Investing in IPO and herd mentality

Herd mentality is clearly visible during IPOs. Many investors want to know the subscription numbers thus far before lodging their application. Very often the success (in collection) of an IPO depends on the subscription amount in the initial few minutes after opening of the IPO.

IPOs fail to get subscriptions if the initial response is poor and vice versa.

This is nothing but herd mentality at play. This is an example of outsourcing investment research and thinking.

Be careful. Invest in an IPO only based on the merit of the issue and only if it fits into your personal investment plan.

#RidingTheRollerCoaster – 146

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s