With the Dow Jones Industrial Average and the S&P 500 closing at 11-year lows, there isn’t much hope in the near future for a quick recovery for stocks, exchange traded funds (ETFs) and other securities.
To add fuel to the fire, the volatile, yet promising IPO industry continues to see the same freeze that it faced in 2008, indicating somewhat of an instability in the markets and a bleak future for 2009.
The following statistics are dumbfounding:
- France hasn’t seen a new listing of more than $100 million in 69 weeks, Germany has gone 30 weeks, and the U.K. markets have been surviving on a respirator. On a positive note, Poland may give some bankers something to be cheerful about, in that the nation plans to pursue its privatization plans, states Dawn Cowie of The Wall Street Journal.
- The last IPO to grace us was Grand Canyon Education (LOPE) on Nov. 20th, 2008; in the entire year of 2008, we only had 20 IPOs. We haven’t seen these numbers since the prehistoric 1970s, states Baback of Seeking Alpha.
- According to a survey by the National Venture Capital Association, 92% of venture capitalists surveyed stated that they expect a significant slowdown in investments, of which 61% believe the slowdown will cause funding to fall to $27 billion for the year.
The IPO industry seems to be on serious bed rest right now, so does this mean that the ETF that tracks IPOs is down for the count, too? Not necessarily. The FirstTrust IPOX 100 Index (FPX), which tracks the top 100 IPOs in the United States, is designed in such a way to account for inactivity in the IPO market. The only catch is that the index will benefit when the market rebounds and reverts back to its mean, and no one really knows when this will happen. The ETF is up 1.4% over the last month
If you are just itching to get into the IPO market, this fund is a simple way to gain access.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.