Every day it seems another batch of companies is going public. With billions of dollars pouring into fledgling start-ups with no discernible track record, naturally investors are looking for big returns. In this highly competitive market, some of them need quick and large injections of capital just to survive. But sometimes this race to an IPO comes at the expense of laying the foundation for a viable, long-term company. As long as investors stay hungry for public offerings, there will be even more IPOs.
Competition is the lifeblood of the free market.
But finding the companies that will thrive in tomorrow's market demands even more work on investors' part today. For investors, this means taking the time to research what they read and hear about potential investments. In many respects, a culture of gamesmanship has taken root in the financial community making it difficult to tell salesmanship from honest advice. A lot of analysts we see on television recommending stocks work for firms that have business relationships with the same companies these analysts cover. And some of these analysts' paychecks are typically tied to the performance of their employers.