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Market Got You Down? If So, Just Think Of All Of Those Juicy IPOs Next Year

Silver linings!
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Either thinking about next year's IPOs or about to start laughing uncontrollably due to nervous breakdown.

You know those smug assholes walking around while you drown in red ink, with shit-eating grins on their faces thinking about how they've somehow already got their hands on some novelty “2016” eyewear four months early? No? Well, if you did, you’d probably be seeing a giddy IPO investor who just can’t wait for the opportunities to roll in next year, for all of the obvious reasons.

A look at U.S. IPO returns from 1999 to 2015 show that the best IPO outcomes for investors have come in years after an annual decline for the Nasdaq….

Why might this all be? There’s the obvious answer that IPOs that price in those bullish years come at inflated prices, while IPOs priced after a tough market come at discounts….

Notably, the market-decline years also saw a drop-off in the number of IPOs. That gives investors pricing power. And it creates a stricter selection bias for companies that attempt IPOs, meaning that higher-quality companies more likely to deliver good returns are the only ones who actually do IPOs.

Is There As IPO Silver Lining In Nasdaq’s 2015 Sell-Off? [WSJ MoneyBeat blog]


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