Our “Off The Wall” Blog
is now Monument #Unfiltered

Subscribe below to receive our unique, straight-forward, unfiltered wealth advice delivered straight to your inbox.

Don’t Fall in Love With Social Media Stocks

U.S. News and World Report Smarter Investor

Investors might be smitten with social media companies right now, but think twice before diving in.

Love is an intoxicating emotion, especially in the early stages of a relationship. It’s so powerful, sometimes uncontrollable, and irresistible. There’s no better feeling then being smitten with that special someone!
But what if you’re in love with an investment or a sector, and the excitement surrounding the emerging social media industry? Is this a remake of the fatal love attraction of the late 1990’s dot-com bubble, in which investors couldn’t get enough of anything with an “e” prefix or a “.com” to their name?

There’s nothing investors love more than the phrase “new growth industry” and the thrill of owning a company that’s outpacing the expectations of analysts and their forecasts. Michael Santoli recently wrote an article for Barron’s called “Bubble Trouble,” in which he cites that there are eight leading social media companies. Three of these companies are publicly traded and five are expected to go public in the near future. The remarkable assumption about these eight companies is that their estimated combined market value is about $200 billion, but their 2010 revenues were just $3.5 billion.

Now, who’s to say that one or more of these companies aren’t the next Google, whose IPO price in 2004 was $85 per share and is now over $600 per share? Time will be the ultimate arbitrator. I feel that the social media industry and many of the companies associated with it offer unique benefits and efficiencies to businesses and the general public. I also know from past history that many companies will disappoint their shareholders and not live up to expectations set by management and the investing public. When that happens you won’t be able to sell quickly enough if you’re leading with your heart and not your head.

As an investor, pay close attention to the expectation of revenue, profit, and cash flow for the future for your investments, but most importantly, stay diversified. Overweighting a portion of your investment portfolio to a stock, sector, or industry can make sound investment sense, however, your “investment position” should have balance within your overall portfolio and financial plan.

Remember, every investment strategy should have a buy discipline and most importantly a sell discipline; they go hand-in-hand.

There is a lot to like about social media. Owning innovative companies that are blazing ahead, advancing new ideas about connecting people and business, and the potential to make a solid investment return is exciting, rewarding, exhilarating, and just plain fun. But it’s not love. Bottom line: Love your spouse, your kids, your dog―but always strive for a loveless investment.

Dean J. Catino, CFP®, CPRC, is a managing director and cofounder of Monument Wealth Management in Alexandria, Va., a full-service investment and wealth management firm. Monument Wealth Management is backed by LPL Financial, an independent broker-dealer and Registered Investment Advisor, member FINRA/SIPC. Monument Wealth Management has been featured in several national media sources over the past several years. Follow Dean and Monument Wealth Management on their blog Off The Wall , on Twitter at @MonumentWealth and @DeanJCatino, and on their Facebook page. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for individual. To determine which investment is appropriate please consult your financial adviser prior to investing. All performance references are historical and are not a guarantee of future results. Strategies involving asset allocation and diversification do not ensure a profit or protect against a loss.

Read the article on U.S. News & World Report here! >>

Get Monument #Unfiltered: Our Free Private Wealth Newsletter

Our no B.S. wealth advice delivered 2x per month, max. Tuned specifically for busy, high-net-worth business professionals and investors who want straightforward advice without the fluff.


Please remember that past performance is no guarantee of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“Monument”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if Monument is engaged, or continues to be engaged, to provide investment advisory services. Monument is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.

A copy of Monument’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.monumentwealthmanagement.com/disclosures. Please Note: Monument does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Monument’s website or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results.  It should not be assumed that your Monument account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Monument accounts; and, (3) a description of each comparative benchmark/index is available upon request.

Please Remember: If you are a Monument client, please contact Monument, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.  Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.