Blackstone IPO surges, Wall Street tanks

Investors saw big losses in the markets today except for the privileged few who rode the Blackstone Group LP (BX) to nice gains on it's first day of trading.



Could this be a great new divergent indicator? Everytime a private equity firm sell shares to the public, investors should dump their shares? After reading some of details of this public offering, I have to question the wisdom of why I would invest in an entity where most of my money went to a select few management individuals. Is this a complete stock swindle or what? Let's see, a firm whose specialty is taking companies private, is going public and asking investors to invest in something that may or may not make money for several years to come. Excuse me for being blunt but, not with my money! In fact, I am so convinced that this deal stinks I am shorting the stock at $35.98 as I write this post.



This event will also convince other private equity firms to go for the walk-off homerun by selling shares to "joe public", but I hope regulators and lawmakers will engage in more scrutiny to protect investors who may not understand the risks they are taking by supporting these types of firms. If my money was going to support a new promising drug, help expand an alternative energy company or finance some other worthwhile endeavor, at least there is an incentive for the company to succeed. Where are the incentives here? How many jobs will be lost in the business of buying companies and trying to turn them around?



For the most part, I am favorable towards any firm who dives into the public investment pool with grand plans to reward shareholders, but until firms like this show a track record to investors, I remain skeptical.