Friday, February 03, 2012

Facebook to have IPO: Worlds Colliding

“Yeah, I know.”

These words came from my brother, Loring, and their significance was unmistakeable – worlds have collided.

My brother is an actor and filmmaker (quite talented too,, He is about as far removed from the world of investing as one can get. In fact, I suspect he couldn't name more than one holding in his managed portfolio.

But when I mentioned to him the other day that “Facebook is having its IPO. IPO stands for Initial Pub-“ he saved me the trouble, cutting me off with the statement above.

My brother is not an official MarketPsych Sentiment Indicator. We have REAL ones for that. But he might as well be.

It indicates that Facebook's upcoming stock offering is much more than a financial investment. It's a pop-cultural phenomenon - with all that that entails.

In a story that is perhaps apocryphal, Bernard Baruch said that he knew it was time to get out of the market (pre-crash) in 1929 when his shoe shine boy gave him a stock tip.

In a story that is definitely apocryphal, Baruch also said,"By the time your Mom learns the name of the band, they’re no longer cool."

Why? Because it means EVERYBODY knows. Stocks are like "Indie Bands"; part of their appeal is that not EVERYONE is rushing to see them.

Facebook's IPO will attract an entirely new class - indeed, perhaps an entirely new generation - to equities investing.

By the way, the last time my brother mentioned a stock to me it was Sirius Satellite Radio (SIRI) in 2007. Two years later you could pick up a share of SIRI for a dime. A piece of Bazooka Gum or ownership in the most revolutionary company in radio history? Your choice.

Will that be the fate of Facebook? I hardly think so. But as MarketPsych has long (and correctly) maintained, all stocks prices are the product of the aggregate psychology of the investing community.

What happens to that community when Worlds Collide? When the peaceful, orderly state of Financia is suddenly flooded with wild refugees from the nation of Facebookistan?

(Occupy Wall Street Types created chaos when they invaded the Financial District, imagine what will happen when they actually invade the Financial Markets?)

Strange, often tragic things happen when worlds collide. Just ask Independent George.

I didn’t say unpredictable. Just strange. My MarketPsych colleague and resident genius, Dr. Richard Peterson has created to provide uncanny predictions utilizing social media analytics for just this sort of thing.

Ironic, don't you think? Using social media to forecast social media stocks?

Worlds colliding, my friends. Worlds colliding.

Happy Investing.

And hey... let's be careful out there.

-Dr. Frankenstocks.

Frank Murtha, Ph.D.

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