there was something luje $7T sitting in money market funds
I’m still in the market, so I’d venture at least $20
Is in there