Nymex bag holders

New York Mercantile Exchange (NMX) operator rocket from $59 IPO price to trade as high as $152 in debut session.

Is there an edge for mom and pop investors in buying an IPO with lots of buzz. IPO's are never bought, they are sold.And they are sold to clueless retail fools. There are hundreds of studies which show investing in hot IPO under performs the market.

When CME IPOed it was just the beginning of bull market, it had low float and because of market condition was low priced, so it performed very well. Each subsequent IPO in that sector has been priced much higher and has larger float. So in essence the cat is out of the bag. Even the grandma in Timbuktu considers exchanges as good investment. When everyone gets it the party is most likely to be over.

So what will happen to all those who bought it today. They will be the bag holders. Who made money on this stock, all those who bought it before IPO. They will dump it,it will most likely remain below the first day trading price for substantial period of time. When sellers are exhausted , if it has legs it will breakout and then might be good time to buy.

That is typically the story of IPO's with buzz. That is the path for majority buzz IPO's.The only people who make money on IPO are the one who get it at IPO price,buying it at retail price is fools game. The probability is stacked against you.

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