How will IPOs perform in coming months?

IPO is an acronym for Initial Public Offering. IPO is the initial offerings of a company in the form of shares to their share holders at the start of a new company or at the time of expansion of a existing company.

IPOs are being offered by companies that wants the money from the company for their project. People those who are interested in the project of the company or those people who have confidence in the management of the company would subscribe for the shares that is being offered according to their will.

If the IPO is subscribed fully then we can say, people has confidence in that particular company. If it is oversubscribed, then it shows the interest of the investors in that company. If it under subscribed then it shows there lack of faith in that company.

Investors’ interests in investing in IPOs are affected by the various factors. One of the biggest and most influential factor is sentiment in the secondary Markets. If the sentiment is bullish, the IPO will subscribe fully, if not it will flop in the IPO Market.

In any market, the sentiment would be bullish only during Bull Markets. So IPOs will be successful only during the course of the Bull Market or in the end of the bull market. But in Bull markets, the IPOs are priced highly. In bear markets how much ever good project will be bombarded in the IPO market.

But as an investor it is always best to invest during Bear Markets. Simply it is good because it will be priced lowly.

Scams and Stock Markets?

Whenever a bull market is over, a scam would emerge at that time. The person who is so bullish on that Market or a sector would be jailed because of scam. In 1992, Harshad Mehta a leading Stock Broker at that time was arrested for frauding some leading Banks and Financial Institutions.

In 2000, Ketan Parkeh, a leading Investor and operator of the Stock Market was arrested for swindling some Bank’s Money. In 2009, Ramalinga Raju of Satyam Computers was for cooking up his company’s accounts.

In US, Bernard Madoff, who was running a ponzi scheme based on Stock Market, was arrested for defrauding the Investors. In Germany also a major scam was known at that time. And also in all countries minor scams were unearthed.

Why scams are are being unearthed only during the start of the bear market or in middle of the bear markets. Let me explain the mechanism. During Bull Markets, price of stocks are moving steadily up. So, a confidence has been built over these years about the market that the price will go forever. Once the trend changes as no trend will continue forever, the scamsters failing to foresee the change in trend get trapped in their own landmines only to be blown away.

Don’t think any trend will be there forever.