The stock market has a history of crashing and it also has a history of making incredible successes. People come here for one thing which is to make money. For decades the stock market has been a very rewarding entity but as a rule of thumb, it tends to crash and eventually lower the prices of almost every stock. Everything in this world has two faces so does the market crash, some see the market crash as a good opportunity to invest more but on the other hand, financially illiterate people think the stock market to be a risky place due to these risky crashes.
Isn’t it funny, when you buy a stock in the stock market you think it is a good time to buy but on the other side someone selling you that stock thinks it is a good time to sell?
Legendary investors like Warren Buffett and Bill Gates have proven many times that if you have the right strategy and a right-thinking process you can make big on the stock market. There is a simple tool called the compounding effect which is considered to be the eighth wonder of the world from which one can become wealthy in the long run, but people tend to ignore it? The only thing needed is time for the money to grow.
The stock market attracts those who wants to make quick money but rewards those who wants make a fortune.
WHY DO MANY IPOs COME IN A BULLISH MARKET?
Simply because they can get and listed on to the market with a bigger valuation than otherwise and through that valuation they can bring back more money than anticipated. Generally, a company dilutes only a very small percentage of its shares with the public through IPOs so that the primary ownership remains with the promoters of the company, and also they can raise money from the market.
Pro Tip: If more number of IPOs are arriving then average, and many industry firsts’ IPOs are also arriving then it is a clear indication that a market crash is about to happen in the near future.
Companies like Coinbase, Airbnb, and bumble are prime examples of why they chose to offer their IPOs just after the Covid crisis. As soon as that IPOs were launched their valuation quickly doubled which made billions of dollars for the company out of thin air. Taking the company public is an irreversible act that requires a strong foundation of financial fundamentals.
Different Kinds of Public Offering
1.IPO:- It stands for Initial Public Offering, the is a process in which a privately owned company comes forward to dilute a portion of its shares with the public by getting listed on the stock exchange. Once it is mentioned in the stock exchange the company Is required to follow certain procedures and rules that a public company has to follow.
2.FPO:- It stands for Further Public Offering, initially the company dilutes a portion of its shares with the public, and when it wants to dilute more of its shares an FPO come into place and further dilutes the shares of the company by raising more money in the end and giving them a larger market cap overall. FPOs arrive after their IPOs have been offered before.
3.NFO:- It stands for New Fund Offering, basically these are IPOs for mutual funds. When a new mutual fund is listed they are listed through these NFOs.
ICOs:- Stands for Initial Coin Offering, These are IPOs for newer crypto currencies which are to be listed on the exchange.
Covid-19 CRASH AND THE LEGENDARY UPLIFTING
After the crash of COVID-19 the market has seen an exponential growth rate never seen before. By convention, it was the highest rate of recovery ever after the crash of a market. This rate has been increasing for a year and has reached a level so high that many industry analysts and experts fear the market would crash drastically and wipe out trillions of dollars along with it.
Believe it or not, this was a periodic crash which came in the form of Covid 19, if we look closely at the history of the stock exchange we can see approximately about 10 years ago the housing market came crashing down which took the stock exchange along with it, and proximately a decade ago from housing market crash the dot com bubble busted and took many new investors to a path of bankruptcy. Coronavirus not only took the stock market by storm it shook the whole world with its drastic effects and its killing ability. You won’t believe this but the coronavirus pandemic was also a periodic event that happened approximately after hundred years of the previous pandemic.
Smaller periodic crashes happen all the time but with the overall increased return but these massive crashes happen once every decade and eat into the gains of millions of people. Market analysts had predicted the crash even before it happened and those who did make millions out of it by shorting the stocks.
Why is Bill Gates selling his position?
Recently Bill Gates sold a major portion of his holding in the first quarter of 2021. Bill Gates is a person who constantly changes with the changing market, as a matter of fact, he is shifting to a new approach in his portfolio by selling shares of Apple and his beloved Berkshire Hathaway.
He sold the same shares that were The Saviour of Apple in the early 2000s. he invested $150 million in Apple to save it from bankruptcy and also it was done to save his image in public which was kind of deteriorating at the time.
A simple pattern was also found in his selling of stocks, he generally sold those stocks which had a higher PE ratio and kept those which was considered to be safe stock. you also sold Alibaba stocks because of the ongoing conflict between the trade of China and the US.