Buying the Latest IPOs Not the Best Trading Strategy, According to Profit Confidential, a Top Financial Newsletter
The year 2011 has been a difficult year for the stock market considering how well stocks performed in 2009 and 2010, according to Michael Lombardi, lead editor of Profit Confidential.
(prHWY.com) December 23, 2011 - New York, NY -- The year 2011 has been a difficult year for the stock market considering how well stocks performed in 2009 and 2010, according to Michael Lombardi, lead editor of Profit Confidential. Appetite for the IPOs of stocks in the last quarter of this year has been exceptionally strong, but Lombardi says this isn't the best trading strategy.
"Would I buy any of these IPOs? Of course not," says Lombardi. "I don't have the appetite for the risk they present. And when the bear market rally we are currently experiencing finally ends, it will be these kinds of companies, with unstable earnings, which will fall the fastest."
Lombardi's strategy has been consistent over the last 10 years. He just continues to "buy boring, not-so-sexy senior gold mining stocks when the price of gold bullion corrects sharply on the downside..."
As for those hot IPOs, Lombardi is staying away from them.
"Wall Street's making big money over these overpriced IPOs" writes Lombardi in Profit Confidential. "They've gotten so smart; most companies are only selling 10% to 20% of their equity. This creates perceived value for the company issuing the stock."
With so many investors and funds out there chasing the little stock that is offered, only "quality" clients of the big brokerage houses are able to get in at the early stages of the IPOs.
"It's one of those 'the public be damned' situations again," says Lombardi.
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it "begged" its readers to get out of the housing market...before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit
www.profitconfidential.com.
Profit Confidential is Lombardi Publishing Corporation's free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit
www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi's current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit
http://www.profitconfidential.com/critical-warning-number-six.
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