|Why? Because if market or economic forces cause difficulties for a specific industry, there’s a good chance that many of the companies belonging to that industry will be affected - which means their stock prices could fall. So if just a few types of stocks dominate your portfolio, you could be taking on a relatively high degree of risk.
Ultimately, you may be able to lower that risk level by investing in many different types of stocks, along with corporate bonds, Treasury bills and other securities. In the investment world you have quite a few investment choices - so take advantage of all of this freedom and flexibility.
Does “IPO” Spell Investment Success?
If you spend any time among investors, you’re bound to hear someone say: “If only I had gotten in on the ground floor of such-and-such a company.” In investment terms, “getting in on the ground floor” means buying a company’s stock shares when they first go on sale - at an initial public offering, or an IPO. But is buying stock at an IPO always a good move?
Initially, you might see a big spike in the stock price of a company that’s just gone through an IPO. But over time, these companies are subject to the same economic and market forces as all other businesses. Consequently, their stock prices will go up and down.
So, look at an IPO as a long-term investment. If a stock fits well into your overall portfolio, getting in on the ground floor may be a good point of entry.
Contact Wendell at Edward Jones www.edwardjones.com.