The following aptly describes the art of creating and distributing new issues
of stock. It is from an important publication.
Why the Stock Exchange is Likely to Have More and Greater Frauds in it
Than in Any Other Market.
There is a set of peculiarly crafty sellers that finds ready to hand
a race of peculiarly foolish buyers such as not to be found in other markets.
From the first projector who finds the mine, or acts for the state, far
down among the dealers who sell the stock there is a lore varied in form,
but united in object, all meant to sell the stock. And they do sell it.
In an ordinary produce market there is nothing like this. No dealer,
however skilled, can introduce an unknown and untried commodity for which
he, himself, paid nothing, and can sell it at a huge price.
A quiet, simple, parsimonious person in the country is exactly what the
active, greedy and mendacious dealer wishes to meet with and there is a
practically unlimited supply of such persons.
There is a class of unskilled "outsiders" far exceeding those in any
other market.
- The Economist, March 17, 1875.
Note that the writer included "or acts for the state" which goes beyond mining
deals to include promotion of bonds of barely solvent countries.
"China's initial public offerings are such hot commodities that a
company seeking $1.2 billion attracted bids approaching the annual economic
output of Hong Kong." (GDP for 2014 was $274 billion)
- Bloomberg, June 3, 2015.
And then there is the definition of a promotion from the old and highly-speculative
Vancouver Stock Exchange.
At the beginning of the promotion, the promoter has the vision and the
public has the money.
At the end of the promotion, the promoter has the money and the public
has the vision.
