ARE YOU WIRED FOR IPO-BASED INVESTING?

What is your level of general understanding of the market? Which way is the S&P 500 headed?

IPOs follow the markets, of course, with a higher degree of volatility. But when markets are hot anyway, lot of IPOs happen. So how do you decide which ones to participate in? Go on ...

Image from Flickr

Understanding sectors is important.

An IPO in a hot sector will likely outperform the market by quite a

bit.

KNOW SOME SECTORS WELL ENOUGH TO TAKE YOUR PICKS? GREAT!

Do you make it a point to know the

IPOing company well enough?

There’s enough data & social opinion about unlisted companies for one to research them thoroughly. Right from their private investors and founders’ social footprints to their growth trajectory. And then there’s media – it often plays an important role in the success of IPOs. Image from Flickr

What’s your vision of the future! Flying cars?

Teleportation? Work from anywhere? Genetically produced, but healthy

veggies?

Knowing WHY a sector is hot is probably more important than knowing which sectors are hot. A single Coca Cola stock bought at $40 in1919 is worth millions today.

Know the market dynamics! No. Not the stock market. The consumer and/or enterprise market that your investee company is operating in.

Hyper-competitive segments see companies under constant pressure of eroding margins. This is alright for a private company looking for exponential growth but is a death knell for public companies and their stocks.

Is it a short-term or a long-term investment? We all like to avoid shorting an investment we just made.

So, try to think like a dispassionate

strategist and see if you agree with the

business model, financial foundation

and medium-term playbook the

company seems to be following. See if you agree to these

strategies!

Do you completely depend on investment managers?

It’s highly likely that your area of knowledge and competence will be different from that of your money manager.

Given that you need to invest only in sectors and companies you understand deeply, being self-directed could be a safer!

Thank You!

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