Category: Speculative Investments

The Facebook IPO

I was reading a post over at Everybody Loves Your Money called Are You Going to Buy Facebook Stock? He has decided that he doesn’t have a good chance to get it at a reasonable price….Maybe, maybe not.

I’ve traded IPO’s for years, note the term, traded; in my mind this stock will be a short term trade, maybe even a day trade. Here’s how I decide if I’m going all in. I love all the hype associated with Facebook-this can be used to your investing advantage. Since I use Scottrade, I don’t worry about getting any initial stock allocation.

I watch how the stock opens-you should see the initial flippers of this stock unloading their shares. They have made a profit and want to Free up the money for the next kill. Assuming I continue to see incoming orders for the stock, I will jump in. I buy at the market and then watch it closely. I’m happy to go in and out with a 15-20% profit for the day. If the strength continues into the closing-I will hold on to the stock and look at selling it over the next couple of days.

One thing I’ve learned about IPO’s is to forget the valuations. Valuations are for long term investors. I know for me, Facebook is just a trade and I want to catch the momentum wave and leave-without being to much of a piggy 😉

Good Luck-Are you planning on trading this bad boy just for the fun of it?