On July 26th, 2018, Mark Zuckerberg lost 15 billion dollars in a single day.
And that's mainly because facebooks stock price dropped from 209 to 174 causing the
company to lose 120 billion dollars overnight.
Just to comprehend that number, That's more than what some of the biggest US companies
worth such as Starbucks.
In fact, that's even more than the entire GDP of the largest country in Europe, Ukraine.
However, that wasn't a big a deal for Mark, since he didn't even leave Forbes top 10 billionaires
list.
But you are not Mark and you can't afford to lose that much and never worry because
you don't have that kind of money.
In fact, if you even lose a thousand bucks, you probably will have a nightmare.
So here are the 3 types of companies, that you should never invest in because you are
almost guaranteed to lose money.
such as when startups decide that its time to gain the fruits of their hard work so they
go public and sell and a big chunk of their company to the world.
This is the moment you have been waiting since the beginning, finally, you can fly private
and enjoy the billionaire's life.
But that won't happen unless you give this video a thumbs up.
sounds like an exaggeration As an owner of the company, you understand
that the bigger the hype around your company, the bigger is going to be the demand for your
stocks, therefore, the more money you are going to raise.
That's why most companies stock price decline after a day or two of going public since that
hype vanishes and people get real about what this company can accomplish.
Circle with hands
Facebook went public at 38 per share, however, within the next 2 month, the stock price only
kept declining to 20 dollars before it took off again.
Or take a recent example of LYFT who went public at 78 dollars but then within the next
2 month it dropped to 51 dollars.
That's why Warren Buffet never invests in IPOs.
And neither should you if you don't want to lose money.
Wait till the hype disappears and then make up your mind.
The stock market is as much as unpredictable as it's predictable.
it sounds a bit controversial but if you take a look at the market over a long period, you
will realize that it follows certain patterns.
For instance, a dramatic rise is almost always is followed by an even more dramatic fall.
Graph It doesn't only happen to individual stocks
but to the markets in general.
Because a high demand keeps driving the price up to where the company gets overvalued but
sooner or later, the bubble bursts and the price gets back to what it truly worth if
not below that because of a snowball effect.
When Petro Chinas share was dramatically increasing.
Warren Buffet, instantly sold off all his shares and didn't wait till it reaches its
peak although he could have made much more since he knows it's going to crash at any
moment, and it's not going to be fun.
And that's exactly what happened.
Just remember what happened to bitcoin.
After reaching its peak, within a few weeks, it lost half of its value.
The lesson is, whenever the price is skyrocketing, it's a bad time to invest.
In fact, when it happens to the market in general, we get a financial crisis like in
2008 as it happened to home prices.
you see I am a big fan of Tesla and Elon Musk In general.
I love the idea, I love the goal behind it, the product just looks awesome.
And I want to invest in it to be part of it, but from a purely investing perspective, tesla
hasn't been the best investment out there.
Because Musk is a genius when it comes to generating hype around his companies and it
gets me and many others excited about what tesla could possibly accomplish.
But in practice, things get delayed, deadlines are postponed and unexpected problems start
pomping out which is absolutely normal.
Which is why the hype disappears and investors lower their expectations so the price naturally
falls back, and if you have been one of those people invested
in that hype. you have clearly lost a buck.
So don't let your emotions ruin your reason because your main objective is to make money
and everything else is secondary.