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Facebook Falls on 2nd Day of Trading

If Facebook is or is not a high quality long term growth stock is hard to tell at this point. Facebook has lot of growth potential on the user front, with the potential to grow way behind its 900 million current users. It also has alot of convincing to do in regards to showing its revenue growth strategy via advertising and other means.

Facebook came out last Friday with an IPO price of $38/share and ended the trading day very close to that $38/share price. Today it fell almost 10% bringing it well below its initial $38 price.

Regardless if Facebook is or is not overvalued/undervalued is a topic that will remain to be seen, depending on how Facebook grows and moves forward over time with its strategy.

What this whole Facebook hype has reiterated to me and many in the professional investment community is that you have to be very prudent about investing in any IPO and especially extremely speculative ones at the beginning of their public trading life cycle.

Typically, when any investment is becoming so popular that you hear people talking about it at family gatherings and the weekend BBQ, more often than not right now is not the best time to be buying that particular stock.

Investment returns are not made in one off price appreciation but gradually over the long term.

Our Globalizied Business Society

Today we are living in all senses of the phrase in a “globalized society”. Business has never been more international than it is now: with the internet, the ease and low cost of communications, transportation and language barriers being less of an obstacle now than probably any time in world history.

Think about all of the relatively new technologies that 20-30 years ago were unimaginable. Take Skype for example, where calls are free amongst 2 Skype users no matter where in the world the two parties are located.
In the 1980’s international calls were very expensive and only done out of necessity and for short periods. Take the internet in general, which allows us to find information about any part of the world in any language we want at any time of the day. Take international flights, which are much cheaper on a comparative wage scale to what they were in the 1980s.

All of these things are just a few examples of the daily applicable applications that change our daily life as global citizens.

Just something I often think about from time to time.

Don’t trust the large firms

A Goldman Sachs former managing director made big news headlines with his remarks on why he is ending his relationship at one of the most “prestigious” investment banks in the world. The reason? He said that the culture at GS was the worst it has been in years and employees care more about making money FROM its clients than making money FOR its clients. It always shocks me when I hear statements like these, even though I know that this is the culture of the day at these large firms. It makes it more important than ever that a wealthy individual that wants his money managed really do his/her due diligence on the investment management firm they are thinking of hiring. Honestly, that is why we decided to start our family office because we could easily see that most retail investors were not getting the best service that they could and trust was going out the window between advisers and their clients.Its a sad day when you can not even trust the famous large institutions to work in your best interest.