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I just love it when a hot new tech stock crashes.
Please don't think I'm taking delight in watching folks lose money. Well, unless it's those "geniuses" on Wall Street. Just saying…
Here's the simple truth. If folks don't listen to me, I can't help them.
I have said for many years now that the average retail investor should avoid buying high-tech initial public offerings (IPOs) when they first start trading. When you buy at the open, you really risk losing your hard-earned money.
It's much better to wait a little more than six months from the open. That's when insiders can sell, an event that usually means a big drop in price.
Had you followed that advice with a savvy cloud provider I've recommended, you could have made 863% in just a tad more than five years.
But if you bought at the open, you risked losing more than half your capital.
Today, I want to show you why this market-crushing tech leader is exactly what I have in mind when I say you only need a few winners like this to become a high-tech millionaire…
The IPO Pitfall
Now then, I'm bringing this up with you today because I do expect to see heavy IPO volume in 2020.
That's because the market remains near record highs, and companies want to take advantage to have a timely exit from being privately held.
In the third quarter of 2019 alone, we saw 50 IPOs, according to data from FactSet. That followed brisk second-quarter output of roughly 85. That brings us to a total of 175 new stock debuts in just the first nine months of the year.
FactSet has not issued full-year numbers, but it looks like we had more than 200 IPOs for all of 2019. If 2020 just sees half as many IPOs, we're still talking 100 chances for average investors to get hosed.
Sure, you may miss the occasional rocket ship. But the odds are really against you here.
And I can prove it. Back in June, Business Insider listed the 10 hottest IPOs in the first half of the year. So, I went back and looked at each one.
Every single one had crashed from their highs, declining by 40% or more. Of those, only one came back to start trading above its previous high.
To show you just why I say you should wait for the post-IPO selloff, I have a great moneymaking example.
This Stock Tells Us to Buy for the Bounce Back
About the Author
Michael A. Robinson is a 35-year Silicon Valley veteran and one of the top technology financial analysts working today. He regularly delivers winning trade recommendations to the Members of his monthly tech investing newsletter, Nova-X Report, and small-cap tech service, Radical Technology Profits. In the past two years alone, his subscribers have seen over 100 double- and triple-digit gains from his recommendations.
As a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs and high-profile industry insiders. In fact, he was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon. And he was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
In addition to being a regular guest and panelist on CNBC and Fox Business Network, Michael is also a Pulitzer Prize-nominated writer and reporter. His first book, "Overdrawn: The Bailout of American Savings" warned people about the coming financial collapse - years before "bailout" became a household word.
You can follow Michael's tech insight and product updates for free with his Strategic Tech Investor newsletter.
Tags: IPOs