IPOs Are About to Yield Another Crop of Millionaires – Here's How You Can Be One of Them
From the Investment U Research Team
Getting in on hot initial public offerings can make you a fortune.
"More millionaires have been made in the IPO market," says author and financial commentator David Menlow, "than any other segment of the stock market."
Over the last 5 months, more than a dozen of them could have made you money.
Indeed, 2010 is fast becoming a banner year for IPOs. And the thing is, you no longer need a million bucks to get in.
Initial Public Offerings Can Go Up 354% In A Single Day
An abundance of IPOs clamoring for investment and a newfound quality in the market are the two main reason new offerings have been taking off, with substantial gains. Since the beginning of this year, eleven new IPO's have gained an average of 20.07%.
With so many new IPOs hitting the market this year, you may wonder whether the pool of reliable companies has been diluted. After all, a lot of investors got burned by the blockbuster promises of the dotcom days.
Well, the difference back then was that those same investors were scooping up any business they thought might have serious growth potential.
Unfortunately for them, many of those businesses had absolutely no profits or revenues. This was an easy mistake to make nine and ten years ago because only 25% of companies that went public in 1999 and 2000 were profitable.
Now, here's why the IPO market can make individual investors rich, even if you're not an accredited investor or don't have a million bucks to plunk down.
Triple-Digit Gains in the IPO "Aftermarket"
The biggest misconception about IPOs is that you can't win big if you don't get in on a newly issued stock before it hits the market. It's assumed that the big money gains are reserved for accredited investors and investment bankers. But that doesn't have to be the case.
You don't need to be an institution-sized preferred customer. And it doesn't even matter if you get in right away. You can invest in IPOs, make 3, 5, or even 7 times your investment, and do it safely.
It's true that wealthy, high-profile investors have taken advantage of Private Equity Investments by cashing in and going public. Public offerings have raked in billions of dollars for their owners and their ground floor investors, those few privileged enough to be let in on the initial investment just as it's set to go public.
Campfire stories about investment bankers issuing preferential treatment to their best clients, and leaving the little guy out in the cold have circulated and left most investors scared to enter the IPO jungle.
The secret that has been kept so quiet among those who have made the most money in the IPO market is that you can easily make just as much money by investing in the aftermarket.
The "aftermarket" is just another word for the public market where anyone can buy shares once they begin trading. Too many investors believe all the profits are taken by those that get an initial allocation. And that's simply not true.
For instance, in 2009, the average IPO returned 27%, and these are just the averages. *
If you purchased shares of Solar Winds Inc. (NYSE: SWI), Tri-Tech Holding Inc. (NasdaqCM: TRIT), or Max Linear Inc. (NYSEArca: MXI) on the first day of trading, you would currently be sitting on gains of 95%, 120%, and 371%. Here's a list of recent IPO's that have experienced gains:
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