The research report

Another benefit of waiting a bit before investing in a new issue is the analyst research report, which comes out about 25 days after a stock starts trading.

Because the analysts who first start covering a new issue work at the banks that helped bring the company public,

these "rah-rah" reports nearly always include a "buy" or "strong buy" rating and rarely make much of an impact on a stock price.


However, they do provide some food for thought as well as revenue and earnings estimates which can help an investor decide on an appropriate valuation.


If you're determined to get in on an offering on the first day, always use limit orders, which allow you to set the maximum amount you're willing to spend.

Limit orders may not always get filled, but you may get saddled with a wildly overvalued stock if you use a regular market order.