IPO Stars Lifting Mediocre Brethren

That means that IPOs in October have been, on average, priced at a significant discount to what the market thought they were actually worth. If the stock market is truly an efficient, self-interested beast, then that's an awful lot of money that easily could have been raised but was left on the table instead.

And that can be explained only two ways: Either underwriters were stupid in valuing these deals or they were very cunning.

I'm inclined to favor the cunning theory. These first-day pops have happened so consistently that you'd think the bankers might realize they're setting the bar a little too low on deals that won rave reviews on the road.

Anyway, you don't get to work on the investment banking desks of Morgan Stanley, Goldman Sachs or any of the other big boys, let alone get handed a hot IPO, if you're not terribly bright.

Besides, executives at these new companies, who still own a good chunk of stock in them, have seen their own net worths improve, so they're unlikely to complain.

Some people might point to many recent IPOs that haven't done as well and thus argue that the market is still being rational.

But it's not being rational at all. It's being irrational in a very focused, clever way.