Investing 102

[CRCRFT78]

Greg, what's your take on the Facebook IPO? I don't want to get off topic but is that something a newbie should consider buying given the recent expectations of the company? Would parking say $2000 in Facebook be a good idea. I know you've explained that good growth and a decent dividend are key but how should we approach IPO as investors?

[CRCRFT78]

I guess what I'm wondering is if IPOs are an investment we should consider or are they a lot of hype. Would waiting for the dust to settle be a wiser decision?

[Bucketlist2012]

Originally Posted by CRCRFT78

I guess what I'm wondering is if IPOs are an investment we should consider or are they a lot of hype. Would waiting for the dust to settle be a wiser decision?

Being the newbie, I wonder what Greg will say..

For me, I don't understand it, I don't get the value in it, and seems more speculation than anything..And if I am going to speculate, it will be in PM's and Commodities.

But again, I don't do facebook , so I won't buy it, and I am a newbie..

My Wife was asking about it today, I said pass..

The other good thing is that my Wife and I talk money all the time..We are passionate about it..

For a couple to talk about money together is very important for a marraige..


I know so many people in Financial trouble that never, ever talk about Money strategies, or plans for the future..Like they are frozen..because I know they care about it. They just won't do anything about it...Or WORSE, they do everything wrong to sabatoge the future. Those,including certain family, I have stopped helping. They will never learn.

[CRCRFT78]

I only use Facebook as an example because they're the most current IPO that I know of. I'm wondering if its a wise move to jump aboard in the beginning and hope there is future growth along with a decent paying dividend for the long haul. The problem I see with something like a Facebook is that eventually another social media site will/may surpass it. Like what Facebook did to MySpace. But a good company with a solid background and business plan with an IPO might be a wiser choice. I guess its just the luck of the draw. No one knows what the next big thing will be or how to time the market.

[Bucketlist2012]

Originally Posted by CRCRFT78

I only use Facebook as an example because they're the most current IPO that I know of. I'm wondering if its a wise move to jump aboard in the beginning and hope there is future growth along with a decent paying dividend for the long haul. The problem I see with something like a Facebook is that eventually another social media site will/may surpass it. Like what Facebook did to MySpace. But a good company with a solid background and business plan with an IPO might be a wiser choice. I guess its just the luck of the draw. No one knows what the next big thing will be or how to time the market.

Newbie here...I guess there is always arun up on some of these things, but it doesn't seem to be long term investing...More like you said, timing to get in..But then will you hold it long term ? Most of them do flounder, but someone made tons..

But I just stay out of that..

[Sieg]

Originally Posted by CRCRFT78

I guess what I'm wondering is if IPOs are an investment we should consider or are they a lot of hype. Would waiting for the dust to settle be a wiser decision?

I've bought three that went bankrupt and two that have floundered. I found a decent article about FB and the hype yesterday. But haven't seen any indication of price, my guess is it's not going to be cheap.

[Sieg]

Originally Posted by CRCRFT78

I guess what I'm wondering is if IPOs are an investment we should consider or are they a lot of hype. Would waiting for the dust to settle be a wiser decision?

Originally Posted by Sieg

I've bought three that went bankrupt and two that have floundered. I found a decent article about FB and the hype yesterday. But haven't seen any indication of price, my guess is it's not going to be cheap.

Here's the article, I thought it was a decent read...........
http://navelliergrowth.investorplace...ebook-ipo.html

[GregWeld]

Originally Posted by CRCRFT78

Greg, what's your take on the Facebook IPO? I don't want to get off topic but is that something a newbie should consider buying given the recent expectations of the company? Would parking say $2000 in Facebook be a good idea. I know you've explained that good growth and a decent dividend are key but how should we approach IPO as investors?

Fantastic question.... and the answer is.... simple. It's gambling. I'm not against gambling --- provided -- that it's money you have set in the gambling bucket.

Most IPOs don't fare real well... that's the history... but when they go - they can make a guy rich. Just ask me how I know.

So how to play it. I have no idea what the right strategy will be on Facebook and I'm going to tell you right now - I made a sizable 7 figure deposit in cash yesterday in my Schwab account (the last of the sale of Isilon to EMC)... and I went to bed last night thinking about what "I" should do with this one. I'm not sure I want any part of it - and then the little man on my shoulder is saying "but Dude! What if it doubles and triples in the next three years?!?!?!"

So there is no right or wrong answer --- and the only thing I would say is that this is gambling in it's purest form. Ya plunk your money down and hope ya hit it right.

Now -- I will also add - since this is investing 102 -- that these kinds of "bets" are a good test of your intestinal fortitude. They will show you if you really think you can take risk. Everything is wonderful and the sun will shine if the stock keeps climbing -- but if 6 months out - it starts to fall... and every day you get up and you're dying the "death of a thousand cuts"... then you'll see if you can hold... because these kind of companies tend to have wild swings...

If you pull up a chart of GOOGLE (GOOG) or Chipotle Mexican Grill (CMG) and you look at those dips and the peaks... they're gut wrenching moves. Can you stand that and hold on long enough to live to talk about it and reap the reward... CMG went UP 200% and promptly fell back to even... before it took off and never looked back... Ask yourself when you would have bought and when you would have sold or hold... had you bought near the top would you have held on and watch your money go to half? Or? It's a question you can not answer - not until you're staring down the barrel of the pressure that can put on your mind.

So here's the only right answer.... only play with money you can truly afford to loose. That you just don't care about - it's not the money you were going to buy a new set of wheels with... it's not anything you're going to miss if it's gone. If you have that - then by all means - if you want to buy an IPO... go for it.

Now - if you're going to play - I'd suggest you buy HALF of what you think you can play with - sit back and see what happens - if it goes up buy a little more -- but I'd wait at LEAST for their first quarter report before committing new money. Maybe you'll miss some of the run up - but you'll have gotten some of it. But you'll also be happy and think you're pretty smart if it's gone down 40% - at which point you might want to take that other half and average down. It's BALANCE... try not to get knocked off balance. Try to curb the greed on the way up too... you'll thank yourself in the long run.

[Bucketlist2012]

Greg,

thanks for chiming in...Without you , on occasion setting the rudder, we can go off course..

Just wanted to say great advise on the gambling thing...I have small plays that are just that..heck, I have large plays that are that, but it is not money that I will need right away...Right away to me being 3 to 5 years... "Now" would be called my immediate cash, which is the only cash I have ,because those employees are slackers and just stand around doing nothing...your fired..

But to my point of this post...When you said you just made a sizeable seven figure deposit into your account, I could feel my toes curl in my Slippers,haha.

Well Done... That was my whole NET worth, just deposited like nothing..

KUDOS.. I never envy or take things as bragging...More like the goal I want to achieve...

That is why I read this thread.And why I post some of my limited knowledge. To help if I can...Someone get independent and secure no matter what...Or for me, to take it to the next level...

[GregWeld]

Originally Posted by solarguy09

But to my point of this post...When you said you just made a sizeable seven figure deposit into your account, I could feel my toes curl in my Slippers,haha.

Well Done... That was my whole NET worth, just deposited like nothing..

KUDOS.. I never envy or take things as bragging...

I'm sharing my deepest darkest secrets in an order to put PERSPECTIVE in the thread so all can see how my wheels turn in relationship to your (all the readers) own.

If I have that kind of "new" money (it's net worth that is taken into a cash position - so it's not new but it is freshly minted cash which now needs to go back to work!). BTW - this was made from a gamble taken 6 or so years ago -- !!!!AND I'M CONFLICTED ABOUT INVESTING IN FACEBOOK!!!!.... where should your thinking be?

That's the "context" I'm trying to provide. Here I sit on a bunch of new "employees" that need some retraining and I'm wrestling with where to deploy them.

I "might" and this is a big "might" put 50K in this IPO... but I might also chicken out. I just don't know if at this point in my life, whether or not I'm willing to take the gut wrenching ride these things can do. Even though it's money I can take out into the middle of the street and toss it away... The brain wants you to make a home run out of EVERY investment you make.... and when they don't go your way - your mind starts working on you. I don't care who you are or how much money you have.

++++++++++++++++++++++++++

When I owned a business in NYC -- my partner used to say -- "the only guy that ever screwed me was the guy I trusted". By that -- he was saying that if you don't trust the person - you wouldn't loan them money in the first place... so the only guy that you loaned money to was people you trusted - putting them in a position to upside-down and screw you unintentionally.

Here's why I'm adding this. EVERYONE thinks FACEBOOK is the next Microsoft... EVERYONE is dreaming of the millions they're going to make off "only" a lousy $1000 investment. So like the loan to your friend/customer etc just make sure you can be disappointed if it doesn't work out.