Ask Matt: Are IPOs good bets for investors?

• Top performing IPOs like Microsoft and Google can be very lucrative for investors
• Choosing the IPOs that will win is difficult thought give these firms%27 limited track records
• Investors need to treat shares of IPOs differently as they can suffer great volatility

USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com.

Q: Are IPOs good investments for individual investors?

A: The initial public offerings that individual investors remember are the big winners.

Newly public companies that turn around and see their value blossom, such Microsoft and Google, create the legends that keep investors interested in initial public offerings.

And there's no question investors who pick just the right IPO can see the value of their investments skyrocket. Google shares have soared 922% from their $85 a share IPO price nine years ago.

But it's a very false assumption to think investors can buy just about any IPO and become fabulously wealthy from it. IPOs are traditionally shares of companies with very limited track records operationally. Some often have untested management teams or limited experience dealing with the demands being a public company.

IPOs also tend to be even more volatile than the broad stock market: The FTSE Renaissance US IPO index fell by roughly a third in late 2011.

The newness of IPOs makes them very lucrative when investors buy the right ones at the right time. But investing in IPOs requires a very deep understanding of the businesses and requires investors to do much more research.

There's often very little Wall Street research available on IPOs, either, since analysts involved in a deal have to wait for a few months before issuing reports.