So you asked about IPO's

November 22,2006



Happy Thanksgiving,





If your broker is the investment banker or in the selling group of an IPO (Initial Public Offering) you may have the opportunity to get some shares at the offering price. You should read the Red Herring or Prospectus carefully to gather information on the offering. You have to put in an indication (inquiry) saying you’ll take 500 shares. Once the IPO is priced (usually the night before) then the shares are distributed. If it’s a very hot IPO it is VERY HARD TO GET SHARES on the offering price. Most firms reward their best customers with shares. Many firms don’t like it when an investors gets the shares then sells them the same day ,this is called flipping, however no one is ever allowed to tell you your not allowed to make money. If you can’t get the shares on the offering price this does not stop you from buying the shares in the open market after the offering. Warning IPO’s are generally considered a very high risk investment.



Semiconductors and semi equipment makers are starting to look very positive remember they moved first in the fall of 95 then into the first 1/2 of 96 and the rest is history. They also are very cyclical in nature so you have to buy when P/E’s are high and sell when P/E’s are low. As a sector semi’s often signal a big move in the market. Traditionally they stay flat to down for a very long time, but once they get going its time to jump on. I often tell clients better to buy them on the way up then look for bargains and wait. You could wait a very long time.



Another major positive is the increased take over activity and continued preponderance of the market to finish strong at day end. Takeovers and mergers continue to suggest that many perceive the market to be a bargain and strong day end rally’s are a sign of institutional money getting into the market after it fails to sell off.





James

www.jamesfoytlin.com

1(866)492-3959