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#InvestopediaCliffNotes #IPO So my goal for this week's posts will be to put together quick written shorts on certain asset classes - in short Cliff Notes of Investopedia, except I get to choose what you searched for. To save myself time it will be mirroring what I am also doing on my YouTube channel as white board video shorts (link on profile if interested - feedback greatly appreciated ... 1 month into it and definitely still figuring it out). Line-up for the week looks like: M - #IPO, Tu - #REIT, Wed - #Crypto, Thu - #Meme, and Fri - #Gold. The Breakdown: - An IPO or initial public offering is a way for a private company to raise capital by issuing shares of their stock in order to reinvest said capital into the growth and development of the company Where to Find: - Online calendar's of upcoming IPOs exist - see link below What should you know before investing in an IPO: - An IPO is cumbersome and expensive and only done when the company is felt to be positioned for growth - Pre-market IPO purchasing is usually closed off to retail investors until recently - Ex: Robinhood's lottery, has anyone hit on this lottery w/ them? I missed on $FIGS 😢 - IPO price is typically set at a value that is felt to reflect conservative estimates of projected stock price, but does not guarantee short or long term price What are the downsides in investing in an IPO: - The price is unknown and volatile as the market tries to agree on a fair market value - There are two groups of people - short and long term investors - actively investing but could care less about each other - Short plays w/ enough volume can cause volatile price swings - lets say hedgies or day traders want to make a quick buck in a day - they might buy up lots of shares causing prices to go up and then everyone else jumps on (usually retail investers last w/ FOMO) and then finally once the price spikes the hedgies or "early adopter" goes to profit taking ... the price sharply drops and some are left holding the bag. - Long investors that want to invest early need to be aware that the above is happening and not panic sell if they fundamentally believe the IPO company is solid and made for the long run ... this is difficult, we are emotional creatures After Action Review: - If you want to invest in an IPO - I am not here to stop you, but if you got burned by $DNUT then I hope this helps clarify why things might have played out the way they did. - Know which kind of investor you are - short or long, then make real sure you are ok with volatility. After that have fun and enjoy the ride Sources and Resources: https://www.investopedia.com/terms/i/ipo.asp https://www.marketwatch.com/tools/ipo-calendar P.S.: ⚠️ Remember my portfolio on Public is my laboratory 🔬. I'm a long term buy and hold investor in my regular brokerage account but by night I do enjoy a little #SwingTrading and speculative action ... but only in my tax free #RetirementSavingsAccount. I don't enjoy unnecessarily paying Uncle Sam. Some of what I have in Public is for market research, some as a cheap position to use as a watchlist so I know how much I would have made/lost at that entry point, and some is to force me to learn a new asset class such as #Gold or #REIT by putting my money at stake. #FunFacts #TheMoreYouKnow #GrowthNotGreed #BuildEachOtherUp #Coexist #BuildCommunityNotFollowing #FinancialLiteracy
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