Buying New Issues

Has your broker been calling you recently with the "great opportunity" to get in on a new Initial Populace Offering? With friends like that you don't need any enemies.

I don't care how good this new stock offering sounds. The opportunities it will remain even or travel up are about 1 in 3 and I don't desire to play those likelihood with my money.

Most of the new IPOs these years are from the engineering sector. That is where the love affair and large money have been, but the NASDAQ topped out on March 10 this year. It is a good thought to take a expression at what have happened to these new offerings since that time.

The S&P500 Index have dropped only 3% since March 10 while the NASDAQ Complex have fallen 43%. Here are a couple of numbers you will desire to retrieve for the remainder of your life if you have got any interest in the stock market. Sixty percent of the move in any stock is owed to the class or sector it is in. Twenty percent of a stock terms is owed to the overall market motion and 20% is caused by the quality of the company itself. You can immediately acknowledge that even if you have got bought the best stock it have only a 1 in 5 opportunity of going up if the other 2 factors are not working for you. Since March 10 the New Issues Index is down 67%.

With all the major market indexes in the sewerage there is small hope for ever finding one of those new issues that come ups out at $10 and runs up to $200. Those years are gone forever - at least in the engineering field. The NASDAQ have a better opportunity of going to 1500 before it ever travels back to 5000.

For the adjacent year, maybe longer, we are going to see the number of new issues dry up and almost disappear. And there are many other good grounds other than the overall market. In a new issue you have got no thought how the company will perform. Volition management do its proposed goals? Are there any possibility of a profit? You have got no path record for their terms performance. Volition the stock terms tendency up or down? The more than of these unknown regions you throw into the premix the less opportunity there is that the stock will travel up.

Last twelvemonth we had a raging bull charging through fencings and tearing everything up and we all loved it. All we had to make was follow the bull. The bear have taken his topographic point and is ruining the landscape. And you cognize what bears make in the woods. Be careful where you step - or set your money.