Should You Buy New Stock Issues?

Should You Buy New Stock Issues?

Should the average individual investor buy new issues on the initial offering? I don't generally recommend it. There are several reasons.

First, the few outstanding new issues are going to be in such hot demand by institutions that if you are able to buy them on the offering, you may only be able to buy a tiny allotment. If you can acquire all the stock you want, in many cases it may not be an outstanding issue.


This speculative area should, in most cases, be left to experienced institutional investors who can afford the necessary indepth research and who are able to spread their new issue risks among many different equities.

Larger individual investors who can afford several expensive and varied services may want to consider Value Line's New Issue Service.
However, many of the stock offerings being followed here that were initially filed with the SEC may not actually come public. The IPO Reporter, also provides information on new
issues.

Once an initial public offering has been trading in the marketplace for two or three months or more, you have additional valuable market price and volume action data on which to judge the situation. Stocks that have formed proper price bases should definitely be considered by experienced investors who understand correct selection and timing techniques. This can be a great source for new ideas.

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