time horizons: With strong demand for new issues and valuations that are generally rich, the risk of overpaying for a stock with less-than-impressive fundamentals is high, according to Market Watch. In addition, history shows that companies typically underperform the market for many years after going public. While there are attractive opportunities out there for savvy investors, our advice is to approach the IPO market with caution. So, investors who are attracted to this sudden frenzy of IPO activity should keep this in mind when thinking about their time horizons. Behind the resurgence in companies going public We see three main catalysts for this recent surge in IPOs First, IPO activity tends to accelerate when stakeholders believe the market cycle is approaching a peak because private companies and venture capital investors see an opportunity to capitalize on high valuations and cash out of their investments. You may have to remain patient if you expect to earn an attractive return on your investment.
(news.financializer.com). As
reported in the news.
Tagged under time horizons, market cycle topics.