A tribe member shared this video with me some time back. This is a hilarious take on how a lot of companies that come out with their IPOs really operate and sell their shares to public.
You must understand Hindi to understand this video.
If you can’t watch the video above, click here.
The underlying lesson is simple – Avoid (most) IPOs.
Over my 12 years of experience in the stock market, I have rarely come across an IPO that was launched keeping in mind the interest of minority investors. In fact, a majority of them were launched in the form of legalized looting by company promoters and their investment bankers.
Warren Buffett says this on IPOs…
It’s almost a mathematical impossibility to imagine that, out of the thousands of things for sale on a given day, the most attractively priced is the one being sold by a knowledgeable seller (company insiders) to a less-knowledgeable buyer (investors).
If the stock market continues its climb and the IPO line lengthens, I’m afraid you’ll have plenty of opportunities to see that Buffett’s right.