How Fad Investing has affected the Stock Market

In February 2014, it was predicted that Candy Crush’s IPO would truly be crushed like a previous game app that saw it demise, Zynga. Many people have made a mistake in believing that the company’s success with a game easily produces success in the stock market.

On August 12, 2014, King Digital Entertainment, the parent company of Candy Crush watched their shares drop by more than 20%. It is necessary that investors adopt healthy skepticism, when comes to fads; especially those that involve games on mobile devices and computers. At the same time, look out for false investment icons. They will embrace the present rage of popularity. If you worship what is admired the most, there is a great chance you will be burned.

When it comes to investing, you must keep in mind that Wall Street is a business. It is not in place to provide a service or increase America’s capital. Its primary focus is selling stocks and bonds. When the market is high, it easy to sell and the sales pitch is more disingenuous. Although a lower price leads to more sales in retail, you will see more sales in the stock market due to a higher price.

Another stock market fad that had a similar effect is the Facebook stock. At the time, they were approach a billion members and becoming a household name across the globe. Facebook became the poster child for success. All ages wanted a piece of the Facebook dynasty and a piece of history. Initially, Facebook entered and just like other fads, it quickly went down. Recently, Facebook has recovered from its fall and manage to gain. These success stories and far and few in-between, so it is best to stay away from the common fad shares. There is a lot more to lose, than there is to gain.