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Originally Posted by PaceAdvantage
If you get in on an IPO, depending on the brokerage firm, there can be consequences if you try and sell your shares as soon as you make a quick buck.
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there are brokerages that will stop giving you new issues if you sell them right away.
i used to get secondary issues from full service brokers and they would not let you short them the night before they got issued. i had to use a different account to short them. the brokerage firm that gives you the new issues don't charge a commision to buy them, but when you sell them you get charged a FULL comm. 1000 shares might be over $600 for the transaction.
if its a hot issue like facebook, very few people will get more than 200 shares.
back in the 80's and 90's i dealt with a firm called HAMBRECHT AND QUIST. they brought most of the hot company's public. i made a deal with them that i got every new issue, the good with the bad and the same amount of shares. i agreed to pay full commision, and i made money. then the company got taken over and i was out of business with them.
the best new issues that i used to buy were mutual savings banks and mutuel life insurance company's. you had to have bank accounts in the banks before they went public, and life insurance policy's to get the new issues. with the mutual banks you could buy up to 30,000 shares at $10. they were all the same deals. some went up $1.00 per share opening day, and others went up as much as $8. the best part of those deals were you could sell them in a discount broker and not have to pay stupid fees.
