IPOs-Some Most Important Things to know about

WHEN ITS HOT AND FIREY!

IPOs only and only come in hot and bull market. Why? So that they can obtain the highest price.

MERCHANT BANKERS AIN’T YOUR FRIEND

Investors forget that Merchant Bankers are selling agents of the issuers. And many times they are also given extra fee for performance selling over and above fixed fee.

Merchant/Investment banking is a cream business. So many are in race to get mandates for IPOs from issuer companies. They will do everything to please the company.

SELL ON LISTING? If you’re lucky enough.

Most investors have only one funda for investing in IPOs.

To sell on listing!

They all think that they will be able to sell and outsmart everyone else.

They all feel so because of psychology. They have seen some issues listing at high premium and their listing premiums quoting in so called ‘gray-market’; and this brings the representative bias. The availability bias makes him confront only good and positive news and information. They ignore the discounted/failed listed IPOs. And in hot market there is all news of economic growth as well.

New sectors are not invented every now and then: The fad and fancy for ‘new’ in markets:

Many IPOs come which are highly pricey and shares of some peer company are already available in secondary market. Still

COMMON AND MUST TO KNOW TRADING RULES

• Always have a trading plan. Never trade without a trading plan (a trading plan consists of a trading system which is made of few components)
• Never trade without a StopLoss (Repeat 10 times).
• Never ever hold on to a losing position. Never average/add to a losing position. (Repeat 10 times).
• Let your profits growing. Add to your winning trades.
• Trade on Rumors and Exit at news. But be care ful while following this strategy.
• Never discuss your

HOusing Finance Counters: Update on Recommendation given on Behavioral Finance principles

Behavioral finance has just evolved in earlier part of this decade.

Understanding of behavioral finance can help tremendously in investing; and so in trading and speculation as well.

On 13 May, we reported in brief about the application of rule of behavioral finance in housing finance sector stocks. We talked about the ‘representative’ and ‘leadership’ bias. How small companies tend to follow the sector leader. We covered a sector with fewer listed companies.

The LIC Housing is listed industry leader and after it Dewan Housing, Gruh Finance, Ind Bank Housing, Can Fin Homes can be listed amongst the housing finance specific companies.

DEWAN HOUSING has since shot up to new high of 260 from 230 levels.

While GRUH FINANCE has since shot up to new high of 351 from 290 levels.

Can Fin Homes hit new high of 140 today, while Gruh Finance, and Dewan Housing also hit highs in this month. while Ind Bank Housing is trading firmly above 20.

We still recommend both of this stocks for fresh buys.

Click below link to Read the Earlier Article:

http://www.meghainvestments.com/2010/05/trade-with-behavioural-finance-rules.html