Daily Investment Tips

It was a day to remember for lucky investors who bought into Zillow IPO. Zillow, a Seattle-based real estate listings website, tripled in value as it began its first day of trading on Wednesday, continuing a series of successes for dotcom companies this year in an echo of the 1990s boom.

Zillow sold IPO shares for $20, then on the opening date on Wednesday on Nasdaq, the shares skyrocketed to $60. By the close, the shares had settled at $35.77, for a valuation of $965m, a gain of 79 per cent.

Money To Be Made In Tech IPOs

Zillow was just repeating a pattern that has been set by other Tech companies: Shares skyrocketing on the first day of trading. A word of caution. although this tech stock have shot up on the first day of trading, they have thereafter struggled to stay at their peak levels.

written by Constantine Njeru \\ tags: 1990s, Boom, Caution, Dotcom Companies, Investors, Ipo Shares, Ipos, Lucky, Money, Nasdaq, Peak Levels, Real Estate Listings, Seattle, Stock, Successes

IPO Laddering was a practices that was common in the 1990s tech bubble. Laddering requires IPO investors to buy more shares once trading begins. Critics complain this can create false momentum.

IPO laddering was an IPO risk during the 1990s tech bubble.

A law website explains how Laddering tricks retail investors:-

Investors observe that an IPO stock’s prices are rising and join in the trading, assuming the shares are moving at an honest rate. Laddering artificially balloons the value of a stock, making it appear to be a hot pick before investors. After the IPO stock’s value rises, the client-investors often sell their shares and make huge profits. Those who are not client-investors of the underwriting firms, and thus not aware that the value of the stock has been inflated, fail to sell, and end up holding highly overpriced shares.

People whjo make money from IPO laddering

In the end the people who make money are the executives of companies that the underwriting firm does banking business with and the investment banks that boost commissions.

written by Constantine Njeru \\ tags: 1990s, Balloons, Commissions, Investment Banks, Ipo Laddering, Ipo Stock, Momentum, Money, Profits, Retail Investors, Risk, Stock Prices, Stock Value

Their is a quote that says “nothing is new, everything that happens today has happened before.” This is true in stock market and even in housing market.

Robert J. Shiller a professor of economics and finance at Yale and co-founder and chief economist of MacroMarkets LLC has posted an article in NYtimes detailing the history of real estate bubbles across USA.

The first real estate bubble happened in 1830s and burst in 1837

The second real estate bubble happened in 1850s and burst in 1857

The third real estate bubble happened in 1970s and burst in the early 1980s

The fourth has been the recent bubble that started in 1990s and burst in 2007

It is clear real estate bubbles have been few and far between. To read the full article visit New York Times Real Estate.

written by Constantine Njeru \\ tags: 1830s, 1850s, 1970s, 1980s, 1990s, Bubbles, Burst, Chief Economist, Co Founder, Economics, Finance, First Real Estate, Housing Market, Llc, New York Times, Nytimes, Real Estate Bubble, Stock Market, Times Real Estate, Yale

If you are a follower of Ken Fisher you must be interested to listen to his latest forecast on what will happen in the next decade.

The next decade will be as good for investors as the 1990s, said Ken Fisher, the billionaire chief executive officer of Fisher Investments Inc.From Bloomberg

Fisher made this forecast at the Forbes Global CEO Conference in Sydney.

Don’t follow Fisher’s forecast blindly, the man might have made a ton of money from stocks before but keep in mind the man is human and he makes mistakes just like us mere mortals.Like in the case below:-

Fisher said in October 2008 that U.S. stocks were close to the bottom. The S&P 500 fell about 30 percent from October 2008 to a 12-year low in March 2009.

written by Constantine Njeru \\ tags: 1990s, Amp, Billionaire, Bloomberg, Ceo Conference, Chief Executive Officer, Fisher Investments Inc, Follower, Forbes Global, Global Ceo, Investors, Ken Fisher, Mere Mortals, Money, Next Decade, Stocks, Sydney

I found some interesting comparisons of returns of index fund and mutual funds.

From motley Fool website;

During the 1990s, the S&P 500 has provided an annualized return of 17.3%, compared with just 13.9% for the average diversified mutual fund.

And From Yahoo

In 1998, for instance, 85 percent of all mutual funds that were set up to beat the S&P 500 failed to meet that goal. When you think about it, that’s an amazing statistic — eight out of ten mutual funds didn’t beat the market!

Investing in a stock index fund guarantees that you’ll never outperform the overall but an index fund might give investors a higher return because of their cost advantage. Index funds have lower or zero fees, they also don’t hire expensive equity analyst. All that saving is passed to investors.

written by Constantine Njeru \\ tags: 1990s, Amp, Annualized Return, Cost Advantage, Equity Analyst, Guarantees, Index Funds, Investor Returns, Investors, Motley Fool, Mutual Fund, Mutual Funds, Statistic, Stock Index Fund, Yahoo, Zero Fees

We know Greece in a financial hole and investors are already betting that Greece will default on its bonds sooner or later. The investosr who think a default akin to Russian default in the 1990s is on the cards are shorting Greece bonds.

When Greece Economic minister was asked by a BBC report about the possibility of a default this is what he said, They will lose their shirt!

But the reality on the ground is that Greece is a sinking ship. They are running out of time, they need to find 9 billion euros by 19th May just to pay off due debt. The public is strongly opposed to any attempts by the Government to cut spending to raise funds. They cant borrow money, lenders are demanding reforms first before any new lending. The greece government is dead broke.

Worse still, on April 26, Greece debt was downgraded to junk status by rating agency standard & poor.  In the report S &Pwarned holders of Greek debt that they only had an “average chance” of between 30% and 50% of getting their money back in the event of a debt restructuring or default.

written by Constantine Njeru \\ tags: 1990s, Amp, Attempts, Bbc, Bbc Report, Betting, Bonds, Cards, Debt Restructuring, Financial Hole, Greece, Greece Government, Investor, Investors, Junk Status, Money Lenders, Running Out Of Time, Russian Default, Sinking Ship