Welcome to Ameritrade Plus University |
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Lessons:
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Introduction Some of the most spectacular and fastest gains ever made in the stock market are the result of initial public offerings, known in Wall Street parlance as IPOs. An IPO is launched when an existing company decides to sell shares to the public. Notable IPOs of the '90s, such as Netscape and eBay, have taken a company from relative obscurity to stellar status, virtually overnight. Those who got in early got rich. Those who got in late may have bought overvalued stocks and, consequently, taken a bath, depending on when they sold. Many investors do well by holding on just long enough -- typically, not more than six months -- and then selling a now pricey stock for many times its initial price. Others hang on and watch their promising find turn sour after the initial run-up. Assessing IPOs is tough. After all, these are incipient stocks with no trading record to go by, no market perception to use as your own gauge. These days, many IPOs don't even have earnings, or the hope for profits anytime soon. Yet for those who prefer to pick stocks, IPOs are alluring rafts of profit in a choppy and uncertain investment sea. Whether you end up being richly rewarded -- or dashed on the rocks of poor performance -- depends on your skills in sizing up companies, their markets and investors' attitudes toward them before and immediately after they go public. For a quick overview, click on "Top 10 things to know" at the upper left. Or work your way through "The details" sections for more information on the topics in this lesson (calculators and other interactive features are marked with a symbol). The "Glossary" section provides an online dictionary of important terms. And "Take the test" is a quiz that checks what you've learned and offers suggestions for further study. |
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