How To Buy Stocks Online For Beginners

How To Buy Stocks Online

It is easy to learn how to buy stocks online and I will show you how


IPO stocks can get a lot of media attention, especially when they are technology names that everyone has heard of. Lets make a list of stocks that have gotten more than their share of air play and hype to see how they have done since they went public (as of 11/2/2015):

StockIPO PriceOpening PriceToday's PriceGain or loss

A very important thing to understand is the difference between the “IPO price” and the “opening price”. The IPO price (also called offering price) is the dollar amount the company decided to offer to all the insiders who might be company founders, hedge funds, mutual funds, underwriting banks, and anyone else who has some deep connections to the deal. Regular investors like you and I cannot get in on the IPO price.

The opening price is the price that anyone can get on day 1 when the stock opens for trading on an exchange. Since no one (except the muckety mucks) can get the lower IPO price, the REAL price of the IPO is that opening dollar amount that all investors can get. That is why I have used the “opening price” as the basis for calculating how well each stock has done since its debut. You can read more about the complicated process of pricing IPO’s here.

So, Should You Buy Tech IPO’s The First Day?

In order to buy any IPO stock the first day, you need to have an online broker account that has money in it. That means you have to sign up ahead of time to make sure everything is in place before the IPO opens for trading. TradeKing is a good choice for any investor because it offers very low trading fees (only $4.95 per trade) and it consistently gets great reviews year after year from investing publications.

If you had bought each of the IPOs listed above on day 1, it looks like you would have had a few big winners (FB, LNKD, and SCTY) that have each gone up 100% to 200%. It is stocks like those that make IPO’s so popular! But there are also three stocks (TWTR, BOX, and P) that have struggled and are down 30% to 40%. The other stocks mostly have insignificant gains or losses.

The problem with technology IPO’s is that they sometimes get more hype than they should just because technology is more exciting than most other industries. That means there can be quite a big difference between the IPO price and opening price as we see with most of those on the above list. That also means investors aren’t getting a very good deal because the hype has by itself driven the price up higher than it would be without all the publicity.

**Remember that the stocks I have included in the table represent just a small number of the tech companies that went public in the last handful of years. But they are some of the more popular ones and are all companies that you should have heard of as they get a fair amount of publicity. They are the ones that regular investors get interested in because they either use the product/service or they have heard so much about them.

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