Facebook's epic fail

[Commentary] Maybe the dumb money wasn’t so dumb this time. The stock market did turn out to be a voting machine on Facebook and the vote was thumbs-down on flapdoodle.

Market pros will be debating the lessons to be drawn from the disastrous first-day trading in Facebook’s initial public offering. But one lesson is that when given enough information, investors can find their way through fogbanks of hype. When a stock offering is as closely followed as Facebook’s, it’s much more likely that the shares will be fully valued than that they’ll harbor hidden treasure. Facebook went public at $38 a share, and after a day of epically heavy trading, closed at $38.23, for a gain of 0.61%. Not quite the huge pop market mavens were predicting. The expected pattern is that public investors — “dumb money” in Wall Street regard — react more to hype than to fundamentals. That’s why savvy Wall Street traders take it as a bearish signal when small investors pile into a stock or the stock market. This time the expected frenzy didn’t materialize.