Think fast – name 10 IPO’s over the last 12 months.
Doo dooh doo dooh do doo dooh
If you could name even 3, I’ll be blown away.
And it’s that’s not a commentary on your market prowess.
I literally have CNBC in front of me for 12 hours a day and I couldn’t name 10 IPO’s last year.
There were actually 218 IPO’s in 2020!
But I bet if your company IPO’d, you knew everything there was to know about it.
And therein lies the problem.
It’s called the Anchoring Bias.
You place more value on what you already own.
That’s why it’s so hard to sell your company stock – IPO or not.
But if you zoom out on the IPO market, most IPO’s don’t actually do that great.
The rule of thumb is only 50% are higher a year later.
I went through the 10 biggest IPO’s over the last 12 months and – sure enough – only FOUR of them are
positive.
But you don’t hear about the bombs.
You only hear about are the ones that did well.
That’s called survivorship bias.
Which is why people tend to think IPO’s are a guaranteed lottery ticket.
So if your company IPO’s think long and hard about holding on to the stock.
Your salary and bonus are already tied to the company.
Over time, you’ll probably get more equity compensation, so you’ll participate in the upside if does go
up.
And if it goes down, you’ll be glad you sold.
