Facebook/Meta price move shows that no individual stock is 100% safe

It's a lesson that everyone who invests in individual stocks should keep at the back of his mind. Microsoft, Google, Amazon and Facebook have been praised on here for many years as stocks that will outperform the overall market with relative safety. It's very possible that Meta will grow for years to come, and the stock will recover, but at this exact moment:

  • Facebook has returned 65% over the past 5 years – not bad, but below the 88% for S&P 500, and the 172% for NASDAQ. Despite the fact that holding a single stock is significantly riskier than holding the index
  • The price has been cut almost in half from its ATH.
  • It is trading at its lowest P/S and P/E ratios ever. “The stock is cheap now, the P/E ratio will return to historical levels” doesn't always work out.

Again, not to say that Facebook is a bad business or the stock won't recover, but if it was a big part of your position you're probably not doing too well right now. It just highlights that market dominance over decades is exceedingly difficult. There will eventually come a time when Microsoft, Apple, Tesla and Google underperform, start stagnating, missing earnings, and decrease in value. If you invest in individual companies you should make sure that you are willing to stomach that risk.


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