There will be investigations and already there are lawsuits over the rollout of Facebooks overhyped IPO last week but no investigation is necessary into the reason for the outrage over the stocks rapid fall. Its called human nature.
It is the same characteristic that causes people to believe against staggering odds that they can win the lottery or score big in Atlantic City or discover a fool-proof system for playing the stock market. It is the familiar get-rich-quick notion that somehow one can bypass hard work sound financial planning and win The Big One retiring to a life of ease.
The old maxim Theres a sucker born every minute can be amended in the Internet age. Today theres a sucker born every second. No matter the teaching of moralists history and experience there are still those who believe they have discovered something new or that they alone have a gift for making money.
Facebook was going to create instant millionaires even billionaires. It did for founder Mark Zuckerberg and a few of his associates who sold their stock immediately and reaped immediate profits. There is nothing wrong with what they did. Thats business.
But shareholders are blaming Zuckerberg and Morgan Stanley one of the firms handling the IPO sale. Reuters reports the plaintiffs are accusing the defendants of concealing from investors during the IPO marketing process a severe and pronounced reduction in revenue growth forecasts resulting from increased use of Facebooks app or website through mobile devices.
This is like suing a casino because you lost money at the roulette table. Gamblers know or should know the risk in betting. The stock market is simply another form of gaming. When investing in an IPO one is betting the stock will rise and the investor will profit. There are no guarantees. Even a novice investor has probably heard the disclaimer past performance does not guarantee future results.
The problem with moral lessons is they must constantly be re-learned. The dot com bubble burst of the 90s wasnt enough for some people. Big and small scams some of them advertised on TV continue to catch the easily duped. Recall the recent rash of gold commercials in which the announcer proclaims that some experts predict gold prices will soon top $3000 an ounce. Gold prices are down from their historic highs but the commercials continue to run.
How about a reverse mortgage? There are dangers with those too but to hear the paid spokesmen talk about them you might think they are the answer to all your financial problems. In fact they are not for everyone and may cause new and even worse problems.
Why dont people learn from history and the experiences of others? Greed is listed among the seven deadly sins for a reason. In the case of those who poured a lot of money into Facebook stock seeking instant wealth only to see the price plummet their greed did them in.
There are rules about money. Licensed financial advisers -- as opposed to some of the TV hotshots who recommend stocks -- inform individuals about responsible investing. But our human nature too often gets in the way of sound judgment and it is that which the flimflam artists snake oil salesmen and sleight of hand merchants have relied on for generations to fool us into believing they have discovered the fast track to prosperity.
Those who lost money in the Facebook IPO have wound up with egg on their faces. They should have known better. Congress now wants to get into the act. It shouldnt. Facebook involved private money. If Congress wants to investigate something it should examine how it wastes taxpayer money.
Cal Thomas is co-author (with Bob Beckel) of the book Common Ground: How to Stop the Partisan War That is Destroying America.
There will be investigations and already there are lawsuits over the rollout of Facebooks overhyped IPO last week but no investigation is necessary into the reason for the outrage over the stocks rapid fall. Its called human nature.
It is the same characteristic that causes people to believe against staggering odds that they can win the lottery or score big in Atlantic City or discover a fool-proof system for playing the stock market. It is the familiar get-rich-quick notion that somehow one can bypass hard work sound financial planning and win The Big One retiring to a life of ease.
The old maxim Theres a sucker born every minute can be amended in the Internet age. Today theres a sucker born every second. No matter the teaching of moralists history and experience there are still those who believe they have discovered something new or that they alone have a gift for making money.
Facebook was going to create instant millionaires even billionaires. It did for founder Mark Zuckerberg and a few of his associates who sold their stock immediately and reaped immediate profits. There is nothing wrong with what they did. Thats business.
But shareholders are blaming Zuckerberg and Morgan Stanley one of the firms handling the IPO sale. Reuters reports the plaintiffs are accusing the defendants of concealing from investors during the IPO marketing process a severe and pronounced reduction in revenue growth forecasts resulting from increased use of Facebooks app or website through mobile devices.
This is like suing a casino because you lost money at the roulette table. Gamblers know or should know the risk in betting. The stock market is simply another form of gaming. When investing in an IPO one is betting the stock will rise and the investor will profit. There are no guarantees. Even a novice investor has probably heard the disclaimer past performance does not guarantee future results.
The problem with moral lessons is they must constantly be re-learned. The dot com bubble burst of the 90s wasnt enough for some people. Big and small scams some of them advertised on TV continue to catch the easily duped. Recall the recent rash of gold commercials in which the announcer proclaims that some experts predict gold prices will soon top $3000 an ounce. Gold prices are down from their historic highs but the commercials continue to run.
How about a reverse mortgage? There are dangers with those too but to hear the paid spokesmen talk about them you might think they are the answer to all your financial problems. In fact they are not for everyone and may cause new and even worse problems.
Why dont people learn from history and the experiences of others? Greed is listed among the seven deadly sins for a reason. In the case of those who poured a lot of money into Facebook stock seeking instant wealth only to see the price plummet their greed did them in.
There are rules about money. Licensed financial advisers -- as opposed to some of the TV hotshots who recommend stocks -- inform individuals about responsible investing. But our human nature too often gets in the way of sound judgment and it is that which the flimflam artists snake oil salesmen and sleight of hand merchants have relied on for generations to fool us into believing they have discovered the fast track to prosperity.
Those who lost money in the Facebook IPO have wound up with egg on their faces. They should have known better. Congress now wants to get into the act. It shouldnt. Facebook involved private money. If Congress wants to investigate something it should examine how it wastes taxpayer money.
Cal Thomas is co-author (with Bob Beckel) of the book Common Ground: How to Stop the Partisan War That is Destroying America.
