How often do you use LinkedIn? I probably go to the site at least once a day to communicate with readers of Canadian Investment Review and flag articles I think my network might find interesting. It’s fun and it’s good for readers—but is it worth the $108 the shares hit on the first trading day?
Clearly not.
What the LinkedIn IPO does signal is a strong investor appetite for exposure to innovation and novelty (along with a pinch of nostalgia for those heady trading days of the late 1990s before the great Tech Wreck). The fact that the LinkedIn IPO drew so much attention means investors are hungry for exposure to social media—LinkedIn just pushed all that pent-up demand into one place.
But reaction to the LinkedIn IPO boom runs contrary to the mood in the ETF space. All month, ETF investors have been shedding risk, shifting to bond ETFs and shifting money away from stock and commodity products in greater numbers. They’re also seeking stability in consumer staples, investing in ETFs with holdings in companies like Walmart—whatever the mood in global markets, people have to buy groceries, right?
The flight to safety signals turning tables in the ETF space—and it’s a stark contrast to what we saw happening last week with the LinkedIn IPO.
Whether or not ETF investors will add more equities to their network in the coming months remains to be seen—but I’m not convinced they’re in the mood for a 90s-style bubble bath quite yet.