[R_Symtex_II]

I think the term you're looking for is Ponzi scheme. Much like Bernie Made-off... err Madoff operated. Or perhaps more recently: Groupon. A classic pump and dump, take a look at the charts.

Your 'train analogy' is merely painting a glib picture of what is clearly insider trading by the likes of Goldman Sachs in a different, albeit obvious, guise.

[neilk]

You are conflating completely different kinds of stock scams.

[R_Symtex_II]

Perhaps in detail, but they both constitute classic Ponzi schemes. Convoluted valuation(s)/promise of returns only to find yourself trapped with a worthless 'investment' when the core of the operating capital has been pilfered by its biggest players.

Goldman Sachs is the underwriter (and reason enough to scoff its initial valuation and then spike in price) of the IPO in question, hence the pump and dump; JP Morgan was taking a billion in fees for services rendered while Madoff laundered his money there.

[VolatileVoid]

I love how people jump on the anti-GS train because it's the hip, popular thing to do. No doubt, GS has done things wrong. But:

  1) They were not the SOLE underwriter of GroupOn, nor were they the largest (that was Morgan Stanley).
  2) They were co-leads with Morgan and Credit Suisse.
  3) They made $8mm in fees on the deal.

To put it into perspective, GS's Q1 2012 revenue was $9.95bn. Let's compare for perspective:

  9,950,000,000
  8,000,000

Obviously GS also profited from the fact that they could buy GroupOn on the cheap, at pre-IPO prices, but even then I hardly think it would have made a dent in their bottom line.

So if you're going to criticize, add Morgan and Credit Suisse to your list. And JPMC wasn't even a lead underwriter on GroupOn. And even then, if you're going to implicate people, you might as well add the other 11 underwriters.

And in fact, you might as well add GroupOn's early investors who standed to make a KILLING on the inflated IPO price.

It's dollars all the way down, sir - and it doesn't start or stop just at Goldman Sachs.