To all Motley fool fans.
Where in the hell have these clowns been for almost a year?
Now I understand Rule Breaker #10. Don't buy an IPO because of risk! But they continue to hype Amazon.com!
Well at least they like Coca Cola.
>March 5, 2000
Ask the Fool
IPO Confusion
Q: In 1997, when it came public in an IPO, I bought shares of A.C. Moore Arts and Crafts stock at $15 each. The stock rose to $20 and then dropped to $5. I' m familiar with the industry and know the company is committed to high-quality work, so I don' t understand what' s happening to the stock. Any thoughts?
-- Rob Dembosky, West Chester, Pa.
A: First off, we generally advise people to think twice before investing in IPOs. Newly public companies don' t have much in the way of track records to scrutinize, and their stocks tend to be quite volatile in their first few months or year. We' d rather give the companies a chance to prove themselves and the stocks a chance to settle down.
You did right, though, looking to a familiar industry for stocks in which to invest. It' s best to invest in companies when you have a solid understanding of their competitive landscape, the industry' s outlook and so on. It' s not enough, though, to park your money in a company you respect. You need to make sure that it has a successful business model, that it' s putting its earnings to good use and growing, and that its prospects are promising. |
