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Get Started in Shares by Glen Arnold

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Can be good, but be cautious

Buying shares in IPOs can be a good deal. As well as avoiding brokerage fees and stamp duty tax when buying, you might find that the company and its advisers have deliberately priced the shares a fraction below what they think the market will pay. They are concerned to ensure that the shares get away to a good start, and that the shares go up in the first few days rather than down. They do not want newspaper headlines of ‘shares falling due to being overpriced’.

Many great companies started as small companies raising a few million when they first joined the market, e.g. Tesco, eBay and Google. Imagine being a buyer of one of those in the early days! Or being a buyer of LinkedIn shares in 2011 when they rose more than ...

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