Late Friday night I was surfing the Web and clicked my way into one of those scrolling news-headlines sites when I ran across this little gem: "IPO's 40-60 pct gains now called 'successes'."

This is an

actual

story headline that ran Friday evening. When I read this I laughed out loud. I couldn't help it. Those of you who have read even a few of my past columns already know where I am headed with this. But for the sake of those who are just joining us I will repeat the sermon.

When the

Earthweb

(EWBX)

IPO burst onto the stage in November with a huge price gain, it marked the beginning of what has become one of the hottest IPO markets I can remember. That deal was quickly followed by another blockbuster IPO from

theglobe.com

TheStreet Recommends

(TGLO)

, which to this day stands as one of the highest ever first-day percent gainers in history. Since then, we have witnessed literally dozens of these "hot" IPOs open with unbelievable premiums. In recent months, watching a deal double, triple or even quadruple in price on the first trade has grown, well, tiresome. I liken the phenomenon to watching a fireworks display -- the first few shell bursts are spectacular and elicit passionate sounds like "ooooo" and "ahhhhh". Very quickly though, the newness wears off and the crowd goes back to eating potato salad and drinking beer.

For many retail IPO investors, this cycle is their first and only experience in buying the deals. What troubles me about this is that many of them do not understand that what has happened over the last seven months is not normal. Ok, then what is?

First off, I refer back to the headline above from Friday night. Where else are you going to get that kind of traction from an investment? It's time that we check our expectations and get back to reality.

Second, you must understand that the IPO market runs in cycles, and that the peaks and troughs of these cycles represent some of the most extreme trading environments imaginable. You have just seen the good part. What comes next, nobody knows. But, there will come a day, and I have said this before, when the IPO calendar will dry up and appear to be dead. These dry spells, like the one from June of 1998 until November, are tough, frustrating markets. Only after an IPO buyer has lived through a complete cycle -- hot and cold -- can he truly appreciate the gift we have been given over the last two quarters.

My advice: Put a little of those profits aside for the coming summer. You just may need them.

Let's look at the week ahead:

Ben Holmes is the founder of ipoPros.com, a Boulder, Colo.-based research boutique specializing in the analysis of equity syndicate offerings. This column is not meant as investment advice; it is instead meant to provide insight into the methods of new and secondary offerings. Neither Holmes nor his firm has entered indications of interest in any of the companies discussed in this column. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Holmes appreciates your feedback at

bholmes@ipopros.com.