Clownishness, much like beauty, stands in the eye of the beholder. So let's gather together to behold a clownish trade. Granted: playing Monday Morning quarterback to lame stock trades is a bit selective, even venal. But in the end, you learn from analyzing mistakes. Plus, what's more fun than making fun of missteps and pratfalls? With all that said, welcome to the next installment of The Clownish Trade of the Day…
Talk about a three-ring circus: let's consider Facebook (FB). Yesterday, it traded like an offering. It was down God-knows what, the latest installment to a three-day slide in the wake of Friday's disaster of an IPO. But more to the point: the offering was all anybody was talking about.
The mechanics of the Facebook offering, to be certain, defined dysfunctional. It was so mishandled, you'd think James Dolan and the Knicks (CVC) were running the show. Morgan Stanley (MS) acted skeevy, at best, in cutting revenue estimate numbers to ribbons in the prelude to the offering, even as they were raising its price and size.
NASDAQ (NDAQ) came off looking like a clown parade headed off the lip of a cliff and the whole sordid methodology of initial public offerings is now open to question and regulatory meddling.
The only problem is that Facebook is now a stock. It's a company, which sold portions to the public. That means that it's business and its prospects should be at the center of discussion in the public square: not sour grapes or even legitimate concerns about the offering process.
Sure, Facebook might be a touch distracted by lawsuits and inquests, but the reality is that Morgan Stanley and the likes of Citigroup (C), Bank of America (BAC), Goldman Sachs (GS) and JP Morgan (JPM) will bear far more of the brunt there.
Facebook is on to the more mundane existence of running a company. But traders who insist on indulging in the offering contretemps risk being caught in the past, forever the class clown.