Tuesday, May 15, 2012

Facebook IPO - yawn...

In case you've been living under a rock, Facebook's IPO is scheduled for Friday.   As Felix Salmon notes, there has been much talk about whether you should buy some of the stock.

Let's be clear here.  For individual investors, it will near impossible to buy the IPO at the issue price.  But to buy the IPO at the post issue price (once it begins trading) is a bad idea.   History shows that on average, IPOs purchased on the first trading day significantly underperform similar stocks in the long run.

Just stick to indexing.

I've posted a lot on this before - here