I can already hear “What are you on about?!” as I type. The reason for delving in to what might appear to be obscure is simple. Remember the dot com boom a few years back before the last recession? Well guess what, the banks are at it again.
Don’t get me wrong, IPO’s (Initial Public Offerings) can be incredibly profitable both for investors and companies, as well those involved in making them happen. They really are not for times like these though when markets are volatile, cash is tight, and market confidence has decided to have high tea with Lord Lucan.
New Look joins list of companies scrapping IPOs
Most 30 something investors will remember the IPO hey day when dot com bazillionaires were made and the internet was busy driving a steamroller through the office squashing all the carbon paper, fax machines and research books in its wake. Everyone talked about them, most had signed up for heavily oversubscribed offerings, and several made money, even from financial horrors at the time like Yahoo that failed to show any real profit in its first 10 years of trading (yet was one of the most successful IPO’s of the time)
The points I am trying to make here are timing, judgment, confidence and general sanity. When the IPO boom was around the first time, the sheer mention of the term would silence a rock concert in anticipation of overhearing the name of the company that was the next “hot tip”. It didn’t matter what they did or made (if anything at all in some cases) it was a simple “Lock and load” and start throwing darts at the financial pages mentality.
In case there is anyone reading here that hasn’t noticed, there is a recession going on at the moment, and if there isn’t where you are, then it’s either just been, or it is on its way. (If neither is the case, do let us know where you live!) Expecting to make a quick profit from an IPO by a company with debt is much like trying to win a space-hopper race in a drawing pin factory.
If gambling is your game, or you have a large enough portfolio to wear some high risk rollercoastering, then IPO’s are a worth a punt with a few sheckles.
On the other hand, if the glitz of “Vegas style” investing is not quite your cup of tea, and in these trying times you prefer a rather more sedate investment, have a browse at some of the options offered by IPIN.