Facebook facepalm

I bought Facebook at its initial public offering (IPO). It lost a little bit after that, so I sold my shares. It was a classic short-term reaction, with me being blind to my long-term objective — building wealth. I can’t even look at Facebook’s stock price now — it just makes me want to cry. — D., online

The Fool responds: It looks like you learned all the right lessons. Short-term investors often miss out on phenomenal gains that occur over many years or decades.

Facebook’s debut on the public market in 2012 didn’t go as smoothly as hoped. The stock, initially priced at $38 per share, started trading at $42.05, reflecting great interest and demand. (It was the third-largest U.S. IPO ever, at the time, with the company valued around $104 billion.) Three months later, though, the shares had dropped 50 percent, in part due to questions about the company’s lofty valuation and to allegations that financial information had not been properly disclosed.

Many stocks soar at their IPOS only to retreat in the following months. It’s generally smart to avoid IPOS, giving the shares time to settle down. And once you invest in a company in which you have great faith, hang on — for a long time and through ups and downs. Facebook shares were recently up more than 800 percent from where they began trading.