[Investing in Xiaoyuzhou] The profit-making effect of new stocks has come back, can you still win when you hit new stocks?
Entering May, the haze of the intensive breakout of new shares seems to have dissipated. The new stocks listed within the month not only did not break on the first day, but also rose by an average of 57% (some stocks have restrictions on their first-day gains).
The money-making effect has returned again, can you lay down and win with new strategies?
We mentioned in the previous investment Xiaoyuzhou that the fundamental driving force for making new strategies to make money is the price difference between the primary and secondary markets, and the profit-making effect will attract a large amount of funds into arbitrage. In theory, such arbitrage will gradually bridge the price difference between the primary and secondary markets; but the real situation is more complicated, and the price of the primary and secondary markets will be inverted due to the inquiry mechanism, market atmosphere, thinking inertia of making money, etc., that is, IPO The asking market price is higher than the market trading price of a comparable company, causing the new stock to break out.
But such a situation is precisely part of the market price discovery mechanism. Excessive issuance prices will prevent new players from winning or even losing money. In the past period of time, everyone’s enthusiasm for participation has been cooling down due to the repeated breaking of new stocks. What follows is that some participants choose not to participate in new listings, and even if they continue to participate in new listings, investors will implement a more cautious quotation strategy, forcing The issue price of new shares has been greatly reduced, and the arbitrage space has re-emerged.
This is where the money-making effect of May comes from. We can see that the initial price-earnings ratios of the 10 new stocks listed in May are lower than the industry average price-earnings ratio, and most of them are lower than the industry’s price-earnings ratio by more than 30%. The profit-making effect is not difficult to understand.
After understanding the internal mechanism of IPO pricing, you will find that after the reform of the registration system for IPO inquiry, there will no longer be a win-win policy, which will lead to periodic profit-making and periodic break-points . As an investor who wants to obtain stable income from new launches, it is necessary to be cautious in the quotation strategy. It is best to give a considerable discount on the basis of comparable industry valuation levels in the secondary market. “I would rather miss it than buy the wrong one” is quite important principle.
The above content is not intended as investment advice, please do not be impulsive.
@雪Sphere Fund @Today’s topic @中泰投資管理
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