Since the market becomes hot again, more and more companies would come to the market to raise money. I assume most of us don't have more than 1M assets. which means the most of us don't have access to IPOs. Don't worry, though. The good news is we can invest newly IPOed stocks.

Newly IPOed stocks are under full control by their underwriters. As a matter of fact, it's quite easy for underwriters to manipulate. Why? First, floating shares of newly IPOed stocks are few during their locking periods. Moreover, those newly IPOed stocks pretend to have sound fundamentals in order to attract investors; second, underwriters have their interests involved. They got paid commissions by cash plus profit from selling alloted stocks; third, underwriters care about their fames. If a newly IPOed stock performs weak, the chance to underwrite a next IPO is dim. For this reason, underwriters would use their fund money to buy or contract third-party funds to buy. This happened a lot back during the 1999-2000 IPO rush hour.

Not all newly IPOed stocks would perform well in the market. I successfully invested CPST, ACPW, SONS and also lost a bunch in PTIE in 2000. Like investing other stocks, TA and FA matter. The lessons I learned by putting $ and efforts can be shared with others here. Name a few:

a. Underwriters must be Wall Street monsters: Goldman Sachs (GS), Merril Lynch (ML), or Morgan Stanley (MS). As for others, piss off. I lost $ in PTIE because I didn't strictly obey the rule. I lost $40 grand in 30 minutes as a student. I still remember I almost had a heart-burn at that time.
b. It must be in a hot sector. For instance, I definitely invest an oil related stock at this point (July 2005).
c. Floating shares must be less than 20 M. The few, the better; the more, the worse. It definitely cannot be more than 100 M.
d. The first day turn-over rate must be over 100%. If it is over 100% during the first trading hour, I would definitely jump in.
e. Jump in based on its intraday technical charts (e.g. 5 minutes). Don't chase though!!!
f. Its open price on the first day must be above its IPO price. Its IPO price must be the top of its IPO price range.
g. WHEN TO SELL? SELL BEFORE ITS LOCKING EXPIRES OR WHEN UNDERWRITERS PUBLISH THEIR RATINGS (usually one month later).
etc.

No pain, no gain. Do your hard work, and you'll be rewarded.

¶ 11:39 PM

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