“Let me tell you about my dumb luck on Wall Street last summer,” writes one of your number by the name of Uvarov. “When [Ralph Lauren’s] Polo went public, I put in a stop order at $27, for 1,000 shares. [A.T.: He means a limit order, not a stop order.] If I couldn’t get the stock for $27 or less, I didn’t want it. I was going for a quick in-and-out IPO profit. Reckless, but I’d seen three other recent IPO’s I’d passed up…go uppppp.
“Well, after the favored clients at … [a broker other than the one that sponsors this comment] got the stock, it went to everyone else for more than $27. I thought, Oh, well, I didn’t get it for $27 or less. Such is life. And I thought that was that. What I didn’t realize was I had not put a deadline on my order!!!! [A.T.: He means he didn’t place a day order; he accidentally made it “good-til-canceled.”] And if you want to know what panic looks like, you should have seen me when I opened a statement from … [a broker other than the one that sponsors this comment] a week or two later stating I had bought a thousand shares of Polo at $27!!!!!!!! I meant for that order to be in only for the day of the IPO!!!! I thought that was understood!!!! And, of course, the reason I got Polo stock for $27 now was because the stock was going doowwwnnn. The statement was for a trade two days before. So I threw open my Wall Street Journal to see what Polo stock was trading for the day before. I expected to see it trading for $20, or something terrible … losing thousands of dollars through an accident – an oversight!!! But the stock was trading at $28!!!! But was it trading at $28 that day??? I called … [a broker other than the one that sponsors this comment]. It was trading at $28. (Whew!) I organized my information and called … [a broker other than the one that sponsors this comment] back a few minutes later and said I wanted to sell my 1,000 shares. The friendly girl said, ‘Okay, that’s 1,000 shares at $28 1/8.’ Those few minutes of organizing my info. meant over $100 difference in my favor. So I made a nice little profit for less than a week of holding the stock, all from a flub.
“Anyway, that is my Wall Street Adventure. Forrest Gump couldn’t have had dumber luck.”
A.T.: I’m thrilled for Uvarov and first to admit I’ve made a mistake or two in my own day. But I’m also worried for Uvarov, because he sounds as if he’s fairly new to all this. Buying an IPO the first day at way above the initial offering price just because IPOs seem to go up even more than that the first day – well, this obviously can work, and it’s obviously exciting, and the great thing about America is that you’re free to do it. And Uncle Sam is thrilled, because he’ll take a good chunk of the winnings if you do win, while strictly limiting any tax benefit if you lose.
But when I read this message, other than liking Uvarov immediately, the sense I had was, well, it’s just getting a little too easy.
Quote of the Day
The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.~Adam Smith, The Wealth Of Nations
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