How does one go about buying stock in an initial public offering?

Call your broker!


 Phenomenal woman
 Bitch Corporate Lawyer
 That's me

OK, I can see I understated my total lack of financial knowledge. Where does one get a broker?

Heh, okay, didn’t mean to be a smart-aleck.

There are on-line brokers; I have never dealt with them and so express no opinion one way or the other. I’m inclined to think that they are probably for people who have more experience, and who know what it is they want.

There are companies – brokerage houses – who buy and sell securities, bonds, etc. for their clients. I happen to use a guy with SalomanSmithBarney, but there are lots and lots – Merrill Lynch was what my father used, and I know there are manny, manny more. Ask around people you know, or your parents, or at work. Somebody will have a name or two of someone that they use, or that their great-uncle uses, or some such thing. Get a couple of names, then call and set up an appointment. This is your money that you are talking about, so don’t be afraid to ask questions. You wanna know about somebody’s training, experience, credentials, philosophy. You also want to know what kind of services s/he can provide, and what the commission rate will be. (The more money you have to invest with a particular broker the more likely you are to be able to get a better, preferred rate.)

Be prepared to answer questions about what your financial goals are, whether you are a conservative or aggressive investor, and what kind of money you are making, and what you want to invest. If you are particularly interested in, say, Internet company IPOs, be upfront about that, and ask about the broker’s experience, and the brokerage house’s experience. Don’t be afraid to (politely) take your business elsewhere if you don’t get what you want out of that first interview – there are a lot of brokers out there who want your business.

Lots of the big brokerages have other services now, too. Some offer credit cards and checking accounts tied to your accounts, and I recall at least one in the 80s who was getting into the mortage business – don’t know if that’s still the thing.

Did I forget anything?


 Phenomenal woman
 Bitch Corporate Lawyer
 That's me

Melin did a really good job. Think of finding a broker the same as finding a good attorney or doctor.
Really do ask around.
Do you really want to buy IPOs? Your best luck may be with online brokers (again, do your homework).
Wall Street Journal ran an article a month ago about how the big brokerage houses were cracking down on IPO buyers. If they sell you an IP0, you have to hold on to it for a minimum amount of time if you want them to sell you another one later. This is to quash “flipping.”
That’s buying the IPO at the offer price of $16 and “flipping” (selling)it the next day when it’s been bid up to $32.
Which, frankly, is one of the few good reasons to buy into an Initial Public Offering, IMHO.

One of the best sites to rate online brokers is Gomez at: http://www.gomez.com

Some of the brokers (mine/Suretrade) do not offer IPO services. If you don’t get in on the offering, you definately want to use a limit order if you want to try to get in on the first day. Lately I have been following the IPO aftermarket scene and have missed the boat more often than not. Watch good companies that did not take the rocket ride on the first day. 2-3 weeks later you may find opportunity without the usual IPO risks.

Of course the easiest way to make lots of money off an initial public offering is to be the initial offerer yourself. Here is how, in easy steps:

  1. Make a web page about your cat or something.
  2. Incorporate and call yourself an “Internet startup”.
  3. Make the initial public offering.

I’d like to market a children’s toy called “Junior’s First Internet Startup” and sell it at Toys-R-Us. I’d make a fortune.