[IPO ignored] Why Buffett refuses new IPOs
Hello, this is Shimoyama.
“IPO (Initial Public Offering) is tasty.”
Many people feel that way are not few in number.
Last month there were more than 10 new listings, and almost
the “first price” exceeded the “public offering price.”
Also, when you look at this year’s new listings,
roughly nine out of ten times
you can make money just by selling at the opening price.
You too
“If you can buy new IPOs, you can make money easily in a short time”
perhaps you hold such an image too.
However, to be frank,
saying,
“Because it’s an IPO, I’ll just make money,”
and thinking complacently, traders like that
will have a short life span.
If you don’t put much thought into it and just buy IPOs carelessly,
the world of investment isn’t so forgiving that you can survive.
Well,
“as a bonus, occasionally getting lucky and money coming in is fine”
if you think that way that’s one thing, but
if you think, “I want to invest for life
from now on,”then
investing in IPOs has too much uncertainty.
By the way, even Warren Buffett, the world’s No.1 investor,
completely denies touching IPOs.
Why is that?
Why does Buffett completely deny IPOs?
In English, this interview
discusses the reasons behind it.
↓
https://www.cnbc.com/2019/05/06/warren-buffett-im-not-buying-the-uber-ipo-but-ive-never-bought-any-ipo-ever.html
On the page above Buffett’s words below
are introduced.
“The idea of saying
the best place in the world I could put my money
is something where all the selling incentives are there,
commissions are higher,
the animal spirits are rising,
that that’s going to better than 1,000 other things I could buy
where there is no similar enthusiasm …
just doesn’t make any sense,”
Buffett
uses the expression “animal spirits are rising,”
but indeed,
a setting where animalistic desire swirls
is not the best place to throw your hard-earned money.
Everyone has their own investment style,
and there is no absolutely correct method, but
even so there may be no one in the world who can refute
his words.
One more thing,
in the book “Lessons from the World's Greatest Investor: Buffett”
by Mary Buffett & David Clark
— published January 31, 2008, 1st edition
P.136
“IPO is something you end up paying high prices for!”
is essentially what it means.
In response,
“Huh, but actually IPOs
tend to have first prices higher than the offering price, right?”
you may think,
but
what Buffett wants to say
is not that.
