Should I Buy an IPO? // IPO investing strategies, IPO stocks, invest in IPO, stock market basics 101, initial public offering explained, IPO explained, options trading strategies welcome to looking at the markets wit
David Moadel I'm going to answer a question that I've heard sometimes
especially when there's a hot hot new company that everybody's talking about
should i buy an IPO meaning should i buy stock or options right when those shares
are offered on the free market for an IPO
well let's talk about that ipos the fantasy and the reality if you wish you
had bought up shares of Apple Facebook or Microsoft right after its IPO or
initial public offering
you're not alone perhaps you're looking to the next hot IPO as your ticket to
wealth yet are the odds in your favor do most ipos end up like apple or microsoft
let's find out
well the fact is upon the announcement of a highly anticipated IPO large
institutional investors get first dibs on stock shares before any shares are
released to retail traders by the time
retail traders can buy shares the price has already increased considerably as
usual
retail traders end up holding the bag
besides for every hot IPO that ends up like Apple there are quite a few that
end up in disappointment
here are a few examples the first one is zynga
remember when that came out yeah few years ago and had a little pop and
beginning
nice and then the drop and it never really recovered from that drop at least
not
not so far and from the beginning if you had held onto it from the beginning
you would have lost about seventy maybe seventy one percent of your investment
this next one is groupon and you really didn't get that initial pop their digits
just kind of wobbled and then down and now its way down so the trajectory is
clearly to the downside and if you have held on from the from the beginning you
would you be down about 86 or eighty-seven percent
not too good and this one is shake shack one of the one of the more recent ones
yeah it was just just in 2015 that this one came out there shake shack up and
down and it again never really recovered from that at least so far and it's down
not not as dramatically as the other two examples but be down about fifteen
percent if you help from the beginning
now while they don't not all ipos don't look like this but we can detect a
pattern in these few examples
plenty of hype there it is followed by a large dose of reality
personally I prefer to invest in companies with staying power
solid earnings over a period of decades and plenty of capital chasing price
action in hot IPOs simply doesn't fit into my overall financial plan
I think it's best to avoid what's hot in favor of solid financial management with
an eye toward steady income
be wary of IPO hype and look to reliable companies as your go-to investments
so if you'd like some help for advisement on Finance stocks options
investing or anything of that nature please feel free to contact me anytime
my email address is David Modell @ gmail.com
I'll be glad to hear from you thanks a lot