Despite the strange economic climate we find ourselves in now, a few of the soon-to-be public companies will excel over the long haul. That being said, a small bet can come up big if you back the right horse.
This rule applies to investing in any individual stock: Experts recommend that you avoid putting large percentages of your cash in any one company, no matter whether it’s a hot IPO name or has been listed on the New York Stock Exchange ( NYSE) for a century.ĭiversifying your dollars across many companies, via exchange-traded funds ( ETFs) or index funds, helps position your money to grow without putting all of your eggs in any single company’s basket. When that day comes, though, make sure to allocate no more than a small percentage of your portfolio.
While there are still some IPOs in the pipeline, most of the companies that might have considered going public this year have put their plans on hold until the market rebounds. “It’s not a surprise investors are thinking twice about speculative investments.” “When the stock market is down, people have less of an appetite for IPOs,” says Angel. The IPO market should bounce back once investors stop running for cover, says James Angel, of Georgetown University. When Will the IPO Market Return to Normal? Between 19, over 60% of newly public companies saw negative returns after five years. Meanwhile, the big-name IPOs of 20 have struggled mightily, but that’s no surprise. Hawkish monetary policy and higher rates have vaporized the cheap money that drove big IPOs and demand for risky new issues. In 2022, stock markets have sunk as the Federal Reserve raised interest rates swiftly to combat the four-decade highs in inflation. Reality turned out to be somewhat different, however, and the IPO firehose has slowed to a trickle. Meanwhile, retail investors piled into meme stocks and economists predicted the good times would last as governments withdrew from strict Covid-19 measures and shoppers started spending again. Remember IPOs? A cavalcade of companies went public in 20 as the stock market soared higher, thanks to the proliferation of cheap money and retail investors stuck at home with cash burning a hole in their bank accounts.īig names, from Airbnb (ABNB) and Coinbase (COIN), to Palantir (PLTR) and Rivian (RIVN) rode a wave of animal spirits to impressive IPO debuts.
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