03
May

Investing with IPO How Initial Public Offerings Can Help Diversify Your Investment Portfolio

Written by Best Financial Magzine. Posted in Initial public offerings, New issue services

Ipo company

There are plenty of ways to make money for those willing to take a chance. The American stock market opened its doors on Wall Street on January 4th, 1865, allowing thousands of wealthy investors to buy stocks and potentially turn their investments into fortunes. Unfortunately, stocks can be a risky endeavor as the stock market crash beginning on October 24th, 1929 showed us by plunging our nation into the worst economic collapse in our country’s history. As the market recovered, investors once again flocked to Wall Street as they still do today.

Investment Opportunities

There are a number of ways to make investments with most financial advisors suggesting that individuals diversify their investment portfolio in order to have the best chance of avoiding losses and making profits. Stocks, bonds, mutual funds, and other investment opportunities can be handled through a prime broker service; it should be noted that most of these investments take years if not decades to mature into something profitable, and even then there is still a significant risk for losses. For those looking to make significantly more profits from buying stocks, initial public offerings may be the best way to go.

The Benefits of IPO

Initial public offerings
(IPO) became a commonplace term on the stock market during the late 1990s when the nation saw a surge of new businesses pop up in response to the advancement of the world wide web. An IPO is offered by a startup company looking to generate a large amount of capital to get their business off the ground, this means that around 10 to 15% of the company is offered up for sale. Due to their increased risk, investors are typically able to get IPO prices for 13 to 15% less than the regular trading price. Most IPOs do have a lock-up period whereby investors are unable to sell off shares of stock for a specific period of time (typically three to 24 months). IPOs have allowed hedge funds and other high-end investors to make triple-digit gains on the first day of trading for the IPO, making it the most profitable venture for big investors.

Staying Up to Date on IPO News

Last year was one of the best years for IPOs since 2000 with IPO news reports suggesting that 2016 may be an even bigger year for profits. As a general rule of thumb for those staying up to date on IPO news, when the market overall is doing well chances are good that IPOs will be performing well — IPOS typically outperform their estimated benchmarks according to regular IPO data. While partnering with an IPO firm can certainly improve one’s chances of making profitable investments, there is always the risk that the company itself will fail and go bankrupt like with any other stock; because of the lock-up period this means that many investors may find it difficult to recoup their losses. Make sure to do your research and find a trusted IPO firm in your area before investing your hard-earned money.

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