Tepid Honeymoon of Facebook and NASDAQ Does Not Deliver The Big Bang

May 20, 2012

NEW YORK, NY - MAY 18:  The Nasdaq board in Ti...

They promised us the Big Bang. The Facebook initial public offering was the beginning of a new Wall Street universe. The end of the doldrums. Instead, we got tepid. If that.

Spin it however you prefer but, for me, the Facebook IPO was a dud of a thud, barely closing at a premium on the first day of its aftermarket. On top of that, the NASDAQ stock market struggled to keep pace amid reports of order execution snafus. The great Web 2.0 darling and the supposed state-of-the-art stock market on which it debuted collided with the resulting scene little more than loose hubcaps spinning off from the rising steam of the mangled mess.

The pundits were wrong. Facebook shares did not explode into the stratosphere but remained earthbound. NASDAQ's big coup of beating the New York Stock Exchange in gaining this listing proved a bit of a fizzle as the high-tech trading platform wheezed under the pressure.

In the '80s and '90s you had the old Pump And Dump world of stock fraud that largely thrived on NASDAQ, the OTC Bulletin Board, and the Pink Sheets.  Stock jockeys, unscrupulous promoters, and all sorts of hucksters simply patched together a garbage stock-offering, touted the company as the Second Coming, and convinced too many idiots to submit Indications of Interest that assured a hot aftermarket that closed at double, triple, ten-times the opening price. Of course, in order to get the precious units in the IPO you also had to promise to buy shares after the opening - not exactly legal but, in those days, not exactly legal was often about as good as it got. And, anyway, who the hell really cared? You bought it at X and planned to unload it on some other jerk for X-plus. Not quite sure what it was that the company made or did but the stockbroker said it was incredible.

It ended ignominiously with the Tech Wreck of 2000when there were no greater fools left and all the blue sky had been sliced, diced, and repackaged.

Then there was 9/11.

Then there was the collapse of the real estate market.

Then there was the Great Recession.

Now there is a world of growing financial and political brushfires, all threatening to combine into that one all consuming conflagration - a bonfire of the vanities if there ever were one.  Ultimately, old Hegel may have had it right. You start with a thesis. Someone comes up with an antithesis. The clash of those ideas produces a synthesis.  Mankind moves on via the route of creative destruction and rebirth.

They are in the streets now. In Spain. In Greece. In Syria. In Egypt. Out with the old. In with the new. Seems to me we heard this all before.  How did that line go? "Meet the new boss. Same as the old boss."

Okay, so, yeah, rah rah. Facebook is now trading. NASDAQ hopefully hit reset. The Euro may or may not survive with or without Greece and who knows if the contagion spreads to Spain. On the other hand, all those hedge funds, the high frequency traders, the financial institutions couldn't move Facebook much beyond its opening price. Apparently the big boys were counting on the little guys to come back to the markets in droves and drive Facebook higher.  Seems that a lot of you folks stayed away. Not quite convinced that Wall Street has reformed. Not quite trusting in the rigged casino. Not willing to risk what's left of your savings on some social media thing run by a kid in a hoodie. You know, they often say in the biz that some of the best trades are the ones that you don't make.

Perhaps you're still praying that we don't get fooled again.  Amen!