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What "IPO" Stands For In Investing

TimmyBoy

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When you hear of a new company stock coming out with an IPO, think of IPO in these terms and you will be OK:

It's Probably Overpriced
Imaginary Profits Only
Insiders' Private Opportunity
Idiotic, Preposterous and Outrageous
 

RightinNYC

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TimmyBoy said:
When you hear of a new company stock coming out with an IPO, think of IPO in these terms and you will be OK:

It's Probably Overpriced
Imaginary Profits Only
Insiders' Private Opportunity
Idiotic, Preposterous and Outrageous
google, anyone?
 

Kandahar

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TimmyBoy said:
When you hear of a new company stock coming out with an IPO, think of IPO in these terms and you will be OK:

It's Probably Overpriced
Imaginary Profits Only
Insiders' Private Opportunity
Idiotic, Preposterous and Outrageous

Hehe. Very true, very true. I avoid new stocks like the plague.
 

Kandahar

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RightatNYU said:
google, anyone?
But for every good deal, there's probably ten overpriced IPOs. Trying to pick the right one is like trying to find a needle in a haystack.
 

TimmyBoy

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Kandahar said:
But for every good deal, there's probably ten overpriced IPOs. Trying to pick the right one is like trying to find a needle in a haystack.
One of the big debates one of my coworkers and myself have is whether I should take out a mortgage loan to buy a house. I am very conservative when it comes to my finances and have no debt, never even took out a loan to pay my college education (GI bill took care of that, Uncle Sam can be good to ex-GIs). I believe that it is best to invest wisely in the stock market in some very carefully selected companies who's stock price is going below their fair market value and eventually accumulate enough wealth to pay for a house, which you believe will go up in value, in cash with no mortgage loan. That way, you have a strong margin of safety and no debt if you lose your job. I also set aside enough cash to pay for 6 months of living expenses without the need of unemployment, though of course, would take advantage of unemployment, if I were out of a job and eligible for unemployment. But I try to plan for worst case scenarios and stick to conservative principles when it comes to money. If I don't have the cash to buy anything, though I have a good credit line, I don't buy it. I wait till the next paycheck. What's your thoughts on taking out loans to buy a house? Is it better to invest towards buying a house and pay cash with no debt? Or is it better to take out a mortgage loan and buy a house you think will go up in value with that loan?
 

TimmyBoy

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Kandahar said:
Hehe. Very true, very true. I avoid new stocks like the plague.
Here check this out Kand, I personally feel it is bad to go into debt even by taking out a home loan on a house you think would likely go up in value. I prefer to pay cash for it. But here is a good article I found, thought you might like it:

Mortgage borrowers know that they don't know much
Thursday January 19, 6:00 am ET
Holden Lewis


You wouldn't believe what homeowners don't know about mortgages. No, scratch that. Yes, you would.
Some recent industry-commissioned polls show that consumers don't feel knowledgeable about home loans and they don't know what to do if they fall behind on their monthly payments. Furthermore, they view their homes as secure piggy banks -- a notion with some merit, as long as they realize that loans against equity have to be repaid with interest.
http://biz.yahoo.com/brn/060119/18127.html
 

Thorgasm

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Timmy, one thing to keep in mind. If your house is paid for ( without a loan), then you are one lawsuit away from losing it. True, you won't be paying interest, but you could lose everything in one lawsuit. You don't have to take out a loan for the whole house. That would minimize your interest payments. Just something to think about.
 

TimmyBoy

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independent_thinker2002 said:
Timmy, one thing to keep in mind. If your house is paid for ( without a loan), then you are one lawsuit away from losing it. True, you won't be paying interest, but you could lose everything in one lawsuit. You don't have to take out a loan for the whole house. That would minimize your interest payments. Just something to think about.
What about selling my house to my relatives for a dollar just before a lawsuit and have it put in their name, so it couldn't be taken from me? I do have some pre-paid legal insurance where I consult lawyers on the law from time to time.
 

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TimmyBoy said:
What about selling my house to my relatives for a dollar just before a lawsuit and have it put in their name, so it couldn't be taken from me? I do have some pre-paid legal insurance where I consult lawyers on the law from time to time.
I believe that is illegal, but am not sure. Why didn't OJ Simpson do that?
 

TimmyBoy

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independent_thinker2002 said:
I believe that is illegal, but am not sure. Why didn't OJ Simpson do that?
I see what you mean, I would want to discuss these things with my lawyer before I buy. Glad you brought these issues up.
 

Kandahar

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I think it's a great idea to borrow money to buy a house; in fact, it's better than paying for it all in cash. I don't have a problem with debt. INVESTMENT debt is a great tool for increasing your wealth, as opposed to CONSUMER debt which should be avoided.

It's all about leverage. If I have a steady stream of income and $200,000 to spend, I'd be much better off buying ten houses for a down payment of $20,000 than buying one equally-valuable house for the entire $200,000. Why? Because I'm controlling $2 million worth of property for a bargain price. I can rent out nine of those houses and have my tenants pay off the mortgage for me, or I can hold/fix them and resell them for a higher price.
 

RightinNYC

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Kandahar said:
But for every good deal, there's probably ten overpriced IPOs. Trying to pick the right one is like trying to find a needle in a haystack.
That one was a pretty gigantic needle.

Want another free stock tip?

IPO, coming out today. CMG.N, soon to be CHP.

Forecast was 15.50, raised to btw. 18-20, just debuted at 22.

Get in while the gettings good.
 

RightinNYC

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TimmyBoy said:
What about selling my house to my relatives for a dollar just before a lawsuit and have it put in their name, so it couldn't be taken from me? I do have some pre-paid legal insurance where I consult lawyers on the law from time to time.
That wouldnt work because in a civil suit, they look at not what your assets are, but what they were in previous years, and actions like that bring up red flags.
 

Kandahar

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RightatNYU said:
That one was a pretty gigantic needle.
There's a pretty gigantic haystack too.

RightatNYU said:
Want another free stock tip?

IPO, coming out today. CMG.N, soon to be CHP.

Forecast was 15.50, raised to btw. 18-20, just debuted at 22.

Get in while the gettings good.
Meh, we'll see. I'm wary of any IPOs. Besides, generally the price of the stock already reflects the available information on it, so unless you know something that the rest of us don't about this stock (which is illegal), I'm inclined to be skeptical.
 

RightinNYC

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Kandahar said:
There's a pretty gigantic haystack too.



Meh, we'll see. I'm wary of any IPOs. Besides, generally the price of the stock already reflects the available information on it, so unless you know something that the rest of us don't about this stock (which is illegal), I'm inclined to be skeptical.

Chipotle shares more than double in debut


Shares of Chipotle Mexican Grill Inc. (CMG.N: Quote, Profile, Research), a restaurant chain spun off by McDonald's Corp. (MCD.N: Quote, Profile, Research) surged to more than double their $22 initial public offering price on Thursday.

Chipotle shares rose to $46.20 on the New York Stock Exchange at midday, up $24.20.

http://today.reuters.com/investing/financeArticle.aspx?type=newIssuesNews&storyID=2006-01-26T174511Z_01_N26400014_RTRIDST_0_LEISURE-CHIPOTLE-UPDATE-2.XML

I just made a 105% return on my investment in 24 hours.

Vindication tastes delicious, but still not as good as Chipotle.
 

Kandahar

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RightatNYU said:
http://today.reuters.com/investing/financeArticle.aspx?type=newIssuesNews&storyID=2006-01-26T174511Z_01_N26400014_RTRIDST_0_LEISURE-CHIPOTLE-UPDATE-2.XML

I just made a 105% return on my investment in 24 hours.

Vindication tastes delicious, but still not as good as Chipotle.
Oh you're a day-trader? A bit too speculative for me... You'll make more money in the long run by picking solid, reliable companies that are managed by good people and holding them for years.
 

RightinNYC

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Kandahar said:
Oh you're a day-trader? A bit too speculative for me... You'll make more money in the long run by picking solid, reliable companies that are managed by good people and holding them for years.
It's not day trading, I'm holding onto it. Chipotle is an incredible company that has only begun to show what kind of growth its going to have. Buying chipotle stock now is the same sort of investment as buying McDonalds 50 years ago...especially considering mackers is in charge of Chipotle's marketing and business development.

I don't buy stock in anything because I hear its going to be good or it looks good on paper. The few times I've actually invested, its been in companies that I either worked for or dealt with day to day and really felt they were on the verge of doing something good. Ive yet to be disappointed.
 

Kandahar

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RightatNYU said:
It's not day trading, I'm holding onto it. Chipotle is an incredible company that has only begun to show what kind of growth its going to have. Buying chipotle stock now is the same sort of investment as buying McDonalds 50 years ago...especially considering mackers is in charge of Chipotle's marketing and business development.

I don't buy stock in anything because I hear its going to be good or it looks good on paper. The few times I've actually invested, its been in companies that I either worked for or dealt with day to day and really felt they were on the verge of doing something good. Ive yet to be disappointed.
Fair enough. I don't know much about Chipotle (other than that I like their food), so I'm certainly not saying it's a bad investment. Just remember that if you're holding onto it for several years, don't get too excited about a 105% return in the first day. :)

I'll have to look into it though. A lot of people I've talked to about it are agreeing that it's a good investment.

One good turn deserves another. I recommend investing in Geico Auto Insurance. Great management, great business ethics, great potential.
 

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TimmyBoy said:
What's your thoughts on taking out loans to buy a house? Is it better to invest towards buying a house and pay cash with no debt? Or is it better to take out a mortgage loan and buy a house you think will go up in value with that loan?
Lets start with the general then proceed to the specific:

Home ownership has been one of the best investments most Americans have ever made, because:

1) real estate has historically been a reasonably good hedge against inflation - ok, the outlook for inflation right now is pretty benign, but if you think long term, even a 1.5% inflation rate will do nasty things to your purchasing power in 20 years, and you never now when inflation might ratchet up again;

2) interest on mortgage loans for your principal residence are still deductible for Fed Income tax purposes (up to a very large maximum amount);

3) property taxes on your home are also tax deductible;

4) when owning your home, your payments build equity; rent payments are gone forever.

Consequently, for most people, home ownership has been a very, very good investment over the long term.
 

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independent_thinker2002 said:
Timmy, one thing to keep in mind. If your house is paid for ( without a loan), then you are one lawsuit away from losing it. True, you won't be paying interest, but you could lose everything in one lawsuit. You don't have to take out a loan for the whole house. That would minimize your interest payments. Just something to think about.
I think all states protect your prinicple dwelling from a lawsuit. Now if you have a fancy beach house you only use on weekends, that may be up for grabs. But ususally a house and a car and even some personal belongs such as clothing and furniture are protected up to a point.
 
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