In the case of the Royal Mail, it's highly likely that you will soon be on the receiving end of a barrage of communications prompting you to grab a piece of the action. You will almost certainly also be reminded that had you invested in British Gas when it was privatised in 1986 you'd be sitting on a small fortune now.
That much, of course, is true - I know someone who did indeed queue up to invest the princely sum of £250 in British Gas, and having done absolutely nothing with those shares over the past 27 years - not even cashing the dividend cheques, which went straight back into more shares - is sitting on a lovely five-figure sum, spread across three very decent companies, BG, Centrica and National Grid.
There is a lesson we can all learn from that, which is that you don't have to be a trading wizard to make very good profits in the stock market if you follow a few simple rules, of which the most important is to always reinvest your dividends (although, as our cover feature notes, being a trading wizard sometimes helps).
However, that very tempting fact should does not mean an investment in the Royal Mail will be similarly profitable. No disruptive technology has yet emerged to change the fact that I still need to heat my house - and with a boiler that was in fact installed in the same year British Gas floated, it makes a pretty penny selling me insurance and servicing, too.
Sending letters, on the other hand, is so last century, and even the number of parcels I currently receive will start to diminish as I buy more books, music and film electronically. Okay, so there are plenty of other goods that can't be distributed digitally - not least the booming area of clothing. But the price hikes that the Royal Mail has pushed through to scrape into profitability means parcels competition abounds. It will have to work ever smarter to stay profitable.
That's not to say that the Royal Mail can't be a good investment - it's worth re-reading our detailed analysis of the business ('Sid's Back', 26 July 2012) to see why we think it could overcome its challenges. But the point remains that you shouldn't be buying any shares just because they exist, or because other privatisations were successful - treat an IPO like any investment, and don't take the plunge without doing the analytical legwork.
