FOMO and Facebook Stock

I couldn’t help but hear that tiny little violin playing while reading these first-world sob stories about people losing money by buying Facebook stock:

Some blame themselves for embracing the hype over a company whose underlying value likely didn’t merit the price at which it went public. But many accuse Facebook and its underwriting banks of setting the price too high and for trying to sell too many shares.

Others are pointing fingers at the Nasdaq stock market for botching buy and sell orders on opening day. Or they’re angry over brokers who pushed them to buy.

In fact, the article serves as a pretty good guide of now NOT to invest, and how to blame everyone but yourself for your own money mistakes. Let’s take a look:

  • Don’t invest in individual stocks, including Facebook (FB). It’s fun to play around with picking stocks, but it should be done with spending money (i.e. money you’d use for gambling at a casino), not investment money. Trying to beat the stock market is gambling. Instead, invest in low-cost index funds.
  • Don’t fall victim to emotions, especially FOMO (Fear Of Missing Out), when it comes to your money.
  • Don’t pay someone to manage your money, since their motivations aren’t aligned with yours. Unless you want to pay me to manage your money. I’d be glad to do that for you, skimming 1% off the top.
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