BackMyth: IPOs are better than stocks
One cannot deny the fact that over the years there have been some IPOs that have created immense wealth for the patient investor, but the number of such IPOs has been few
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Ever wondered why there’s a flood of initial public offers (IPOs) in bull markets? The mood of investors is upbeat and they are looking at making a fast buck from rising markets. Maybe that’s why amateur investors tend to get swayed in bull markets and invest in IPOs without understanding core fundamentals and valuations.
Investors see it as an opportunity to enter at the lowest price, but by the time they get in the IPO, private investors have invested earlier at much lower prices and the real value has already been absorbed. One cannot deny the fact that over the years there have been some IPOs that have created immense wealth for the patient investor, but the number of such IPOs has been few.
Kalpesh Ashar, founder, Full Circle Financial Planners and Advisors
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