How to Lose a lot of Money - Part II

The first article, titled "The Trap" talked about a perilous situation in small cap investing. As a follow up, see the chart below for Sprott Asset Management (SII.T). Initial Public Offering (IPO) was at $10. Current price: $3.80. Notice the initial fall, rally back to $10, then collapse to $3.50.

Of note is the downside momentum. Once the market turned sour there was no stopping that freight train. The only people who made money were the underwriters and the insiders as the offering was 100% secondary (ie. insiders cashing out vs. the company issuing new shares to fund IPO demand). Lesson learned. And a painful one at that!


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