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The Equitymaster Research Digest

Smallcap up 19% in 14 Days, the Next 100 Bagger, and More...
Dec 29, 2015

Thirty percent in a day. That's the kind of investment return that investors like to brag about these days.

Why shouldn't they? The listing gains of recent mega IPOs have made investors feel like rock stars.

It is not every day that markets offer Rs 130 to 150 for every Rs 100 invested. But during such times, sentiments tend to peak as investors get greedy.

There is nothing wrong about investing in IPOs. Nor should a long-term investor look down on listing gains. But it is wrong...

  • to invest in an IPO only in anticipation of listing gains, without knowledge of company fundamentals
  • to assume that any and every IPO will fetch listing gains
  • to assume that short-term investments are always richly rewarded

At Equitymaster, we have erred on the side of caution when it comes to IPOs. Our regular readers know that we don't regret that a bit. In fact, we always tell you that we are glad to see interesting businesses debut on the bourses. But the brief pre-IPO meet with the management is hardly enough for us to draw any conclusions about the company's long-term prospects.

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