Why people are getting crazy about IPO?

What if I tell, you can lose 10 kg. of weight in just 1 day, or you can get a Chartered Accountant degree in just 1 Year. If you are a normal human, you will surely listen to me for once or even try my product once.

The human brain is designed to look for the short-term burst of pleasures but actually, that can make your brain weak or even damage.

If you are reading this, you might have invested in IPOs or you want to invest in IPOs.

What is an IPO?

IPO stands for (Initial Public Offering) when a company invites the normal public to invest in their business at an issue price which is decided by investment bankers. Companies generally do this to either expand their business or sell the promoters’ stake.

Why there is so much hype to invest in IPOs?

People in the stock market are always impatient, they just want quick buck 100% or 200% gains on their investments in 1 year, as we know recently the market was on bull-run, everything was rising, even worthless penny stocks too.

Many companies decided to grab these opportunities and get listed on the Indian Stock market at expensive valuations, like Nykaa listed at 79.38% listing gains, MapMyIndia at 51.50% listing gains.

As discussed, humans always look for quick pleasure biologically, after watching their listing gains people came here to make a quick buck too.

Investment banks were valuing companies at sky-high valuations, Paytm was the company whose listing has provoked the SEBI to form regulations and disclosures for valuations of loss-making companies.

The valuations problem!

These sky-high valuations can be a real problem if they form a bubble because when the bubble burst the real problems are faced by that public too who has never heard of the stock market.

If you want to make a quick buck or just want the loss of 40% of your money you can try IPOs, they are always a hot topic be it 1990 or 2021, people are always mad for profit on listing gains. If the profits are but losses are big too, the best strategy for IPO is to allocate only 5% of your portfolio for IPOs, just to participate in the bull run.

For first-time investors, you should start with mutual funds and learn how mutual funds work, from there you can come to know how experts select a few companies from 5000+ companies and make money for their investors.

Conclusion!

-        You can invest in IPOs only after proper research of the company’s fundamentals.

-        Never try to make a quick buck from IPOs as some companies can fail at listing. 

(We are not Registered Investment advisors; this blog is just for educational purposes only)