You really like Facebook or myspace. You believe in
it. You want a item of it. So you want to get in on the Facebook or myspace
IPO. But to do that, you have to be an "accredited trader,"
significance that your net value needs to be above $1 thousand, your yearly
earnings needs to be over $200k and you must be able to approve that you have
encounter making an investment in personal organizations. Whew!
So you contact up Buy Facebook likes or
myspace and confirm that you are an approved trader. Then you tell Facebook or
myspace that you want to buy their stock at the pre-IPO cost of $20 a discuss
(hypothetical.) But they tell you that all the pre-IPO stock is gone. All of
the stock has been marketed to financial commitment investment organizations,
protect resources and other many.
You hold up the cellphone, damaging your go and
think, "I'm SOL. How can that be?"
Here's how it performs for Joe Community. Your only
choice is to buy the stock at the IPO cost and that's only if you can get it.
Keep in mind, the Buy Facebook fans
or myspace IPO will basically be stocks of stock available on the industry.
Their stock is depending on provide and requirement.
So you contact your agent and ask him to get you
Facebook or myspace stock at the IPO cost (say $50 dollars hypothetically,)
only to understand that the Facebook or myspace IPO was marketed out and you
can't get any stock at that cost either.
You hold up. Only now, you're disappointed because
you're starting to understand that the phrase "Initial Community
Offering" should really be known as Preliminary Non-Public Providing...
What's going on here? How is it that you can't get
stocks of what is expected to be a first public offering? Where's people part?
This is how the encounter performs. Investment
financial organizations take plenty of organizations public and they need to
offer the stocks to someone. Some of these organizations are champions. Others
are poor performers.
The simplest way for the financial organizations to
take organizations public is to provide them to organizations like common
resources and protect resources because they have much more cash than Joe
Community. In convert, the common resources and protect resources organizations
"put in" for almost every organization the financial organizations
provide - even the not so hot IPOs. This is so that when the hot ones like the
Facebook or myspace IPO come down the pike, they are confident of a significant
stock allowance and generate earnings.
The financial commitment financial organizations
have tried to provide more stock to people but they need huge customers like
the common resources and protect resources. It's the common resources and
protect resources organizations that buy and create a public industry for the
stock to start dealing.