1. Sometimes one invests in a company because it has a sound business model and you know that it will have long term value.
2. Other times you invest because the company is hot and rising and you plan to get your money out of the company before the party comes to an end (if you know a stock is going to rise, you might as well buy it and take profits as it goes up.) It can be very profitable for those in at the beginning, not so much for those left holding the relatively worthless bag.
The fact that the original founders are taking hundreds of millions of dollars out of groupon before the IPO reinforces many people's fears that Groupon is this second type of investment.
In my opinion, the second type is not investing. It's speculating.
"An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."
-Ben Graham, from chapter 1 of The Intelligent Investor
Uh, in your parent post you essentially claim all investors are savvy.
In this post, you define non-savvy investors out of existence.
I'm not concerned with the true definition of an investor but all this redefining won't change the point that by looking hot and looking good one can get people to toss one capital.
1. Sometimes one invests in a company because it has a sound business model and you know that it will have long term value.
2. Other times you invest because the company is hot and rising and you plan to get your money out of the company before the party comes to an end (if you know a stock is going to rise, you might as well buy it and take profits as it goes up.) It can be very profitable for those in at the beginning, not so much for those left holding the relatively worthless bag.
The fact that the original founders are taking hundreds of millions of dollars out of groupon before the IPO reinforces many people's fears that Groupon is this second type of investment.