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Noob investing question

HardcoreRobot

HardcoreRobot

Lifer
How do I invest in an initial offering? Since the stock is not being publicly traded, can I use scottrade like I have in the past? I dont have a regular broker.
 
There are a myriad of answers to the questions you've asked. But what company are you talking about? Are they scheduled for the IPO? If they company isnt publicly traded, you might want to contact the owners about taking an equity stake.
 
Request a prospectus. It will tell you which brokers are handling the IPO. Then contact one of the brokers to find out what you have to do to subscribe to the IPO.

Be warned that popular IPOs are reserved for the broker's best customers so you may not get in.
 
Most investors will have to wait for it to hit the secondary market where a lot of the "initial" value is already lost.

Depending on the broker, you may be able to enter a limit order with them the night before the IPO hits the general trading public. You'll set your limit near where you think it's going to open trading at.
 
I'll sell it to you. Just send me a check to Nigeria. I'll deliver it using Fedex. You get your stock certificate in no time.
 
Originally posted by: Amplifier
lol
Click to expand...

Youre right I forgot to mention that if youre thinking about truly investing in the company then buying it on the first or second day of trading might not be so bad. But if youre trying to get in with the intention of just flipping it, you might get banned from future IPOs by your broker.

Anyway, I made and lost a ton of money with IPOs. When I used to do this, I would get a headsup from the WSJ which tracks pending and current IPOs, and continues tracking them for up to a year later.

Most IPOs have a cycle:

Insiders and initial investors get shares. Unrestricted owners can (and usually do) unload a healthy position during the first 30 days of trading to recoup their initial startup investment. For the first 60 to 90 days it trades up or down depending on news stories, how hot the industry its in is, press releases, etc. Then comes the first earnings report. Its either up or down big time. Then come the upgrades / downgrades when analysts start coverage. Depending on the company, people ususally start to take short positions after earnings in anticipation of the first lockup expiring after 6 months and the ensuing selloff. Sometimes the selloff is mild or doesnt happen at all, especially if the company is very hot or the first earnings report was a blowout.
 
I hate to burst your bubble, but if you're an investing noob you arn't "getting in" on any IPOs.
At least no good ones. :laugh:
 
Originally posted by: FelixDeKat
Originally posted by: Amplifier
lol
Click to expand...

Youre right I forgot to mention that if youre thinking about truly investing in the company then buying it on the first or second day of trading might not be so bad. But if youre trying to get in with the intention of just flipping it, you might get banned from future IPOs by your broker.
Click to expand...
I thought with a lot of IPOs, the investor had to sign an agreement not to sell the shares for a certain length of time.
 
Originally posted by: tweakmm
Originally posted by: FelixDeKat
Originally posted by: Amplifier
lol
Click to expand...

Youre right I forgot to mention that if youre thinking about truly investing in the company then buying it on the first or second day of trading might not be so bad. But if youre trying to get in with the intention of just flipping it, you might get banned from future IPOs by your broker.
Click to expand...
I thought with a lot of IPOs, the investor had to sign an agreement not to sell the shares for a certain length of time.
Click to expand...

There are several types of investors. If you dont work for the company as an officer or director and arent privy to inside information, only your broker might restrict you from selling on the first day. But even then, I dont think they can stop you. That same agreeement might also specify that selling before a certain time will restrict you from future IPO shares.
 
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