Facebook (FB) Stock Debacle: Who's To Blame?


The initial public offering of Facebook didn’t go too well. Disgruntled investors are already suing the company, its founder, Mark Zuckerberg, and its investment bankers though, according to spokes-flacks, “the suits are without merit and we’ll defend ourselves vigorously.”

The causes of all this disgruntling have not yet been determined and the re-gruntling industry is mobilizing to its appointed task. Orthopedic surgeons are canceling weekend plans in anticipation of an epidemic of finger sprains caused by misdirected pointing.

Some believe that increasing the offering price to $38 per share was the primary culprit; others believe that increasing the offering size by 25% deserves the blame; still others believe that sharing negative information about the offering with larger investors while withholding it from smaller investors, otherwise known as sheep, was unhelpful. Most of the rest, if there are any, blame Nasdaq, whose systems appear not to have performed as they should have. Disclosure: it is entirely possible that no one actually believes any of these arguments, but they are convenient.

Missing no opportunity to come to the rescue, congressional hearings are on tap. Makeup artists are touching up earnest expressions on the faces of clueless lawmakers. Such hearings offer little hope at least in the near-term. The information gathered must first be fashioned into draconian legislation to be dangled in front of financial industry lobbyists as bait for “disgruntlement-soothing” campaign contributions.

Upon receipt of whatever contributions the market will bear, the disgruntlement will be diluted to face-saving levels as determined by public relations professionals. Filibusters will follow.

As a public service to all the young staffers whose upcoming three-day weekend plans are in jeopardy, I offer a low-cost, self-help solution.

Look in the mirror.

Are you personally a giant hedge fund? Nope.

Are you personally a giant pension fund? A sovereign wealth fund, maybe? Nope, not that either.

Are you personally the kind of investor who is entertained by his broker with fat cigars and $1,000 bottles of wine? Still no?

Unless you can answer yes to any of these, you are a sheep and you are going to get fleeced.

The closer you are to the bottom of the financial food chain the more likely you are to see only the deals that have been certified as turds by those above you.

Sheep need love too so you can feel good about the under-performance of your investments. It is the source of the out-performance of the others.