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Buy Apple and Google, Wait On Facebook, Stay Away From Zynga

NEW YORK ( TheStreet) -- Facebook's (FB - Get Report) rough start should be no surprise. For those (and there were many) who became caught up in the hype on the opening of trading Friday, you probably should thank the Nasdaq for its computer problems. If Nasdaq executed every buy order submitted, maybe the price would have gone higher before the inevitable crash.

Facebook's IPO, with all the hype and interest by people who never before traded stocks, may be the closest event to tulip-mania I will see in my lifetime. Take a look at TheStreet's Facebook live blog. By my count, a peak of 12,000 people participated at once, and thousands more in total. Many never bought a stock before. These are the smart ones, too. How many more out there didn't know?
The mania over Facebook's initial public offering shows mobs move markets -- and longer and further than recently conceivable.

Not only can mobs move markets; they can move markets longer and further than recently conceivable. Valuations, profitability, future results and logic in general can get tossed quickly out the window as lotto fever takes over, filling stock buyers' craniums with magical thoughts of riches. (Read TheStreet's senior contributing analyst Marek Fuchs on concerns in Facebook's IPO pricing.)

An investment in Facebook is not as much an investment in the company as it is an investment into the hoodie-wearing, mistake-free (so far) Mr. Mark Zuckerberg. Whatever he decides is best for him and the company is what can be expected to happen. The IPO didn't transfer company control; Zuckerberg continues to have the last word in all matters, including compensation.

Some in the media have stated wearing a hoodie is a sign everything is running as it should for Facebook, and a demonstration of confidence. I don't share that opinion, and as an investor looking to allocate capital I prefer paranoia over confidence. Yes, of course leaders need confidence, but a healthy dose of paranoia goes a long way to keep a company sharp.
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