IPOs for Financial Fashionistas

But getting IPO shares is tough. They are generally reserved for the people in the inside.

Reservations, Please

So how do you get in on this?

Well, in many instances, you don't. But stranger things have happened, and ingenuity, hard work and (yes) good luck can help get your hands on some shares.

First, you need to decide if you even want the stock. Do some research on sites such as Hoovers.com or IPOhome.com and educate yourself on the company and its competitors. Then read the prospectus of the IPO you've selected and determine what the company plans to do with its new financing. Is it simply going public to pay off some debt? Or is it using the money to reinvest in the company and help it grow?

"Use of proceeds is a good indicator for whether want or not you want to invest in the company," says Huxster.

Then go through the audited financial information carefully. But since you won't have much of it available, IPOs should clearly be considered in the aggressive part of your overall portfolio, says Bob O'Hara, VP of development at BetterInvesting. But as long as you can get good information, you can make a sound decision.

Once you find an IPO that you like, the easiest way to get those shares is to have an account with the bankers working on the deal. So if you're working with, say, Morgan Stanley, and its underwriting an IPO, your broker may be able to get you some shares.

But your broker might not know about the deals going on in his firm, so check the company's Web site to see what they're working on, suggests Smith. And be sure to mention them to your broker and ask him to get you in on it.