Originally published: May 20, 2012
Last updated: May 20, 2012 - 8:53pm
[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.
- Facebook gets a reality check on IPO day
- Public-safety network gets trial run at Republican convention
- 2011: The year when it became the norm for the device in your pocket to be the center of your world
- Time Warner Cable Says It Will Keep ‘Open Mind’ on Reinstating Al Jazeera
- Sprint Ups Bid for Clearwire to Outbid Dish Network, But Will It Be Enough?
- State Department’s Kindle Plan Offers a lesson in Diplomacy
- Facebook’s tactical retreat on privacy
- Apple's Samsung Win Slams Asian Phone Makers
- Court: Janet Jackson's exposure not illegal
- Making the Most of Broadband: Think Small
- The future of music is boring – and that’s exciting!
- Simple Googling dug up what Daisey had hidden
- Critics Protest Plans for Unclaimed Connect America Funds
- Frustrating inaugural message: No cell signal
- Top 10 Tech Issues for 2013