On July 25th, CNBC used Facebook Live to broadcast Facebook's stock price fall while the stock market investors went rouge! Most investors think they are logical and fact-based decision-makers. But, on July 25th they showed their true colors. Adam Nash (Board of Directors @Acorns. Former CEO @Wealthfront, etc.) puts it in the best way.
Five reasons you should not sell your Facebook stock:
1) Before July 25th you were a happy shareholder.
The only reason you are thinking of selling your Facebook shares is that on July 25th, your feelings toward the company changed. Pause, and think of the 2-3 reasons you were holding onto your FB shares before July 25th. If what the media says about Facebook was not a reason for your investment in FB, what has changed?
2) You are a long-term investor who always talks about 'Buy and Hold' strategy as your primary approach to investing.
That means you invest in great businesses and Hold them through thick and thin as long as they stay great businesses. In the short-term, there is a limited relationship between the strength of a company and the fluctuations in the stock price. What did you think Buy and Hold meant?
3) You agree that Facebook will be a stronger company if it invests in security.
Park aside everything you hear in the media, and ask yourself is Facebook going to be better off investing in security? If that's hard to answer, imagine your friend is a pretty good chef, and you invested in his popular restaurant with loyal patrons that rave about the restaurant to all their friends. Now, something goes wrong in the kitchen pipe, and it floods the dining room. Your chef friend closes the restaurant for a 2-day weekend to fix things up. Are you knocking on the door asking for your money back? If the answer is NO, replace your friend's restaurant with Facebook's stocks and the pipes-breaking incident with the data breach. Answer the question again!
4) You can live your life as usual without the money you invested in Facebook.
Seriously, if you have invested the money you need to live your life in the next few days, weeks, or months, you should stop everything, and go back to Investing 101. July 25th Facebook saga is precisely the kind of things that signify the need to separate your living expenses from investing stash. Don't be that guy/girl. Don't invest the money you need to live your life as is. Investing money is the stash you put aside to build the life as you wish, not as you live.
5) Facebook's Stock Card before and after July 25th hasn't changed.
At Stock Card and within our community, we take pride in mastering our emotions and staying true to the facts and logic. Compare these two images:
The one on the left is Facebook's Stock Card before July 25th (pre-saga), and the one on the right is the company's Stock Card after. Market growth, company strength, and past investment return have all remained untouched, all that has changed is the bottom-right box, and that one shows, the Facebook stock price has entered the undervalued range. If you look for bargains, how else did you think you can get a bargain deal?