An Investor should not let the large 1st day % returns of an IPO fool him/her to Buy and Hold without considering some hard facts.
The average 3-year performance of an IPO bought on the 1st day over the past 30-years has lagged the S/P by about 20%. Yet this under-performance only applies to cos that had < $50M in Sales in the year prior of going public.
Investors aware of these facts have a better chance of making a more profitable decision when the time comes to Buy and Hold an IPO.
Perhaps good reason Biotechs are in a corrective phase as the Wall Street Syndicates have created a lot of new froth.
The law of Supply and Demand always wins in the end over the IPO Road Show and often painted rosy business Story.
Guard Up,
POTC-
http://psychologyofthecall.blogspot.com
The average 3-year performance of an IPO bought on the 1st day over the past 30-years has lagged the S/P by about 20%. Yet this under-performance only applies to cos that had < $50M in Sales in the year prior of going public.
Investors aware of these facts have a better chance of making a more profitable decision when the time comes to Buy and Hold an IPO.
Industry breakdown of U.S. IPOs over last 12-months
Perhaps good reason Biotechs are in a corrective phase as the Wall Street Syndicates have created a lot of new froth.
The law of Supply and Demand always wins in the end over the IPO Road Show and often painted rosy business Story.
Guard Up,
POTC-
http://psychologyofthecall.blogspot.com
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