NEW YORK (TheStreet) -- I own three shares of Facebook FB . According to a smattering of readers that makes my bullish stance on the stock bogus.
I have never understood the logic that a person who writes about a stock must not only own, but hold a sizeable number of shares. We don't expect sportswriters who are optimistic about a team's chances to wager money on that team in Vegas. Just as a sportswriter probably does not expect her readers to go out and put the rent money on the Hartford Whalers, I sure as heck do not expect anybody to buy or sell a stock on the basis of my sentiment.
If my articles do any or all of the following, I feel like I have done my job:
Make you rethink your position
Introduce a new or unique perspective
Serve as a point in your due diligence process
Trigger emotion
Entertain
I am not here to "win" you money. If you allow financial writers to do anything more than subtly influence your decisions (like any other bit of information you come across), I have concern for you.
I would love to own (or, where appropriate, short) every stock I write about. But, truth be told, I cannot afford it. I do well for myself, but it would be next to impossible to take a considerable position in each of the stocks I cover. I get into as many as I can, to varying degrees.
That said, I could have taken a much larger position in Facebook. I opted not to. I put my money to work elsewhere. The three-share purchase represented little more than a way to get involved in a historic event.
By and large, I consider anybody who buys an IPO at the open on day one a crude and rudimentary investor. Unless you're a savvy day trader or a member of the big money,
it's investing suicide. Most investors should institute a three-month rule on IPOs, particularly ones in a situation similar to Facebook.
In fact, the last thing you should want to see is success between day one and day 90 with an IPO. That might create a habit of taking part in risky behavior. It's human nature to seek the thrill, want to replicate triumph and go to the well one too many times.
For every
LinkedIn LNKD out there, there's a
Yelp YELP ,
Pandora P and
Zynga ZNGA . That's not to say the latter three or Facebook cannot be good investments; you just have to be patient with them. You also need to understand the spaces they run in and how they intend to seize opportunities.
Consider Facebook specifically. There's so much
pseudo-uncertainty surrounding this stock. The media created a spectacle of the IPO, keeping the masses horribly uninformed, and turned on the Facebook hate in the aftermath. Allow the dust to settle on these vultures before buying.
If you're a long-term investor, entry price should not matter that much, particularly if you believe Facebook will end up a leader in the mobile ad space. If this company succeeds, the stock is not going to go from $30 to $40; it will climb to considerable heights. If that happens, who cares whether you bought at $30 or $40.
Simply put, this is a stock I would rather buy on a sustainable series of legs up, not headed into more uncertainty, even if it's manufactured uncertainty, or a major event such as earnings. That's a good way to get in at $30 (because you feared it moving to $40) and find yourself dealing with on-paper losses for some time.
I want to buy Facebook when it has turned two corners. First, the negative media attention. The IPO-related backlash will blow over and the "press" will move on to something else. Second, I want to allow mobile advertising to catch up to the rapid migration of eyeballs to smartphones and tablets. There's so much misinformation out there on number two, thanks, in large part, to number one. It all needs to subside.
And it will as soon as Facebook comes through. There should be little doubt that they will. Signs are already emerging that they will.
Henry Blodget at
Business Insider talked to Chris McCann, CEO of
1-800-Flowers.com FLWS , who reports solid results from a preliminary run of Facebook mobile ads. And mobile entrepreneur and LocalResponse.com CEO Nihal Mehta tells
TheStreet that
he sees nothing but upside for Facebook. Why? Because the social network has properly positioned itself to leverage its always-growing vault of consumer data into "contextual" ads, where, as Mehta puts it, the ads "become content."
Once companies such as Facebook and Pandora perfect highly targeted and contextual mobile advertising, look the bleep out.
Walk, don't run. There's no rush. Facebook will be ripe for accumulation in the next two to six months. I intend to buy the stock as well as at- and slightly out-of-the-money January 2014 call options as the anticipated upside prepares to materialize.
