IPO Investing- How to Do it Successfully!
22 January 2006Interested in IPO’s as an investment vehicle? Below is a list of things to help guide you to a profitable outcome (hopefully).
1. Only buy IPO’s that price higher than its initial range (but avoid the over-hyped issues). This guarantees you are buying into a company that is in demand.
2. Only buy IPO’s that open higher than they priced.
3. Only buy IPO’s that close higher on their first day of trading (list price) than they priced.
4. Wait until at least the ninth or tenth day of trading to decide to buy an IPO (when you can see the 9 day simple moving average on a stock chart). The stock price should be above the 9 day sma. Some stocks take off right from the get go but a lot will fall back some before really taking off.
5. Using the IPO archive from the prior quarter, go through the list looking for stocks that meet the above conditions and look at their chart to see how each IPO stock behaved. Each IPO will behave differently but you will see some similarities. Use these to train yourself on how to spot good and bad behaviors.
6. Don’t buy IPO’s during maket downturns or corrections. Not that this is true evey time but most stocks follow the market. If you do invest during a downturn, keep a short leash on your stocks.
7. Not many IPO’s will be brought public during downturns anyway but if they do, you probably will want to run from those stocks.
I hope these simple things to watch help you to successfully invest in IPO’s.
Harvey
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