Our friends at Fox Business have partnered with us to bring you the low down on the Facebook IPO. Cheryl Casone tells us the good, the bad and shares tips to help you decide whether jumping in now while the stock is hot is the right thing to do.
Facebook entered the world and soon became a world others sought to enter. Despite millions of people being skilled FB users, not everyone fully grasps the concept of the company going public, as it did on May 18 at 9:30AM. FOX Business Network’s Cheryl Casone breaks down the good, the bad and the ugly about the FB IPO, and some tips on investing for beginners.
The Good: The average investor can participate. There are mutual funds that focus on Internet and media stocks that you can buy that will give you exposure to the shares. Fidelity is one example. Ask for a breakdown of what companies they own. Zynga, LinkedIn and Groupon have been other favorites. If you have an account with E*Trade you may still have a chance to buy some shares tomorrow. It will depend on how many investors also want the stock.
The Bad: There is so much hype that many financial analysts are worried the stock is going to sell for more than Facebook is worth overall. For example, Facebook makes money from advertising. GM doesn’t think ads on Facebook are worth buying. Ford does. Who is right?
The Ugly: If you don’t already have a piece of this monster IPO, it may not be worth it for you. There are plenty of technology companies that make phones, televisions, and computers. Is Facebook so important you need to have it on day one? Or two?
Investing, in general, is full of risk, reward and responsibility. Here are some tips for beginners looking to invest in the market:
-The best way to invest in the stock market is to buy mutual funds, index funds, or exchange traded funds. Mutual funds have a paid manager but you do pay for that person and their stock picking skills. If you want to be frugal an index fund is just a basket of 20 stocks, for example, in a particular sector weighted from big to small in their field (energy, technology, or retail for example).
Exchange traded funds (ETFs) are several stocks grouped together but you buy it under one “ticker” just like you would buy one share of McDonald’s.
-If you have never purchased a stock on your own go to the websites of ETrade, Charles Schwab, or Ameritrade. Follow the instructions to set up your account. You can either mail in a check for them to deposit into your account or go to your bank and set up a direct transfer. You will have a username and password you will need to keep on hand in a safe place. Make sure it is easy to remember.
-There are pages and pages of stocks. Simply look through the site and see what sections interest you whether its energy, pharmaceutical, retail, or insurance companies. These sites will give you details about each company and the choice is yours which ones you wish to buy. You decide how many shares you want judging by the price per share and click the “buy” or “purchase” button. It is the same as buying jeans on the internet.
-My advice: buy companies you know. It may surprise you that the brands or entities you find exciting often have a very similar impact on others.