investment research http://www.wisebread.com/taxonomy/term/15495/all en-US 6 Ways to Vet an IPO Before You Buy http://www.wisebread.com/6-ways-to-vet-an-ipo-before-you-buy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-to-vet-an-ipo-before-you-buy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/2974906840_c667250442_z.jpg" alt="guys using laptops" title="guys using laptops" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>In the aftermath of the <a href="http://www.wisebread.com/10-ways-to-make-facebook-productive">Facebook</a> initial public offering (IPO), the web has experienced a deluge of answers to the question &ldquo;What went wrong?&rdquo; What happens when one of the most hyped tech IPOs in recent history doesn&rsquo;t rise to meet investor expectations?</p> <p>For months I&rsquo;ve been advising family and friends against buying Facebook. The reasons were fairly simple. I felt the entire IPO was a matter of style over substance, with little data to back up long-term revenue growth and earnings potential. It was also entirely possible the value of Facebook had peaked, and the IPO was a way for Facebook executives to reap the rewards of the company&rsquo;s riches before an earnings decline. I felt Morgan Stanley, the firm underwriting the IPO, didn&rsquo;t understand how Facebook worked and certainly didn&rsquo;t understand the company. (In fact, rumor has it that over a year ago Morgan Stanley executives had to hire Zuckerberg to give a private tutoring session on how to navigate Facebook.) Hundreds of analysts more experienced and smarter than I am had a different perspective. Advice from media outlets came in droves, promising us the &quot;biggest IPO ever.&quot; Amidst all the frenzy, it became hard to distinguish the public image of Facebook from the public offering being presented.</p> <p>Perhaps the sagest advice came from PIMCO&rsquo;s CEO and co-CIO <a href="http://www.huffingtonpost.com/mohamed-a-elerian/facebook-stock_b_1533505.html">Mohamed A. El-Erian on the Huffington Post</a>, who remarked, &ldquo;&hellip;the manner that our brains have evolved and work may not always result in the best investment decisions.&rdquo;</p> <p>Instead of asking &ldquo;What went wrong?&rdquo; a better question for investors to ask might be &ldquo;How can we prevent this from happening again?&rdquo; Here are five ways to vet an IPO before you buy. (See also: <a href="http://www.wisebread.com/5-killer-free-investment-tools">5 Killer Free Investment Tools</a>)</p> <h3>1. Check the&nbsp;SEC S-1 Form</h3> <p>All companies are required to file what is called a Form S-1 with the Securities and Exchange Commission (SEC) before an IPO goes into effect. Facebook&rsquo;s can be found <a href="http://sec.gov/Archives/edgar/data/1326801/000119312512034517/d287954ds1.htm" target="_blank">on the SEC.gov website</a>.</p> <p>The S-1 will contain the meat of the information on a company. It&rsquo;s not exactly light reading, but it will have important data that&rsquo;s well worth a look. Not only does an S-1 contain information on the offering price of the company and estimated par value of the stock, but facts and figures on a company&rsquo;s business plan, long-term growth objectives, and estimated budget. There&rsquo;s a wealth of information to be had on an S-1 form, and it should be considered a &ldquo;must read&rdquo; before any responsible investor even considers purchasing an IPO.</p> <h3>2. Read the Corporate Earnings Report</h3> <p>Companies typically have a portion of their website for &quot;Investor Relations.&quot; Browse carefully, and you should be able to find detailed financial information, often called Quarterly Reports or Annual Reports. Financial statements can provide detailed information on current cash flow and revenue, but more importantly for IPOs, projected cash flow and revenue. Facebook's Investor Relations area can be found on their <a href="http://investor.fb.com/">investor subsite</a>.</p> <h3>3. Consider the Underwriter</h3> <p>The firm underwriting the IPO serves several purposes. It prepares a valuation report of the company to be offered and helps to correctly determine the share price. This is usually a big investment firm. In Facebook's case, Morgan Stanley was the underwriter.</p> <p>When considering an IPO, scan the S-1 for mention of the underwriter and ask yourself a few questions. Is it a reputable firm? Do they have a history of accurately pricing IPOs? Do they stand to profit from the success or failure of an IPO?</p> <h3>4. Get Second Opinions</h3> <p>It's human nature to want to be told we're right. But when it comes to investments, try to get a second opinion and listen to people who disagree with you, just to consider an opposing scenario. Listening to other points of view might spark new questions you hadn't thought about, or might confirm your previous opinion. Either way, gather information from a variety of sources to use as informational tools in decision making.</p> <h3>5. Do a Risk-Benefit Analysis (for Yourself)</h3> <p>Ultimately, buying an initial public offering is always risky. Even the most seemingly stable companies can experience an unexpected setback or glitch that lowers their value after investors have bought into an IPO. A risk-benefit analysis involves weighing the risks and benefits of an investment and determining what is right for your individual situation. Remember that there's no market history on share prices for the company you're about to buy into, no way to glean historical data. The fact is that while most people focus on the &quot;get rich quick&quot; aspects of an IPO, it's just as likely that they will lose money. Be realistic about how much money you are willing to invest, and risk, on an IPO purchase. Will you experience buyer's remorse? Can you stand to <a href="http://www.wisebread.com/the-worst-investments-you-can-make">lose part of your investment</a>? In other words, don't bet the farm. It's common sense, but you'd be surprised at how many people forget about risk when they think a big payoff might be in the near future.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/erin-c-oneil">Erin C. O&#039;Neil</a> of <a href="http://www.wisebread.com/6-ways-to-vet-an-ipo-before-you-buy">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-the-dow-will-hit-a-million-eventually">Why the Dow Will Hit a Million, Eventually</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-fiduciary-rule-is-under-review-how-will-this-affect-your-investments">The Fiduciary Rule Is Under Review — How Will This Affect Your Investments?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-profit-from-obamas-cuba-announcement">5 Ways to Profit From Obama&#039;s Cuba Announcement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-build-wealth-in-a-depressed-economy">How to Build Wealth in a Depressed Economy</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-killer-free-investment-tools">5 Killer Free Investment Tools</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News Investment Facebook initial public offering investment research Mon, 28 May 2012 10:36:09 +0000 Erin C. O'Neil 930828 at http://www.wisebread.com 5 Killer Free Investment Tools http://www.wisebread.com/5-killer-free-investment-tools <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-killer-free-investment-tools" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/stock_exchange.jpg" alt="Stock exchange" title="Stock exchange" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>If there&rsquo;s one thing Main Street has in common with Wall Street, it&rsquo;s a common dislike for one of the most hated words in the finance industry &mdash; fees. And you can avoid them by employing one of the financial lexicon's favorite words &mdash; free. For individual investors, carefully researching investments through the use of free tools can eliminate potential fees wasted on brokerage advice, research, and botched trades. Here are five of the best free sources on the web for researching investments. (See also: <a href="http://www.wisebread.com/investing-with-your-values">Investing With Your Values</a>)</p> <h2>1. Morningstar</h2> <p>A bastion of the investment community, <a href="http://www.morningstar.com">Morningstar</a> offers free members partial access to scores of independent research. Gratis members can help themselves to continually updated information on investments from mutual funds to ETFs, as well as broad spectrum economic and market commentary.</p> <p><strong>Best for</strong>: Consumers and investors looking for information.</p> <p><strong>Favorite Feature</strong>: Morningstar&rsquo;s 5-star fund ratings guide, an independent ratings tool based on risk and historical returns of mutual funds.</p> <h2>2. Yahoo! Finance</h2> <p>Yahoo! may play second fiddle to Google when it comes to web browsers, but <a href="http://finance.yahoo.com">Yahoo! Finance</a> remains at the top of the pack where free up-to-the-minute stock market pricing and data is concerned. I can&rsquo;t even count how many times I&rsquo;ve seen brokers and fund managers at firms turn not to expensive custom financial software, but to Yahoo! Finance for pricing and performance data. Amidst a plethora of opinion-driven financial blogs and financial journalism, Yahoo! Finance provides hard data on investments in a simplified form, something that never goes out of style.</p> <p><strong>Best for:</strong> Up-to-the-minute pricing and real-time market data. Statistical performance and pricing research on investments, mostly individual stocks or mutual funds.</p> <p><strong>Favorite Feature:</strong> Tons of free historical market data and custom chart tools on almost everything with a ticker symbol.</p> <h2>3. The Motley Fool</h2> <p>Back when AOL was still cool, the <a href="http://www.fool.com">Motley Fool</a> emerged from the dot-com boom and quickly became one of the most popular websites on AOL for individual investors. Today, the Fool offers a broad variety of financial services, but still lives by its motto &mdash; to educate, amuse, and enrich. While I may not always agree with the advice from Fool.com, it&rsquo;s a valuable resource for those looking to get a variety of viewpoints on investing. Articles are often intelligent, witty, and enjoyable to read. And the Fool offers a social media component, allowing fledgling and experienced investors to share ideas and investment picks.</p> <p><strong>Best for:</strong> Everything from advice for beginning investors to broad spectrum investment commentary.</p> <p><strong>Favorite Feature:</strong> The Motley Fool CAPS Community, where members research stocks, rank stocks, and share ideas.</p> <h2>4. Investopedia</h2> <p>When I first started working in Alternative Investments, my mind hit a big blank every time I heard investment jargon like &ldquo;mezzanine&rdquo; and &ldquo;xyz&rdquo; thrown around in meetings. A <a href="http://www.investopedia.com/terms/m/mezzaninefinancing.asp">mezzanine</a>? What were these guys doing talking about architecture? Enter <a href="http://www.investopedia.com">Investopedia</a>, which provided me with a crash course in investment terminology. While some of the site's other features are lackluster, Investopedia&rsquo;s searchable dictionary of financial terms is a boon to individual investors.</p> <p><strong>Best for:</strong> Novice and experienced investors who need a quick overview of an investment concept or term.</p> <p><strong>Favorite Feature:</strong> The searchable investment dictionary, which features a definition of terms and a brief overview of the concepts behind them.</p> <h2>5. Fund Fact Sheets</h2> <p>Buried in the websites of mutual fund companies and investment firms are &ldquo;fact sheets&rdquo; or &ldquo;tear sheets,&rdquo; one-page marketing tools designed to provide an overview of the fund&rsquo;s holdings and past performance. These are often in PDF format and offered for free to prospective investors. For those looking to research a specific ticker symbol, fact sheets offer invaluable information on an investment&rsquo;s risk and historical returns.</p> <p><strong>Best for:</strong> Detailed information on a specific stock, <a href="http://www.wisebread.com/the-duel-etfs-vs-mutual-funds">mutual fund, or ETF</a>.</p> <p><strong>Favorite Feature:</strong> A one-page synopsis of information on a single fund or stock, including investment allocation, past performance, and the investing strategy.</p> <p><em>Have a favorite free investment site? Feel free to share!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/erin-c-oneil">Erin C. O&#039;Neil</a> of <a href="http://www.wisebread.com/5-killer-free-investment-tools">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/keep-an-eye-on-your-money-with-these-7-online-investing-tools-and-apps">Keep an Eye on Your Money With These 7 Online Investing Tools and Apps</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-vet-an-ipo-before-you-buy">6 Ways to Vet an IPO Before You Buy</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/investing-101-5-essential-steps">Investing 101: 5 Essential Steps</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/etfs-offer-incredible-benefitswith-a-dark-side">ETFs Offer Incredible Benefits...with a Dark Side</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-the-risk-averse-can-get-into-the-stock-market">How the Risk Averse Can Get Into the Stock Market</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Beginning Investor investment research investment tools Mon, 20 Feb 2012 11:24:22 +0000 Erin C. O'Neil 895852 at http://www.wisebread.com