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Facebook IPO – Will The Average Investor Get A Shot?

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420x316-grad-caruso David Caruso
Dave attributes his achievements in Financial Planning and Wealth...
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BOSTON (CBS) – The initial public offering of Facebook stock is expected to be one of the biggest IPO’s in years.

But will the average investor get a chance to buy any Facebook stock and, if so, is it even worth it?

Dave Caruso, founder of Coastal Capital Group, told WBZ-TV this IPO could be worth up to $150 billion and it is out of reach for most people.

“There are two things you have to think about. Number one – can I get it? And number two – do I want it if I can get it?”

“The reality is it’s for the big institutions, institutions like Fidelty and T. Rowe Price. They get the lion’s share of these shares, so the average investor doesn’t see it as an IPO, which is that $28 to $35 price tag,” Caruso said.

“But, as soon as it starts trading on the open market, now people can come in and start buying it, just like they can buy any stock on the exchanges.”

“If you’re going to buy it, you’re probably not going to get it new, but you are going to be able to buy it on the market, so set a limit. Find something that you’ll limit yourself so you don’t go out there and say ‘I’m willing to pay $100 for something I don’t know anything about, other than it’s kinda cool to play with.’”

If you take a ‘wait and see’ approach, what happens?

“The first day and the first hours are not the time to do it,” Caruso said.  “You want the market to settle down a little bit. Set yourself a limit, maybe $40 or $50 a share, that’s what some of the institutions are looking at. And then when you get it, buy a small amount, don’t go crazy. Don’t take more than five-percent of your net worth and put it out there. And then ask yourself the question – why am I buying this? What’s the reason? Does it fit into my portfolio?”

“Yeah, it’s cool. People want to talk about it, but will I make money on it and that’s really what happens in these IPO’s, it’s a frenzy and this is a hyped IPO right now.”

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