Facebook’s announced debut on the publicly traded market was anticipated as if it were the last eligible (and wealthy) bachelor at a ball and everyone wanted a dance. During an increasingly miserable bear market, many thought Facebook could be their golden ticket. Or rather a ticket back into a golden era. I was going to add something about “not all that glitters is gold,” but the metaphors are already getting crowded.
Almost as crowded as the phone lines the morning of open trading. In the frenzy that followed the opening bell, the stocks leaped, stumbled, slid backward and the NASDAQ system crashed. Investors that had placed pre-market orders scrambled to cancel them and couldn’t get through. All weekend and into the next week, brokers were still sorting out the mess.
What caused the frenzy?
There was a lot of talk about when Google went public. It opened at $85 per share and closed the day, albeit after a rocky ride, at just over $100 per share. People made millions that day. As the New York Times reported, “the co-founders,. . . Sergey Brin and Larry Page, got very rich.” Their IPO raised $1.67 billion on opening day (Google Goes Public, New York Times, Aug. 20, 2004). Today, Google trades at over $600 per share!
Facebook, priced at $38 per share by the underwriters at Morgan Stanley, was anticipated to be everyone’s ride to riches. Even before opening, it rose before most pre-sale orders could take effect to over $42 per share. But then it began to decline. Morgan Stanley frantically began buying shares to prop up the market and keep it above their estimate. At the end of the day, FB closed at $38 per share. Despite a day of record trading, the most eligible bachelor failed to deliver. Dreams of instant wealth, or for some, just a few extra thousand dollars, crashed with the computer systems that couldn’t meet the demand.
Monday, when M.S. no longer attempted to buy shares to keep the price up, the stocks continued to fall.
Nothing replaces the old-fashioned value of tangible products traded at a fair price or an honest day’s labor traded for the means to provide for your family. It’s time to teach our children about the value of work, saving for a rainy day, living within our means, and delayed gratification.
When my son was five years old, he opened up his own “market.” Every Saturday, he’d set out in the drive-way the shelves of products he kept inside the garage. There were flying discs and Nerf balls, individual sized chips and candy. The shelves were white and the items were brilliant colors. Every thing was priced under $1. Neighborhood children learned that they could visit his market any day just by ringing the doorbell, but on Saturdays he “opened” shop and made his real profit. He kept that market for a few years until his first paper route. Our daughter began cleaning house and babysitting for a lady when she was ten. She soon became the first choice of several families. By the time they were fourteen, they both had their first “jobs” working weekends for a caterer. Our children have always been good workers.
They also had the example of their father’s strong work ethic—especially as he ran his own business for years. They knew we never went into debt; we paid cash for everything; and if we wanted a vacation, or a new TV, we saved rather than “paid it off.”
We taught them that there is “no free lunch” or overnight wealth. But there are blessings from heaven from giving a tithe to the Lord.
And yet, in these tough times, the lottery flourishes, Las Vegas booms, and the NASDAQ crashes as investors flood the lines to buy Facebook stock.
Where do you put your trust?
See also The Value of Family Work.