It's indeed a sad tale, and I have seen it happen to friends of my own. I spent a few years in the telecommunications business and saw people I know invest heavily in IPOs from independent long distance carriers and prepaid calling card companies only to watch the stock tumble to pennies a few months later. And it was often same story, namely "Maybe if I keep averaging down it will come back."


Probably the best you can hope for is that your friend will learn some lessons from this and won't make the same mistakes in the future.