Hoping to get in on Facebook's public stock offering? Experts discuss the right and wrong ways to buy and share what they think investors should know.
Don't Buy At The Open -- Josh Brown, author of Backstage Wall Street and editor of theReformedBroker.com, tells Yahoo! Finance that company insiders can sell their shares three to six months after a company goes public. Stock prices tend to fall at that time, making it a good time to buy.
Only Use Your Risk Money -- Don't put all your eggs in one basket under any circumstance, especially for a hot IPO, Brown says.
He tells Yahoo! Finance that a controlled investment is one where "if you're wrong and it gets cut in half, you won't be happy, but it won't change the way you live."
Avoid "Facebook Funds" -- Don't believe anyone who tells you to buy some company that either has an investment in or is "like" Facebook, Brown says. Stick to the real deal.
Use A Limit Order -- Placing a limit order means you're setting a ceiling on how much you'll pay per share. In contrast, you buy stock at any price in a market order.
According to Brown, the success or failure of your Facebook investment may ride on deciding in advance how much you're willing to pay per share. The best way to do that is by placing a limit order.
Limited Offerings -- Typically, individuals get to buy no more than 10 percent to 20 percent of shares sold at an IPO’s offering price. The vast majority will go to company insiders, institutional investors, the underwriters selected by the company to handle the process and preferred clients of all of them, The Associated Press reports. That means your chance of getting any at the initial offering price is pretty slim.
Eligibility -- E-Trade, Fidelity Investments, Charles Schwab and other big online brokerages will likely set requirements on who gets the Facebook stock they will receive from underwriters and other sources, eliminating most small investors.
Open Market Shares -- if you strike out as an insider, it will be easy -- but expensive -- to buy shares on the open market, market experts told the AP.
Buying One Share -- If you want just one "ceremonial" share of Facebook stock, look to websites like GiveAShare.com or OneShare.com. They cater to more casual fans of a company, rather than serious investors, and offer paper stock certificates for framing, according to CNN.
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