All About IPOs: How To Avoid the New Stocks Rip-Off

All About IPOs: How To Avoid the New Stocks Rip-Off. www.watchdogonwallstreet.com

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst and trader Chris.

Speaker 2 (00:14):
Markowski IPOs and you initial public offerings. Yeah, I'm gonna
go way, way way back machine thirty years and then
some back when I first started, that was what the
powers that be had us calling people up on the

(00:35):
old dun and bradstreets. Yeah, you know, dun and bradstreet cars,
business owners telling them about the latest IPO, latest IPO
that our firm was handling at that point in time.
It would get to get all sorts of people excited.
They just wanted a few shares one hundred chairs of
the latest IPO. And then it was also the senior
broker could establish a relationship later on. Ah, yes, you know,

(00:59):
I learned over the years how the entire IPO initial
public offering investment banking thing works. And they're your good ones,
and there are bad ones and more often not more
bad than good. The reason why I'm bringing this up

(01:20):
is there was a Wall Street Journal story today talking
about the IPO market the IPO market for the fourth
quarter of twenty twenty four. It was supposed to be hot, hot, hot,
but now all of a sudden, companies are pulling back,
pulling back because of the volatility that took place in August,

(01:40):
and they're concerned about the political ramifications moving forward.

Speaker 1 (01:45):
What to do?

Speaker 2 (01:46):
What to do? The outlook is not as rosy as
it was before. Why should that matter? I'm just being honest.
If you are a company and you've got a great
business plan, got a great business plan, you've got a
you need to raise capital so you can. You need

(02:08):
to buy, whether it be equipment, whether it be some
of it to marketing, marketing, whether it be to put
up a factory, whatever it may be. What do you care.
The companies that care right now are the ones where
the insiders are looking to get out. This is important.

(02:29):
Don't do not. Don't don't buy IPOs that are getting
out early investors, private equity companies out there, don't do it.
Don't do it. You see, they got the company when
it was on sale. You are paying way up the

(02:52):
chain at oftentimes a ridiculous valuation. And that's why their
concerns right now or the overall market is to say, hey, listen,
because once a company goes public, they may have to
hold onto their shares for thirty days sixty days before
they can sell, and they want to sell at the high.
It's not about developing the business, about growing the business.

(03:15):
It's about the insiders getting out those companies avoid avoid
You are paying up for something where you don't need to.
And again it's changed dramatically from the nineteen nineties, where

(03:36):
you know IPOs people could get in closer to the bottom.
Now years of laddering a company up, multiple rounds of
financing that you can't get involved with, you can't touch.
Remember I've talked about that perverse scheme of musical chairs
where you're left holding the bag. That's what happens with

(03:58):
these things. The majority of companies over the past two
and a half years that have gone public are trading
below their IPO prices, overwhelming majority. Now again, sometimes sometimes
companies there could be a good company, they could be

(04:18):
raising money. Environment might may take a little bit longer,
and you may have gotten in at a good price.
B you bet you, you bet you that most of
these companies were just the insiders looking to find a
greater fool. That's you. Okay, that's you. Don't be a

(04:40):
greater fool. Watchdog on Wall street dot com