Comments on: IPOs are Lousy Investments

By: Investing Intelligently

Investing Intelligently — Mon, 05 Jun 2006 23:13:12 +0000

Benjamin Graham wrote in 1973 in the Intelligent Investor that all investors (not speculators) should basically stay clear away from these stocks, which he calls “hot new issues”. Too bad for many that they didn’t read his work.

By: Phil S

Phil S — Sat, 03 Jun 2006 16:51:38 +0000

I think the recurring theme still applies in this post. Don’t buy the IPO, buy the investment banker. Unfortunately, in Canada our choices are limited as the biggest investment bankers are buried in the Big 5 banks. The only sizeable publicly listed “pure-plays” in investment banking are Canaccord Capital and GMP.

The IPOs which are properly priced and of good size (and thereby offer some value at the time of the IPO) have all been picked over by the large institutions, fund managers and wealthy individual investors before. By the time that we the retail investor, get a chance to buy it – it’s nothing more than table scraps or dog food. The only IPOs that we can buy are the worthless ones.

By: Doug

Doug — Fri, 02 Jun 2006 00:54:09 +0000

Great post!

I think the reason people feel a need to get on the IPO is because the Street likes to sell “the next Microsoft” where if you could only have gotten in “on the ground floor” you would be set.

Truth is, the ground floor investors are the people who invested BEFORE the IPO. IPOs are not priced to be cheap, they are priced to maximize investment banking fees.

By: John

John — Thu, 01 Jun 2006 22:03:53 +0000

I read the same book and have the same conclusion. I do not understand why you want want to be among the first own a stock. I guess there have been a few spectacular success and that is what everyone remembers. The much much more common disappointments are forgotten.