Initial Public Offerings (IPO's)

The Initial Public Offering, or IPO, is when a stock first becomes available to the general public for purchase. This is a great time to get in on the ground level of a stock that you think may become very popular and gain much wealth. Another good thing about the IPO is that it really has nowhere to go but up. This is not the case in every scenario but it makes sense. When a company first allows stocks to be bought by the general public, there is no stocks to be sold in the beginning, only bought. As I said, though, this is not always the case so do not count on an investment in an IPO to always gain value right in the beginning. Depending on the company, an IPO will often be a fairly resonable price. If you look at the case of google, when they released their stock, the price was around $80. This may sound very high but the price quickly climbed to over $200 and is still climbing higher yet. So had someone invested when the price was $80, their stock would be worth three or four times as much right now. This is a special case, however, as the google stock was a much anticipated stock. Most IPOs are smaller, up and comming companies and the price will be a fairly reasonable amount. An IPO can also be a good short term investment stock as they often gain a good amount of value in the beginning. On that same note, however, they can also be a great long term investment because if the company does good, they stock value will continue to rise and possible split several times over several years turning a small investment into a quite sizable amount of money. The method I would use with an IPO would be to invest what you can afford to lose in the beginning, wait until the stock price rises, and then sell enough to recover what you invested in the stock. This way, you will still have shares in that stock but you will not risk losing any of the money that you invested. Basically, you got the remaining shares that you have for free. IPOs require much research, you cannot just jump into a random company and expect them to do good. You must look at what service or product that company provides and the market for that certain service or product. If the market is good, chances are the stock will do fairly well. There are many places on the internet where you can research a company looking to release a stock and you broker will also be happy to fill you in on the details of a certain company. Often, a company plans to use the revenue they receive from the stock sales to expand and upgrade their company. This in turn makes the company more valuabe and able to produce more profit. This is why IPOs are good options to look at when thinking on investing some money in the stock market. The bottom line on IPOs are they are good for both long term and short term investments. They often do good for at least the first two weeks of their release though this is not guaranteed. You must also remember to research the company that is releasing the IPO before just jumping in and buying a bunch of their stock. Also remember that if you begin to get too nervous that the stock has hit it's peak, then sell back what you invested in the stock so you do not stand to lose anything and just keep reminding yourself that whatever happens to the remaining shares of that stock, you got them for free and you do not stand to lose any money, only make money. For more articles on investing, visit www.interestinginvesti ng.com