Stocks

Grpahic: Number of IPO’s With 100%+ First Day Returns by Year

In 1999 IPOs had a successful run, where one hundred and eighteen IPOs were able to produce gains on their very first days.

Number of IPO's With 100%+ First Day Returns by Year

In 2000 that number had decreased almost by half. Eighty four IPOs made gains on their debut.

The numbers experienced a sharp drop from the next year onward.

As noted in the chart above, which is a bar graph showing the numbers of IPOs which made gains on their first day, from 2000 to 2012, there was drought of immediately successful IPO first day gains. For this twelve year period, the biggest number of IPO gains was in the single digits, however, the average rate of IPO first day gains was zero, for that entire period.

IPOs experienced a sharp rise in 2013 when a whopping six IPOs made first day gains. In the next year, that number dropped down to four.

However these two years, 2013 and 2014 were the most successful years for the fourteen year period. These success may be a sign of some things to come as we see more established startups filing for IPOs as developed companies, and perhaps it also has something do with a general economic turnaround.

Chart: Average Commission Per Share on the New York Stock Exchange Has Never Been Lower

While at first glance, it might seem that stock brokers aren’t making quite as much as they used to, a closer look at the chart below courtesy of Deutsche Bank reveals how well they’ve adapted and profited from the evolving modern market.

Average Commission Per Share on the New York Stock Exchange

Over the twenty three year period, between 1983 and 2003, the average commission has fallen nearly five-fold, while the volume of traded shares has gone up by nearly 100 millions shares a year. So while there is plenty of opportunities to take a piece off the top for traders, they aren’t taking nearly as big a bite as before. Their business model has pivoted away from the high fees imposed on a few investors, and more toward a volume-based nibbling of a much much larger pie. As more shares and more investors enter the market, the fees may keep trending lower, while the profits for traders will most likely continue to rise with the increased volume.

Is There a Biotechnology Bubble?

Biotech bubbles have been predicted several years ago but nobody seems to care about its existence. This is due to that fact many small biotech companies are actually in the scene monitoring commercial activities of the bigger biotech companies. They simply refused to go public because they didn’t want to be swallowed up the big and powerful companies.

Biotechnology Bubble
Renaissance Capital

Now, biotech stocks are picking up because young pharmaceutical companies are going public, daring the bigger ones. So, it is right time for die hard investors to going for biotech IPOs before the market become another rowdy scene which might eventually end the mad rush as it happens in the years past.

2014 Is Gearing Up to be the Most Active IPO Market Since 2000

Based on the chart below it looks like 2014 is gearing up to be the most active IPO market since 2000. The image shows the year-to-date US IPO (Initial Public Offering) activity from the year 1999 to March 7 of the year 2014. The image is a graph, showing number of US IPOs on the y axis and years on the x axis.

2014 Is Gearing Up to be the Most Active IPO Market Since 2000

In 1999 the IPO market showed average activity with an amount of forty one IPOs being offered. This was countered in the next year, the year 2000, with an above-average surge of IPOs. In 2000 there were eighty three IPOs, much more than in any consecutive year. This made 2000 a very remarkable year.

For the next three years, IPO activity diminished with twelve, ten and four IPOs offered in 2001, 2002 and 2003, respectively. IPO activity then realized a resurgence to near average levels between 2004 and 207. In 2006 there were 35 IPOs, which was the most activity experienced during any one year in that period.

In 2008 and 2009 IPO market activity once again entered a slump, as neither year produced more than ten IPOs.

Growth was slow in 2010 with only fourteen IPOs offered, an d eventually IPO activity averaged in the early to mid twenties for the next three years. In 2014, IPO market activity approached the high levels once seen in 1999, when forty IPOs were offered.

Investing In Penny Stocks

Penny stocks, also known as cent stocks in some countries are stocks of small public companies that trade at low prices per share. These are usually below $5 per share.

investing in penny stocks

Investing in penny stocks is easy, as long as the investor understands what they are doing and the fundamental market drivers to look out for.

Getting the Right Stock Broker

Before beginning, it is important to choose the right stock broker. Investors choose stock brokers who charge low commissions, provide platforms that are easy to use and provide other investment options such as stocks, bonds and mutual funds. Opening an account with a stock broker includes depositing money into an account that allows you to start trading. The platform an investor chooses should also provide financial news and information in real time.

Use a Virtual Money Account

Based on the broker an investor chooses, access to an online virtual account can provide the needed training ground before investing in real money. This allows investors to understand how the platform works and how to trade in the penny stocks market. Only after trading in a virtual environment should investors put in real money? Investors should take their time to get a feel of the market conditions and learn the needed disciplines of money management and risk mitigation.

Start Small

The trick behind trading penny stocks in to understand how to manage and grow a small portfolio. If a trade can successfully grow their account and to their principal. Additionally, newbies are usually advised to only trade money that they are comfortable losing in case anything goes wrong with their trading strategy. In case you lose money on your first trades, it is not advisable to keep increasing money into your account. It may be advisable to go back to the virtual account until you are confident to trade profitable again.

Avoid emotional trading

Investors new to trading penny stocks should use the tips that they get from their analysts to dictate the way they trade rather than the emotions of greed and fear. Successful investors get past these emotions to make successful trading decisions.

Reinvest in Penny Stocks

To grow your portfolio and make even bigger margins, investors should put off taking out their profits and rather invest into the program. Having additional funds allows investors to diversify into new stocks over time.