Thread: IPOs
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Old 08-12-2007, 04:10 AM
ActionDavidK ActionDavidK is offline
Join Date: Aug 2006
Posts: 46
Default IPOs

In a Random Walk Down Wall Street Malkiel says My advice is that you should not buy IPOs at their initial offering price and that you should never buy an IPO just after it begins trading at prices that are generally higher than the IPO price. He goes on to say six months is generally set as the lock up period, where insiders are prohibited from selling stock to the public. Once that constraint is lifted the prices of the stock often tanks.

Can IPOs be shorted?

What does Malkiel mean when he says insiders?
My guess: The management can sell the shares of the company that they have after 6 months?

Why does the stock usually drop after the lock up period ends?
My guess: If Im correct with my assumption above, its because its a bad sign to see the management cash in their stocks?
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