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How Can I Invest in an IPO?

Question: How can an average person invest in a company’s initial public offering?

– Harparkash Singh, Tracy, Calif.

Answer: Got friends in the business? That’s generally the only way most investors can acquire shares of a newly public company at offering price. Available IPO shares, priced by the investment bank handling the deal, are generally sold to large institutional clients and ultrawealthy investors who have relationships with brokers working the deal, says Jim Krapfel, an equities analyst at Morning-star. Your best bet, say experts, is to wait at least a few weeks after an IPO to see if the share price loses any of its coming-out froth; if you think the company is poised for growth, take the leap. Investors who bought $500 of Apple stock even a year after its IPO, for instance, would have about $90,000 today with dividends.

VIDEO: Experts Explain: What is an IPO?


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    • So, that is the real deal to that!

      Having a friend on that business is a paved way for an investor to have shares on IPO’s business….

      Its a good advice that one should wait and observe if the price is increasing or decreasing for a better chance of success..

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    • Right on. Apple doesn’t pay dividends!

    • I have been an investment advisor for 23 years and the ONLY way to get any stock in a new IPO is to have an account with one of the major (large) investment houses such as Morgan Stanley, Goldman Sachs, etc… and even then it will be impossible to get any more than 50 – 100 shares. Lions share of the stock will go to their largest customers which are pension and mutual funds (institutional clients, individuals are termed “retail” clients). Rule of thumb is, if you are allocated (get) any IPO stock, you probably do not want it!

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