Summary

The author recounts a personal experience of narrowly avoiding a significant financial loss by missing out on an IPO investment due to a bank error.

Abstract

The author shares a cautionary tale about the perils of investing in IPOs, detailing their own near-miss with a substantial investment in Udemy's IPO. Despite following the pattern of using money to make more money, the author faced bureaucratic hurdles with account registration due to a discrepancy in the spelling of their address. This mishap prevented them from participating in the IPO. Initially distraught, the author later realized that the shares had significantly dropped in value, which would have resulted in a loss of $45,600. The narrative serves as a reminder of the risks associated with stock market investments, emphasizing that easy gains are not guaranteed and that thorough analysis is crucial.

Opinions

The author believes that IPO investments are tricky and not as straightforward as they may seem.
There is a sentiment that the stock market does not guarantee easy money and that substantial losses can occur quickly.
The author suggests that patience and detailed analysis are essential before making investment decisions.
The experience led the author to conclude that not all negative events lead to adverse outcomes, implying a philosophical acceptance of the situation.
The author values the lesson learned from the experience, preferring to avoid the potential financial disaster without losing any money.

Money | Investment | Stock Market

Almost Lost $45,000 but Bank Mistake Saved Me

Investing in IPO is more tricky than it seems.

Screenshot of GoogleFinance from Author. The initial price of share and price today (23.01.2022)

Luxury car, house with the pool, personal helicopter — things that only super-rich people have. We all want them too. To get all this stuff, you need a lot of money.

I decided to use rich people’s pattern for making money:

Use money to make more money

In theory, it sounds awesome, in practice there are issues.

Investment Solution

After long hesitations, I picked the most profitable way to invest my capital. At that moment, I thought the most profitable was IPO.

Don’t you know what is IPO? Here is what Wikipedia says:

An initial public offering (IPO) — shares of a company are sold to institutional and individual investors. An IPO is typically underwritten by investment banks, which list shares on the stock exchanges. IPO can be used to raise equity capital for the company and enable trading of holdings or future capital raising.

In simple words, the company needs money for further development. To get money company creates shares. The first round of selling shares among investment banks and individual investors is called IPO.

Usually, before IPO shares have a lower price than later on the market. You can earn if you buy shares before IPO and sell them later. But only if the price of shares goes up — if the market believes in the company.

Investment Opportunity

At the same time, I decided to find an interesting IPO to invest in, I got an email. The email was an invitation to take part in Udemy’s IPO. It was a great opportunity. Something that I was looking for. I still don’t believe that I got the email perfectly on time.

Do you know what is Udemy? Another Wikipedia quote:

Udemy, Inc. is a for-profit massive open online course provider aimed at professional adults and students. It was founded by Eren Bali.

As of September of 2021, the platform has more than 46 million students, 175,000 courses, and 60,000 instructors teaching courses in over 75 languages.

I am an instructor on Udemy myself, so I knew all pros and cons of the platform. It’s a great passive income source that I use for 3 years already.

So I decided that it was my golden ticket. The right time to invest everything.

Preparation

Taking part in IPO isn’t easy. You need a broker account to buy and sell shares. Registration of this account is a fragile and long process. Every letter matters.

Your name, address, phone, and other personal information should be provided to a broker company. Then you have to prove that all the above is correct using local bank references. Then broker company double-checks all your information. So, I started the process.

At the same time, I booked shares for $100,000. Freaking huge sum for me. I was going to use multiplicators and borrow money from a broker to win even more. One-shot to reach the Moon. I was 100% sure that it was worth it.

To take part in the IPO I had to transfer money due 28th of October. One day before shares goes to the public market. I had to be on time.

The Intrigue

The deadline was approaching but I still didn’t have an activated broker account. I couldn’t place money into the broker account to guarantee my order of shares. I still didn’t take part in the IPO.

Then 3 days before the deadline, I received an email. It notified me that broker can’t create my account due to issues with documents from my local bank. It was a disaster…

I tried to solve the situation and find out what was wrong. Many calls to the support department of the broker and my local bank. Much gray hair and stress.

In the end, I’ve discovered a problem with spelling my address. I did it the old way during registration and my bank spelled the address in a new way.

The problem was fixed in a couple of days, but I didn’t take part in the Udemy IPO. I lost the opportunity of my life, as I thought then.

So what?

First days after IPO Udemy shares went up. I was ready to tear my gray hair and cursed my local bank, broker, and whole financial system.

Then the interesting thing happened. The growing trend turned down.

In 3 months that passed potential losses became huge:

🔻45.6%

If I used the opportunity of my life, I would lose $45,600. With broker multiplicators, I would lose all my money for nothing. Perhaps, it would be a valuable life lesson. But I’m happy to learn it this way without losing money.

Takeaways

There is no easy money on the stock market or anywhere else.
Profits and risk are two sides of the same medal
You can’t get rich overnight, but you can become poor overnight
You need to analyze in detail potential investments
Not all bad things in life lead to bad consequences.

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