Monday, October 21, 2013

When Will I Get Over Buying Facebook For $40?

Yippee!  I finally get to share my vast knowledge of investing with you - my readers, my friends, my peeps.  Okay, fine.  A degree in Finance & Investments does not an expert make.  And working as a financial advisor for one year in 2008 when the market crashed causing me to lose my job certainly does not help.  But I have been buying stocks since 1998, so with this 15 year old hobby, it is my pleasure to entice you with my wisdom.

So my investment strategy is to buy and hold – I’m not interested in buying shares in a company today and selling them next week at a profit.  My intention is simple:  I buy reputable stocks and hold them until I retire. (Okay, that was when I started in 1998 and had a job.  So don’t judge me now because I don’t work.)  But since you shouldn’t put all your eggs in one basket, I didn’t want to buy just blue chip stocks – stocks from well known, large, financially sound and established companies.  And for the same reason, I didn’t want to buy into one or two industries only.  When I started investing, tech stocks were the craze, but it seemed like every time a tech company had an IPO – initial public offering – when a private company decides to sell shares to the public to raise money – the owners got rich but within a matter of months, the company goes bust and all the little investors lose their money.  So back then I just stuck with companies like Microsoft, Intel and Cisco for the technological portion of my portfolio.  They had been around for a while, and I could afford their shares.

In 2004 when Google went public, the price was $85 a share.  I probably could have afforded a couple shares if the funds from dividends – money companies pay you to own their shares – were in my account.  However, I was quite busy raising small children and not paying attention, so I did not put anything extra in the account for that venture.  Plus I was not in the mood to lose money on a fad.  But after Google shot off like a rocket, I wished I could turn back the clocks.  That baby is now worth about $1,015.  So even if I had bought just two shares, I would have had an unrealized gain – unrealized because I wouldn’t have sold them, so it would just be a gain on paper – of $1,850.01.  You cannot forget to include the commission of $9.99 I would have paid to buy the stock in the first place.

So I missed the Google bandwagon.  I also missed the Amazon and Priceline crusades.  Now IPOs are real tricky.  In the case of Amazon, underwriters – the investment bankers that assess the price of the new stock – thought the initial share price would be $18, a jump from $12.  When it unveiled, it was $30, but it had dipped by $23 at the end of the day.  Amazon bottomed to $5.51 in October, 2001.  That I could have easily afforded, but Amazon is not a blue chip company, so I was not taking that risk.  It is now worth about $325, so you know I want to kick myself every time I think about it.

As they say, hindsight is 20/20.  

Priceline went public in March of 1999 with a price of $16.  It fell to $1.30 in December of 2000.  Today, it is worth almost $1,100.  Again, Priceline is not established so I was not meddling with it.  Can you imagine if I had bought Priceline for $25 and it then fell to $1?  Of course I would have kept the shares I purchased, because I invest for the long run and I have to weather whatever storms come my way.  But that certainly would have caused me months, years of agony.  On the other hand, since I would not have sold them, I would be beaming right about now.

Therefore when facebook announced that it was going public, Myra was not going to play it safe and not get in on the action.  I determined that I was going to purchase 100 shares for $22 each.  I transferred the money into my investment account, and by I, I mean we, because my husband and I are a team, but for argument’s sake, let’s just stick with me.  I waited and waited.  I listened to the noise.  The underwriters changed the anticipated initial price several times.  They questioned the value of the company.  They went back and forth. I listened to some.  I ignored others.

On May 18, 2012, facebook went public.  It was a Friday, so my husband and I went to the gym.  I delayed leaving the house because there were some technical difficulties with the IPO, but then decided it was out of my realm.  By then it was announced that the initial price would be $38.  As I worked that treadmill and stared at CNBC, I saw the stock doing some acrobatic moves.  It went as high as $45 and by day’s end, it settled at $38.23.  I had some moments of panic, but in the end I was glad that I changed my buying price to $40.  With that increase, I was only able to get 85 shares.

For the next few days, weeks even, the neurotic individual that I am, I questioned if I had made the right decision by not sticking with $22 a share.  Over the next few months, I no longer questioned, I knew for sure I had made a terrible mistake.  That stock dipped all the way down to below $18 in September, 2012.  For months, every time I saw the red in my portfolio to show the loss, internally I pound my head on a wall.  Why didn’t I listen to my gut?  Why didn’t I trust my initial price limit?  Why did I change my mind?  And because I’m so anal, seeing 85 instead of a round 100 angers me more.

Currently facebook is pricing at around $55 a share, so my red has finally turned to green.  But you know me – I calculate how much greener it would have been if I had stuck to my gun.  I’m not impressed with the realized gain, because it could have been so much sweeter hadn’t I blundered.  I would have been so proud of myself if I had gotten it right.

And it doesn’t matter that I miraculously bought some shares of Apple at $80 in January of 2009, and they are now worth about $525 and went as high as $705.  It doesn’t matter than I have more gains than losses altogether.  It doesn’t matter that things could have gone the other way, and facebook could have kept going up after that initial $38, and had I not paid $40, I could have missed it.  None of that matters.  And the fact that when I finally retire (yup, I’m young enough for a few more acts) - and my fixed social security income doesn’t suffice, that it won’t matter if my stocks are at a round figure or a weird odd number because when paying for bread, milk and heat head my priority list, paying $40 instead of $22 for a stock a quarter of a century ago won’t be important.

I went through this whole financial spiel to illustrate that in life also, we have to stop beating ourselves up for that one thing that didn’t go as planned.  So what if you wore a light cashmere sweater to the Antigua Day Festival over the Labor Day weekend because you thought the temperature was going to drop like it usually does in the Poconos, but Harlem sweltered until midnight?  It still doesn’t matter if you had initially intended to wear a sleeveless blouse, but after seeing your husband wearing something heavier changed your mind.  So what if you spend weeks looking for the perfect watch for your husband’s first Father’s Day and when you finally present it to him, you suspect that he doesn’t really like it, and the store has a no refund policy?  So what if you worked hard to convince your son to try out for the school’s basketball team, and he refused, and you both later realized he would have easily made it?  So what?

Every time we change our minds from one thing to another and the first thing was the right choice, we beat ourselves up forever.  Unless we are psychic, there is no way for us to always get it right.  We need to forgive ourselves more and move on with the imperfect choices we have made because perspectively speaking, this is life, and we are all entitled to make a few mistakes.

PS:  Twitter is going public soon, trading under the ticker symbol – abbreviation that uniquely identities each stock on the market – TWTR.  I plan to make a modest investment, then let the chips fall where they may.  In the long run, if I hit, I hit; if I miss, I miss.  You can’t win them all; and you can’t lose them all!


  1. Very I.interesting post. most of us spend a lot of time saying what if. it is high time we say, so what.

  2. Thanks for my education on shares. Never really bothered to find out the details since it is not my neck of the woods. See you just educated me on a blog on something I would have NEVER searched google for, ;)

  3. Hey Perspectively Speaking. how much is your cost to do some investments for me. If you think you are anal......Well, I just get confused with more than one options

  4. Hmm, you sure sound like an accountant. They're the only ones I've ever known to be as anal as you are. What's even crazier...I really see your point. Well said!

  5. Thanks for giving me a good laugh! This post is well-written and entertaining, with a valuable moral at the end. Who needs a job when you write so well? Looking forward to reading more of your posts.