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No. of Recommendations: 1
EmilyYoung

It is generally very hard to participate in an IPO, as most of those shares are allocated to big institutional investors. I would rather wait until there is more evidence and financial records before I invest. Not everyone feels this way, but I consider chasing IPOs more speculating than investing.

I would recommend great caution about IPO companies. Some sky rocket only to fall well below their ipo price, think GoPro and Facebook, although obviously Facebook has become a great investment over time. So far GoPro has not.

The trouble with investing in a drug company that just got FDA approval is that most of the time investors have been following that company for years, watching the results of the various drug trials. Often the expected FDA approval is baked into the stock price. In addition pharmaceutical companies success or failure is purely binary, the drug works or it doesn't. I own a few small holdings in drug companies but much prefer companies with many levers to pull to be successful, think Amazon, Starbucks, Disney etc.

Even tech companies with a single product usually have a longer runway to improve or modify that product to become more successful if the first iteration isn't great.

Just my two cents in investing in pharmaceuticals.

David
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