Has your broker been calling you recently with the "great opportunity" to get in on a new Initial Public Offering? With friends like that you don't need any enemies.
I don't care how good this new stock offering sounds. The chances it will stay even or go up are about 1 in 3 and I don't want to play those odds with my money.
Most of the new IPOs these days are from the technology sector. That is where the romance and big money has been, but the NASDAQ topped out on March 10 this year. It is a good idea to take a look at what has happened to these new offerings since that time.
The S&P500 Index has dropped only 3% since March 10 while the NASDAQ Composite has fallen 43%. Here are a couple of numbers you will want to remember for the rest of your life if you have any interest in the stock market. Sixty percent of the move in any stock is due to the category or sector it is in. Twenty percent of a stock price is due to the overall market movement and 20% is caused by the quality of the company itself. You can immediately recognize that even if you have bought the best stock it has only a 1 in 5 chance of going up if the other 2 factors are not working for you. Since March 10 the New Issues Index is down 67%.
With all the major market indexes in the sewer there is little hope for ever finding one of those new issues that comes out at $10 and runs up to $200. Those days are gone forever - at least in the technology field. The NASDAQ has a better chance of going to 1500 before it ever goes back to 5000.
For the next year, maybe longer, we are going to see the number of new issues dry up and almost disappear. And there are many other good reasons other than the overall market. In a new issue you have no idea how the company will perform. Will management make its projected goals? Is there any possibility of a profit? You have no track record for their price performance. Will the stock price trend up or down? The more of these unknowns you throw into the mix the less chance there is that the stock will go up.
Last year we had a raging bull charging through fences and tearing everything up and we all loved it. All we had to do was follow the bull. The bear has taken his place and is ruining the landscape. And you know what bears do in the woods. Be careful where you step - or put your money.
Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.
Copyright 2005
al@mutualfundstrategy.com; 1-888-345-7870
When is a dividend not a dividend?The latest thing "conservative"... Read More
Wouldn't it be nice if you were only in the... Read More
Every stock market investor faces one primal enemy. An enemy... Read More
Time to look back2004 is over, now we are in... Read More
So you're started trading, you bought some positions with your... Read More
I made my very first investment in the stock market... Read More
For the last 12 years we have seen the Japanese... Read More
The Surgeon General of the United States says that smoking... Read More
What is the Series 7 Exam? If you... Read More
With the internet such a huge part of our daily... Read More
There has been great condemnation recently because China has been... Read More
Stock investment advice is easy to find. Do you get... Read More
Last time we looked at the real performance of the... Read More
As an investor you will want to check out any... Read More
The bulls and bears of the stock market are both... Read More
Both the stock market and oil prices rallied recently, which... Read More
When you stand on the ocean shore and watch the... Read More
Quick, look out the window. It's raining. No, the sun's... Read More
What a great statement!I just heard someone use it in... Read More
How many times have you said to yourself, "I'd like... Read More
What account size do I need?How much money can I... Read More
The stock market has not been very kind to your... Read More
Ever turn down a street, get half way and suddenly... Read More
Jack and Jill went up the hill to fetch a... Read More
There are many good penny stock investments available, which could... Read More
Everyone who invests in the stock market wants to be... Read More
The date October 13, 2000 will forever be embedded in... Read More
Let me start by saying that...Most online brokers do not... Read More
Inverted interest rates? What's that? Who cares? Even if you... Read More
After finding the price of a particular stock, usually the... Read More
I would like to share with the reader an article... Read More
Dollar cost averaging is one of the most popular ideas... Read More
(1) Stock Market is Tough Place to Make Any Money... Read More
There is a famous cliff on the ocean in Acapulco... Read More
Time to look back2004 is over, now we are in... Read More
With all the bad news that has been dumped upon... Read More
With over 6,000 mutual funds available, it may be tempting... Read More
The recent criminal fiasco in the mutual fund industry is... Read More
Sometime in the third quarter of 1997, someone told me... Read More
Ever have one of those sample boxes of candy? Each... Read More
One of the most believed bits of conventional wisdom from... Read More
Dollar cost averaging is one of the most popular ideas... Read More
I have watched my cat play with a bag of... Read More
Robert Rodriguez likes to buy stocks at their lows. When... Read More
Starbucks earnings are up again and so is their stock... Read More
I mean it when I say that. While plastic silverware... Read More
Fundamental analysis.Fundamentals analysis says the best way to predict the... Read More
Should the market turn against you, it is important that... Read More
Caught in a whirlpool and being sucked under. No life... Read More
Stock investment advice is easy to find. Do you get... Read More
Success in small cap & micro cap stock trading like... Read More
The World Bank claims that some two billion of the... Read More
Is really not as important as to how you invest... Read More
If you're a normal human being, your need to feel... Read More
On Monday, November 25, 2000 Investor's Business Daily listed on... Read More
As one of my regular readers you know I have... Read More
Stocks breakout from properly formed bases everyday but many investors... Read More
Many people would like to diversify their portfolios to expand... Read More
You probably have been told that options are risky. Even... Read More
There is so much involved in developing peak performance, that... Read More
Most people think the stock market is a zero sum... Read More
If you've ever flipped on the television to CNN Financial... Read More
We are already in it, but you can't see it.... Read More
Because there are so many stocks that are NOT paying... Read More
The trash business in its efforts to cook their books... Read More
Wall Street has been preaching the doctrine of Buy and... Read More
Stocks & Mutual Fund |