IPOs - get in and out early
ProfR
12/30/2011 7:59:16 AM
Good article on IPOs. I think the only way to win here is to be in at the very beginning and cash out fast. Most individual investors cannot get in in the first round.
Other than that, you need to look at these stocks like any others - do their fundamentals look good, are they in growth markets, etc. Don't get caught up in the sizzle!
Re: IPOs - get in and out early
Phoenix
12/30/2011 9:12:23 AM
Yes that looks like a good strategy. However I would still be very cautious with IPOs. You never know what is going to happen specially with today's volatile market conditions. Thank you Noreen for the good analysis.
Re: IPOs - get in and out early
PAW
12/30/2011 11:03:49 AM
It will be interesting to watch and see how the Facebook IPO will fare next year.
Re: IPOs - get in and out early
Street Smart
12/30/2011 11:29:58 AM
@ProfR said it and it's true: "Most investors cannot get in on the first round." In fact, the only way to get in on a hot offering as an individual investor is to be a VERY good client of the underwriting firm. Even then, you will receive only enough shares (maybe 25 or so) to have bragging rights, not to make any serious money.
If a firm solicits YOU to buy stock in an IPO, my advice is RUN and don't look back!
If a firm solicits YOU to buy stock in an IPO, my advice is RUN and don't look back!
@Street Smart - Good advice. But I just might be tempted to see if there is any opportunity to short. As Noreen shows, a fair number of IPO's move dramatically - down.
Re: IPOs - get in and out early
Street Smart
12/30/2011 1:57:22 PM
Very interesting in concept, @PredictableChaos, but is it possible to short an IPO?
@Street Smart -
My comment about shorting IPO's was mostly in fun, as I prefer lower risk strategies. But there are options chains on GRPN and ZNGA. Could be interesting...
Nobody has cracked the code
tokyogai
12/30/2011 4:39:04 PM
Good article. I am disappointed that none of the IPOs has yet figured a way to be truly fair to the small investor. There have been a number fo schemes, but nothing which has really caught on.
Re: Nobody has cracked the code
BigJim
12/30/2011 6:46:37 PM
Yes it would be a great innovation to have a system that really encouraged broad participation by small investors.
While it's hard to battle that feeling that you're "missing out, "it's worth repeating that IPOs are not usually the fast money tickets they seem. What's more, the bigger the first day jump, the better the chances you will be able to buy later at a better price.
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