I wrote a few days ago that IPO excitement is in the air.

There have been 772 initial public offerings (IPOs) so far in 2017 – that’s the most since 2007. These IPOs have raised a total of US$83.4 billion, which is up 90 percent from the same period in 2016.

Over 450 of those offerings happened in Asia-Pacific, raising US$37 billion.

Many times, investors pour money into these IPOs in the hopes of making big bucks in a short time frame.

For example, take Aoxin Q & M Dental Group (Singapore Stock Exchange; ticker: AOXIN), which rose 35 percent in 24 hours after its IPO. Or construction company Acromec (Singapore Stock Exchange; ticker: ACRO), which increased 23 percent over the same period.

When business networking company LinkedIn went public in 2011, its shares doubled on the first day. Shares of Chinese e-commerce company Alibaba rose 35 percent during the first day of trading. And so on.

But buying into an IPO in the hope of a large short-term gain isn’t investing: It’s speculating.

If you’re looking to invest in a company that’s going public… ask these seven questions first. Then pause for a moment and ask yourself one last question: What about the aftermarket performance of IPOs?

Here’s how recent offerings perform

To see how stocks performed after their IPOs, we looked at all the IPOs in Asia (excluding Japan) since 2013 that raised over US$500 million. There were 82 of these, including 54 in China, seven in South Korea, six in Thailand, five in Singapore and three in Hong Kong.

Then we looked at the one-week, one-month, three-month and one-year performance of these stocks after their IPOs, compared to the average performance of the MSCI Asia ex Japan Index.

As you can see in the chart below, the average one-week return for these stocks after they went public was 8 percent, while the MSCI Asia ex-Japan Index returned just 0.2 percent in any given week. After one month, the IPO stocks were up around 17 percent – while the MSCI Asia ex-Japan Index in any given one-month period rose just 0.7 percent.

That’s pretty impressive. But the outperformance of IPOs slows sharply after that. After one year, the IPO stocks had returned just 3 percent – while the MSCI Asia ex-Japan Index returned an average 8.2 percent.

Of course, these are just averages. Some IPO stocks did exceptionally well. Foshan Haitian Flavouring & Food Co – a Chinese company that manufactures sauces and flavourings – was up 36 percent over the first year after its February 2014 IPO. Shares of JD.com Inc., a Chinese e-commerce company, were up 67 percent in the year after its May 2014 IPO.

Other IPOs were duds. Seoul-listed Hyundai Rotem fell 43 percent in the year after its October 2013 IPO. China Huishan Dairy Holdings – which produces and sells milk products – fell 29 percent in its first year (and far more since then).

Why?

On average, buying into an IPO and holding for the first three months looks to be a recipe for sharply outperforming the index. But holding past that period, in general, is a bad idea.

This may be in part because of the “holding” or “lock-up” period… that’s the time – usually around 90 to 180 days – after a company goes public, during which insider shareholders (like company founders, managers and employees) are prohibited from selling their stock.

Once they’re allowed to sell shares, the share price is sometimes depressed by the sharp increase in sellers, thus leading to underperformance. That can create an opportunity for investors (as opposed to IPO speculators) who can uncover good value in shares that are hit with insider selling after the end of the lockup period.

So are IPOs a good investment?

On average, IPOs in Asia over the past several years have done better during the first few months after being listed than the market as a whole. But there’s a lot of variance in the performance of IPOs – some perform well, and some perform terribly.

Also, remember the cost (and hassle) of buying a large number of IPOs would be significant – you’d need to have a lot of high-volume accounts with some brokers. And you may only get small allocations for the “hot” IPOs that outperform in the short term, which would hurt your average returns.

You’d be better off looking at the shares of recent IPOs that underperform… and find value there.

This is a guest post by Stansberry Churchouse Research, an independent investment research company based in Singapore and Hong Kong that delivers investment insight on Asia and around the world. Click here to sign up to receive the Asia Wealth Investment Daily in your inbox every day, for free.

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