Buy Facebook, but Not Quite Yet
I have never understood the logic that a person who writes about a stock must not only own, but hold a sizeable number of shares. We don't expect sportswriters who are optimistic about a team's chances to wager money on that team in Vegas. Just as a sportswriter probably does not expect her readers to go out and put the rent money on the Hartford Whalers, I sure as heck do not expect anybody to buy or sell a stock on the basis of my sentiment.
If my articles do any or all of the following, I feel like I have done my job:
I am not here to "win" you money. If you allow financial writers to do anything more than subtly influence your decisions (like any other bit of information you come across), I have concern for you.
I would love to own (or, where appropriate, short) every stock I write about. But, truth be told, I cannot afford it. I do well for myself, but it would be next to impossible to take a considerable position in each of the stocks I cover. I get into as many as I can, to varying degrees.
That said, I could have taken a much larger position in Facebook. I opted not to. I put my money to work elsewhere. The three-share purchase represented little more than a way to get involved in a historic event.
By and large, I consider anybody who buys an IPO at the open on day one a crude and rudimentary investor. Unless you're a savvy day trader or a member of the big money, it's investing suicide. Most investors should institute a three-month rule on IPOs, particularly ones in a situation similar to Facebook.
In fact, the last thing you should want to see is success between day one and day 90 with an IPO. That might create a habit of taking part in risky behavior. It's human nature to seek the thrill, want to replicate triumph and go to the well one too many times.