Last Friday Facebook went public in a big way. However it wasn’t the big splash some were expecting. Shares were set at $38 and for just a brief part of the day, it was up to $42. By the close of the market, share prices were practically back to where they started. Monday and yesterday were no better – when I checked the prices were at $31. If people were looking to buy and flip their stocks quickly, they were left with a loss. Does that mean Facebook is a bad deal? Should people be buy now while the price is lower and wait it out?

Before you buy Facebook (or any other stock), you may want to review this post.investment risks

Why Buy?

Investing in the stock market can be a great boost to your long term finances and goals if done wisely. When you think you want to invest, take some time to answer a few questions:

  • Why are you interested in buying stock? Have you heard an expert proclaim that this is a smart buy?
  • Do you understand the company’s business? Can you explain to your grandmother the general business model?
  • Have you read their financials? If it’s an IPO you’re looking at getting into, have you’ve read their S-1 that they filed?
Don’t be in a rush to invest, fearing that you’re missing out on a deal.

Can You Predict the Stock Market?

If buying during an IPO isn’t a good idea, then when should you invest? The answer? I have no idea and neither do most people. Last week people were speculating that Facebook would jump. Some of the honest ones admitted that they had no idea how it would go and instead looked at whether or not getting in with an IPO is a move based on recent tech IPOs.  Not many saw that the first day would be fairly stagnant. And these are the professionals with the resources to do the research.

If you’re an average investor it’s impossible to predict the day to day volatility of the market. A better use of your resources is to have a well thought out strategy and have a system.The easiest way to stay on target for your investment goals is to go ahead and automate your  contributions, whether it’s at work with your 401(k) or with your IRA. Keep to the strategy you’ve taken the time to mull over and stick by it.

Besides having a diversified portfolio (which includes equities), I do believe that having a plan for your money is the best way to come out ahead. Many people find index funds to be a great fit – steady growth over the long term and less need to check the stock market on a short term basis.

Thoughts on Investing in Facebook

I’d like to hear from you. Did you invest in Facebook? Why or why not?