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davepamn davepamn
 

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 M¢37  Funded By Mahalo ? |  October 02, 2009 07:52 PM

Why are investor clueless about investing in nonprofitable IPOs?

Are investors buying on momentum?

A123 is spending more cash than it makes, yet it's stock is climbing, after it's IPO.
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mcrev mcrev
 
 October 04, 2009 07:34 AM
It is likely greed and of course investors perceive momentum and the
ability to make money off an IPO.
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davepamn davepamn
 
October 04, 2009 02:21 PM
Momentum buying gambles on a payout. The investor spends a portion of his with the broker, a short-term trade rakes in some cash. The investor borrows more money looking for a bigger payout. The increased desired for payout increases and more money floods the investment channels. The investor excitement and exuberance surges more dollars for a big payout. The brokers accept the money and take their commission. The market momentum changes due to lack of fundamental earnings, suddenly, and the investor loses money. The investor is blamed for his foolishness in not being able to predict the market turn. Quietly, the investor fades away and he must go look for additional funding and pay his debts.

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