John Lansing

Why You Want to Invest in IPOs NOW!

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I want to let you in on the next investing phenomenon: IPOs.

Sure, IPOs are nothing new, but I can tell you that we are looking at the hottest IPO market we have seen in years, and you'll be kicking yourself if you miss out on the chance for phenomenal profits in this arena.

One thing we have learned about bear markets, especially after the brutal one following the dot-com bubble crash of 2000, and the latest bear market brought on primarily by the subprime mortgage crisis, is that they have a silver lining in common. That is, when the dust settles, the companies that are able to go public are typically the cream of the crop.

After the virtual IPO drought associated with bear markets, it is the "best-of-breed" companies -- the ones with clean balance sheets, compelling growth stories, etc. -- that are able to come to market first. And this is exactly what we are witnessing right now, with a flood of quality mid-cap companies going public.

Soon we may see the smaller-cap companies go public, and that will tell us much more about the health and longevity of the current IPO market trend. You see, the smaller the company, the more nurturing it needs, because of the higher beta, which is a measure of volatility, or systematic risk.

Wall Street, in my opinion, still has some challenges to overcome before it's full steam ahead with the higher-beta, more speculative companies. But the steady stream of mid-cap names going public is a good sign.

Make no mistake about it; now is the time you want to be investing in the best IPOs that come to market.

Just take a look at the chart below. The IPO Composite Index, a float-weighted index of IPO performance, has returned about 42% so far this year, compared with 18% for the S&P 500 (SPX).

Don't Miss Out Again

IPOs can offer investors almost unparalleled gains if you trade them correctly. (Stay tuned for future IPO articles from me, because I plan to tell you exactly how to do that.)