131. The Right Stock At The Right Time (1)


131. LinkedIn was in the news. The company's Initial Public Offering was scheduled for 9:30 a.m. Lonny called his broker at 8:00. "I want to buy LinkedIn," he said. "The pre‐IPO price is $45. But the opening price might be up to 30 percent higher, right?" His broker said, "Yes, 30 percent higher—or lower—is the rule of thumb." Lonny said, "I want to buy 3,000 shares with a limit price of $60. I'm hoping it opens at $45. But if it opens at $60, I've got it covered." His broker said, "You realize that if it opens higher than $60, you won't be buying a single share." Lonny said, "Yes, but I'm sure it won't." The broker placed Lonny's order. He gave Lonny a confirmation number. Lonny told his wife, "We might double our money today! Let's pray that LinkedIn closes at $90!" He explained what he had done. 5.7

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