Even the average holding periods for certain actively traded Internet stocks like AOL dropped to well below one month. At every turn, it seems investors are being challenged to prove that they can discriminate between speculation and investment. The mutual fund companies, by virtue of their huge purchasing power, are treated as institutional investors by the underwriting syndicate. They merit sizable allocations of these hot performing stocks which, in turn, helps to boost the fund performance that their shareholders enjoy during good markets. Purchasing individual IPOs can be risky.
Some issues drop in value immediately.
Even those that soar after they begin to trade publicly on the secondary markets can subsequently drop precipitously in value. My client either opts to purchase additional shares of technology mutual funds they already own or venture into other mutual funds with an even more focused Internet company exposure. Sometimes they choose to do nothing. In the process, we share a few laughs about the nature of greed, while reiterating the profound, real-life reasons why people invest. Most importantly, the discipline of limiting their aggregate technology stock exposure to a minority portion of their overall investment portfolio is never violated.