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What Will The Fools Learn From Facebook

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June 07, 2012 – Comments (0) | RELATED TICKERS: FB , JPM , GS

Stop me if you've heard this one.

Thousands of largely novice investors line up for what's been billed as "the opportunity of a lifetime" to buy a "can't-miss" investment destined for easy gains. Pundits take position and say it's worth buying at "any price." People whisper in anticipation over how much they'll make. Fifty percent? Double their money? More?

In the end, the floor drops out and they're left with hefty losses -- totally predictable losses. Furious investors want answers. What went wrong, they ask? The answer is usually complicated, but has a common denominator: You overpaid. Fell for the hype. Gambled and lost. It happens. - Morgan Housel

 Wall Street doesn't have small investors' best interest at heart. That should be excruciatingly clear after all these years. Most companies don't go public because they want to let you in on the action. They do so to let insiders cash out richly priced shares onto unsuspecting gulls. You're only a victim of that as much as you're willing to let yourself be. - Morgan Housel

 Great story. So many need to read stories like this. In this case the game is definitely rigged. However, it's nice to see the rigging backfire a little bit for a change.

Remember Groupon! It's a different story but the same lesson. They don't go public to make me and you rich! - Borbality

 So that being said, the retail investors are to blame here. Not because of the price dip, but because they willfully put themselves in the line of fire for fast money. - samedge2

 its called RISK for a REASON! - Geldej

 Back in the 1980s I lost money on several hyped-IPOs. It happened then, it happened now. The difference is that now I remembered what happened to me in the 1980s, and managed through nothing more than dumb luck, not to fall for the hype again. - GingerR2

 . Many of the people who took the risk with the FB IPO blindly dived into a shark ( Wall Streets Big Boys ) tank and were had for lunch ! - snickerdoodle

 I agree, this was mostly the fault of the individual investors, and I think it's easy to see why. - BlazerMania

 I have to admit I also cannot understand how anyone could have fallen for the scam this time. - Sunny7039

 it's an IPO. they're DESIGNED to rip off the fish, excuse me, "investors" who participate. - Ockhamsrazor

if you're not an insider there is a big chance you're being duped by investing on Wall Street. If you lose money its you're own fault. The conclusion is.. stop investing money on Wall Street. You can't ever be completely sure that you've got all relevant info, nor that you're not be suckered. - grusilaq 

 I hypothesize that many of the longs were not in it for the quick buck but rather were novice investors that bought to own a piece of a company that figures large in their lives. Perhaps they hoped to make money, but the attraction was based on familiarity, not get rich quick machinations. Smart investing? No, definitely not. But, totally understandable. After all, aren't we supposed to be able to Beat the Street by investing in what we know? - FutureMonkey

 "Some of the outrage might be justified. There are legitimate claims that bankers withheld information from some customers, and that Nasdaq botched trade executions."

You seem to think this is a minor detail. How do you quantify what portion of losses were attributable to this information inequality?

As someone said on a related article, "Saying 'people got what they asked for' has ever been the mantra of thieves and rapists." - Actuary99 

 

Today a hope of many years' standing is in large part fulfilled. The civilization of the past hundred years, with its startling industrial changes, has tended more and more to make life insecure. Young people have come to wonder what would be their lot when they came to old age. The man with a job has wondered how long the job would last.

This social security measure gives at least some protection to thirty millions of our citizens who will reap direct benefits through unemployment compensation, through old-age pensions and through increased services for the protection of children and the prevention of ill health.

We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.

This law, too, represents a cornerstone in a structure which is being built but is by no means complete. It is a structure intended to lessen the force of possible future depressions. It will act as a protection to future Administrations against the necessity of going deeply into debt to furnish relief to the needy. The law will flatten out the peaks and valleys of deflation and of inflation. It is, in short, a law that will take care of human needs and at the same time provide the United States an economic structure of vastly greater soundness.

I congratulate all of you ladies and gentlemen, all of you in the Congress, in the executive departments and all of you who come from private life, and I thank you for your splendid efforts in behalf of this sound, needed and patriotic legislation.

If the Senate and the House of Representatives in this long and arduous session had done nothing more than pass this Bill, the session would be regarded as historic for all time. - Franklin D. Roosevelt -  PRESIDENTIAL STATEMENT SIGNING THE SOCIAL SECURITY ACT. AUGUST 14,1935

Best Wishes,

Steven 

 

 

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