New stock IPOs in the US can't be purchased right away by normal people, right? Only insitutions can buy them??? Pls clarify. Many thanks!
Individuals can buy IPO shares, if they know the right people. It depends on the how the company sets up the IPO and institutions usually do buy most if not all of the shares so I guess for most practical reasons you are right.
That's bad for the individual investors. In India 35% of all IPO shares are reserved for small investors and 5% are reserved for individuals with high net worth. Institutions get 60%.
Normal people can buy them but they are after the big institutions gets their bite. I tried to get in on Planet Hollywood during its IPO offering and by time I got in, the price was so high that I ended up losing money. I did have an opportunity for Yahoo at a really good price during their IPO but I did not have enough funds at that time to get in. One of my friends made 11,000 in 2 weeks on Yahoo. You just having to be lucky to get in at the right time before the price is driven way up. Then you need to sell shortly after the price is way up unless you are looking for long-term . I would not recommend it for a weak heart because it can get nerve racking if the stock takes a quick dive. I lost $1700 on Planet hollywood but gained it back shortly after on another stock. That was back in my single days, now I don't play the market much because I am married and have a family to worry about.
In general IPOs are risky so I wouldn't recommend trying unless you have money you can afford to lose. Of course if it works out you could make alot of money.
In India IPOs are considered the easiest way to make money in stock markets. Two years back, the going was so good that hardly any IPO would list below the issue price. Even now many IPOs give 50-100% returns on listing. This one closed today.. got oversubscribed 69 times.. it is expected to give 60%+ premium on listing. I hope I get some shares .