Sunday, May 20, 2012

Gold - The World’s Friend for 5,000 Years

Gold has been the world's friend for 5,000 yearsFacebook’s highly anticipated initial public offering today helped the company raise $16 billion, a record for tech IPOs. It’s refreshing to see investor excitement rally around the stock, as the U.S. needs innovative businesses to thrive and attract capital. However, as behavioral finance warns, be cautious of a herd mentality.
 
Last November, the IPO deal of the day was Groupon. On the first day of trading, shares rose to a high of $31 from an initial offering price of $20.
By Thanksgiving, the stock had fallen below the IPO price, and only a few months later, uncertainty popped up around the company’s accounting methods and financial controls. The stock fell further, with the market devaluing Groupon by about 50 percent in only six months. How’s that for a group buy?
It’s interesting to note that the value of Groupon’s stock has lost more than $13 billion since the peak on the first trading day through April 30. For comparison, if you look at the total net assets in Lipper’s precious metals mutual fund peer category, assets fell $8.3 billion over the same timeframe. Investors lost more than $5 billion more in one tech stock alone than in all of the precious metals funds combined.

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