SHOULD YOU BUY FACEBOOK?

After much fanfare, Facebook (FB) will become a real company tomorrow with an Initial Public Offering (IPO) anticipated in some quarters to be the largest ever.  It all depends on what parameter you use.  Here is one comparison:

If you bought Google on 18August2004 for $85, it is now worth $630, or you would be ahead by a factor of 7.4.  If you purchased Orbitz on 19July2007, the IPO of $26 is today $3.43, and you  would have suffered a loss factor of 7.6, that is, your $1000 investment would today be worth $132.  If you got in on the Apple IPO, you would have gained a factor of 300 or so.  Microsoft?  +330, or if you invested $1000, your stock value would now be $330,000.

The problem is that if you're reading this, you will NOT be able to be among the first to buy.  By the time you read this (if after the closing bell today), the opening price will have been announced, and it should fall in the $34 to $38 range.  

My absolute recommendation is not to invest when a stock is at a maximum, as FB will be tomorrow.  I've been waiting for the Dow Jones to drop below 10,000.  Subsequently, over the past two years I've only purchased two  stocks related to my long-term interests, thorium and natural gas, and they are both tanking.  

On the other hand, if you have a few bucks to waste, your odds got to be better than in Vegas, and not unlike gambling, you can savor all the excitement.  Perhaps a limit order instead of a market order might be smart.  But at what price??  Perhaps I'll enter a small amount at the market price just to make sure I get something on Day One and see what happens.  I'm will be doing this, of course, in the spirit of doing something dumb but experienceful.

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