How a person should invest in an IPO? What things should be considered??
2007-06-22 00:49:49 · 5 answers · asked by diz_iz_ashish 1 in Business & Finance ➔ Investing
To buy an IPO, establish a brokerage account at a full service (full fee) and give the broker a lot of business and in so doing, give him huge commissions. Then he will regard you as one of his best customers.
This is how IPOs work: The lead underwriter allocates shares (divides up the pie) giving pieces to the other underwriters. (Underwriters are the investment bankers who have contracted to take the issue public.) Each underwriter slices up its slice of the pie and allocates shares to each office, and then each broker gets his quota yo sell. If the issue is any good, there will be a huge demand, so the broker calls his best customers and tells them that he is holding some shares for them. This is a way for brokers to take care of his best customers.
If you see a brokerage house listed in the news as an underwriter and you call a broker there and ask to purchase some of the IPO and he says, "yes", then that means he's not saving it for his best customers and that's a pretty good sign that the issue is overpriced and you would be better off buying it on the market later, after the excitement has worn off.
After the IPO, it trades on the market and you can call any broker and buy it like any other stock
2007-06-22 01:24:34 · answer #1 · answered by Ted 7 · 0⤊ 0⤋
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2016-12-24 06:12:45 · answer #2 · answered by Anonymous · 0⤊ 0⤋
see that is the problem with IPO's. There is only limited knowledge on the company. You can do your research through your online investment company. I know personally I would rather deal in penny stocks than with IPO's. I feel like I get a better return. Just remember that the knowledge is limited. I would watch mad money, he goes over IPO's every Friday. He is able to get a little more information on things than we tend to be able to. Also he has been a professional investor for over 25 years.
Good Luck
2007-06-22 00:58:18 · answer #3 · answered by michaelrayburn 2 · 0⤊ 0⤋
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2014-10-09 22:21:23 · answer #5 · answered by Anonymous · 0⤊ 0⤋