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What are the pros and cons of IPOs?

IPOs - or initial public offerings are a mixed breed of investments.

During the hot-tech craze, investors jammed investor phone and Net lines trying to buy up the latest and the greatest new share offers of technology companies. But even in today's market, less trendy IPOs are often sold quickly because of the generalized opinion that IPOs are sold at bargain-basement prices. While some IPOs do indeed go on to higher returns in a sometimes short time frame, there are just as many others that go flat or even decline in value. As with all investments, knowing what you are buying, as opposed to chasing a presumed stock bargain - should be the criteria. Although IPOs are usually popular, they are limited in supply. Most often, they sell out quickly to established, active investors. Characteristics of IPOs The aftermarket
Individual, smaller investors usually have to wait until IPOs become available in the aftermarket, "after" the new IPOs are issued, when investors start to trade the stock on the market. Waiting for IPOs to settle is not a bad thing. Often IPOs are hyped up by companies and the media and come into the market at high prices, as opposed to realistic prices, and go through a volatile period. Time is an investor's friend. Discussing the IPO you are interested in with an experienced financial advisor, and waiting until the dust settles on a new stock, often results in choosing an investment that is most suitable, less volatile, and priced at a truer market value. Take your time to research the best new companies on the market so that your choice has long-term growth potential.