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Author Topic: Stocks, bonds and investing  (Read 49983 times)
ghost
The Dentist
Posts: 10577


Reply #70 on: May 16, 2012, 02:28:48 PM

Facebook IPO is in two days.  I'm not surprised to see that many insiders are going to "cash in" on their holdings immediately

My gut feeling is that the IPO is going to make an absolute shitton of money for those selling but that we won't see the same sort of takeoff that Google had.  I honestly don't have much feel for how well the company will do long term, however.  As a communications media that is free, Facebook is bloody brilliant in most aspects.  But the problems arise where the rubber meets the road-  what is going to pay for their business?  The advertisements are forgettable and the social media create a site and get people to "like" your business deal only seems to be so effective, particularly as the media becomes more saturated.  The frenzy on Friday should be worth watching, even if most of us couldn't get our hands on the stock even if we wanted to. 
Teleku
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Reply #71 on: May 16, 2012, 03:12:45 PM

Facebook is a bit more solid than people realize.  They are investing heavily into many different areas, trying to turn themselves into the next Google, and not just be a social media company.  Whether they can pull that off is another issue.  We are currently in the midst of another tech bubble, however, so I expect plenty of stock hilarity.

"My great-grandfather did not travel across four thousand miles of the Atlantic Ocean to see this nation overrun by immigrants.  He did it because he killed a man back in Ireland. That's the rumor."
-Stephen Colbert
HaemishM
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Reply #72 on: May 16, 2012, 03:50:43 PM

The Facebook IPO is one giant pump and dump scam. Get in early so you can get out quickly.

Viin
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Reply #73 on: May 16, 2012, 04:22:07 PM

I agree with Haemish. Facebook has no staying power, I think the stock will be significantly down in a year and in the toilet in 3.

But my Amazon stock sure is doing good!
« Last Edit: May 16, 2012, 04:23:55 PM by Viin »

- Viin
Miasma
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Stopgap Measure


Reply #74 on: May 16, 2012, 06:18:08 PM

There was a story today about how a full 50% of people think facebook is a fad.  I'm not sure about that but I don't think it will ever be as profitable as their ipo numbers indicate.  Every time I see a story about their ipo I think of that horrible online pet store sock puppet dog.  There will be a lot of stupid people snapping it up but since there are so many stupid people it could be sustainable.

Of course this is coming from the same guy who thought "the iPad won't be successful, it's just a larger Goddamn iphone without the phone ability".  So, ignore me.
pxib
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Reply #75 on: May 16, 2012, 07:34:55 PM

This WSJ article (probably behind a pay wall) says that 57% of the 100 million shares Facebook is offering are coming from existing holders liquidating a portion of their shares:
Quote
In comparison, when Google Inc. went public in 2004, existing holders represented 28% of sales, according to Dealogic. Private holders sold no shares in the public offerings of Yahoo Inc. and Amazon.com Inc. in the 1990s.

Caveat emptor.

farther refers to physical distance, further refers to metaphorical distance, father refers to emotional distance
ShenMolo
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Reply #76 on: May 16, 2012, 08:43:59 PM

Ask yourself before buying a stock 'Is this something I can see holding for 20 years?" If not, don't buy it.
bhodi
Moderator
Posts: 6817

No lie.


Reply #77 on: May 16, 2012, 08:56:48 PM

The Facebook IPO is one giant pump and dump scam. Get in early so you can get out quickly.

What he said.

And if you're trying to get in on the IPO, set a sane limit buy.
ghost
The Dentist
Posts: 10577


Reply #78 on: May 16, 2012, 10:47:38 PM

From what I understand, unless you have $500k or more in long term investment portfolios many brokerages won't even give you the time of day on this one.  It will be tough to get in at a level where it's sane enough to make sense.  This will be a popcorn spectacle, not something to participate in.
shiznitz
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Reply #79 on: May 17, 2012, 09:35:44 AM

They are investing heavily into many different areas, trying to turn themselves into the next Google, and not just be a social media company.  Whether they can pull that off is another issue. 

This is the key for Facebook.  Right now, it is just a company collecting advertising $.  Like Yahoo.  Like Lycos.  Like AOL.  That model will not sustain the premium stock valuation being set by the IPO.  Google trades at about 25x earnings right now.  It has 65% gross margins and 33% pre-tax margins.  It is growing at a healthy double digit clip.  I find it hard to believe Facebook will be able to sustainably deliver better margins and a better growth rate than Google, which - like Microsoft - has one of the most profitable businesses in the world.  If it cannot, the stock will not hold its IPO level over the long term.  In the short term, who knows. 


I have never played WoW.
HaemishM
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Reply #80 on: May 17, 2012, 09:43:39 AM

From what I understand, unless you have $500k or more in long term investment portfolios many brokerages won't even give you the time of day on this one.  It will be tough to get in at a level where it's sane enough to make sense.  This will be a popcorn spectacle, not something to participate in.

That ought to clue anyone with half a brain in. This is big money looking for a place to park some money for 6 month to 1-year (or less) interest returns above 3%. They aren't buying Facebook because they think it'll be a profitable company, they are buying it to inflate the price, park some money long enough so it isn't taxed at normal income rate, then sell it the minute it starts to take a nose dive, which will further precipitate the dive as the suckers get in on its past success, only to be sucked under by the whirlpool of its downfall.

And the media is doing its level best to hype it, just to make sure it's nice and hyperinflated.

pxib
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Reply #81 on: May 17, 2012, 09:49:37 AM

Looks like they're upping the stakes.
Instead of 100,000,000 shares, of which 57% are insiders cashing out, Facebook seems to be planning to sell 484,418,657 shares, of which 189,369,144 (39%) are insiders cashing out EVEN MORE. Also, all other current shareholders are forbidden from selling their stock for 180 days. At the planned price of about $36 a share, that would be $7 billlion for insiders and $10.5 billion for Facebook itself... enough to lose money expanding its business and playing accounting games for decades.

farther refers to physical distance, further refers to metaphorical distance, father refers to emotional distance
ghost
The Dentist
Posts: 10577


Reply #82 on: May 17, 2012, 09:51:53 AM

This whole thing seems like a massive Ponzi scheme when you put it that way, pxib.
HaemishM
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Reply #83 on: May 17, 2012, 09:53:06 AM

Or, in other words, the modern stock market.  why so serious?

ghost
The Dentist
Posts: 10577


Reply #84 on: May 17, 2012, 10:04:09 AM

I still think there are some good stocks out there that are trying to get good returns for the investors.  This has scam written all over it though, the way the rats are bailing off of the ship.

Addendum:

So you want to buy some Facebook IPO?  You're not good enough.....
« Last Edit: May 17, 2012, 10:21:01 AM by ghost »
Paelos
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Reply #85 on: May 17, 2012, 12:36:17 PM

I've made more money betting baseball this season than I have in my portfolio. Just saying. The market is dumb right now. Long term strategy is fine, but the short term is just...I don't understand it.

Example: I picked up ATVI a few months ago when it was in the 11s off the cataclysm crap. The stock bounces around, but it's been DROPPING post-Diablo 3 release. Their Q1 numbers showed an average return on equity of 14%, but for some reason the stock is dropping after one of the biggest money makers for them of the last 3 years releases?

People are dumb.

CPA, Sports blogger, Mount and Blade enthusiast
Braves by the Numbers, my sports blog
HaemishM
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Reply #86 on: May 17, 2012, 01:58:51 PM

The stock market isn't built on profits of the company whose stock is being bought, but on the hype around that stock which make people by the stock. It's the giant hype machine in dollar form.

Paelos
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Reply #87 on: May 17, 2012, 02:47:10 PM

The stock market isn't built on profits of the company whose stock is being bought, but on the hype around that stock which make people by the stock. It's the giant hype machine in dollar form.

And that's the ridiculous part that puts us into financial crashes over and over again. The point of trading stock is to trade it for the returns of the stock, not the market value. If you ignore the inherent parts of stock ownership (ie - returns of profits on your equity investment), then you will never make consistent money. Warren Buffett didn't make his money on pump and dump.

CPA, Sports blogger, Mount and Blade enthusiast
Braves by the Numbers, my sports blog
bhodi
Moderator
Posts: 6817

No lie.


Reply #88 on: May 17, 2012, 02:58:18 PM

I've made more money betting baseball this season than I have in my portfolio. Just saying. The market is dumb right now. Long term strategy is fine, but the short term is just...I don't understand it.

Example: I picked up ATVI a few months ago when it was in the 11s off the cataclysm crap. The stock bounces around, but it's been DROPPING post-Diablo 3 release. Their Q1 numbers showed an average return on equity of 14%, but for some reason the stock is dropping after one of the biggest money makers for them of the last 3 years releases?

People are dumb.

This guy has some pretty sound reasoning behind it.

Personally, I have a ton of ATVI and I bought more a few days ago. I plan on holding it a quarter and when next quarter's earnings are enormous, bolstered by D3 box and RMAH, I'm going to sell.

My portfolio has also been crap this year. In fact, I'd have been better off in some 1% fund. But that's life! At least my dividend funds are still paying dividends... even my IID which has been doing.. particularly bad.

Like everyone else, I'm betting on an election year and hoping for QE3 to divest myself in the green before it all comes crashing down next year.
« Last Edit: May 17, 2012, 03:03:46 PM by bhodi »
Paelos
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Error 404: Title not found.


Reply #89 on: May 17, 2012, 03:21:28 PM

I read that article as well. He's wrong simply for how he discounts the effect that D3 will have on their income.

He went as far as to make this statement:

Quote
"StarCraft 2 (which was just as anticipated as Diablo 3 I will add)"

That was when I went, yeah this guy doesn't know their business. He's a typical ratio fuckhead.


CPA, Sports blogger, Mount and Blade enthusiast
Braves by the Numbers, my sports blog
bhodi
Moderator
Posts: 6817

No lie.


Reply #90 on: May 17, 2012, 03:27:58 PM

Well, he said 'look at black ops and starcraft 2 which sold like crazy, that didn't budge the price, what makes you think diablo 3 will?'. It's all due to the WoW cash cow slowly deflating, which I do have to agree with. I expect diablo 3 will sell quite a few more copies than starcraft 2, but let's be honest - it's not going to sell as much as black ops, console games are at an entirely different level.

Still, he counted the 10 active sell limit as a bad thing, whereas I think it's a good thing which will encourage lots of volume, quick selling, and little trash. And I think it's going to make them a lot of cash this quarter. In fact, I put money on it! It's straight gambling though. It's from my 'play money' part of my portfolio.
shiznitz
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Reply #91 on: May 17, 2012, 03:44:08 PM

ATVI will not make you rich.  It has too many shares outstanding for the share price to rise dramatically.  With 1.1 billion shares outstanding, for the stock to rise $1, the perceived value of the firm as a whole must rise $1.1 billion.  Diablo 3 is not likely to deliver an incremental $1.1 billion of economic value.

You could make 20% though.  The company's value is too large for one game to make a really significant difference relative to the economic importance of WoW.

I have never played WoW.
Goumindong
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Reply #92 on: May 17, 2012, 08:55:48 PM

ATVI will not make you rich.  It has too many shares outstanding for the share price to rise dramatically.  With 1.1 billion shares outstanding, for the stock to rise $1, the perceived value of the firm as a whole must rise $1.1 billion.  Diablo 3 is not likely to deliver an incremental $1.1 billion of economic value.

You could make 20% though.  The company's value is too large for one game to make a really significant difference relative to the economic importance of WoW.


                                             Q1          '11
Return on average equity    14.42%    10.33%

This is pretty much what you want to know(in combination with their beta values) if you're going to get the barest minimum of information for a stock. Your belief in where those numbers will go and your own risk tolerances determine whether or not you should buy?

If you're in for the long term, the guy might be right, but i don't see if from what he is suggesting. You can't just do a regression on the data and get good results [for a number of reasons]. However, let us look at the stock using a simple hypothesis.

"For any market risk there is a demanded return and that demanded return is higher as market risk increases and lower as market risk decreases"

Activision is currently releasing the end run of its signature products and will be starting on new IP's pretty soon. New IP's mean more risk, and more risk means a higher required return on equity.

But the profits and firm value isn't expected to change much[or change in growth trajectory rather]. If the products succeed they're in the same place they were. If they fail they lose a lot of money. So what is the only way to get a higher return on equity with the same profits? The value of the equity has to fall.

Basically, investors expecting that in the long term the stock is going to become more risky should be expecting a price reduction. People that know that it doesn't matter what IP blizzard releases its going to sell a lot will do just fine in the long term. But it might look bad in the medium term as the people who don't get it bail.

People who are in the know about what blizzard does AND know that other people aren't in the know will win by selling early and then rebuying in the medium term.
« Last Edit: May 17, 2012, 08:58:32 PM by Goumindong »
Margalis
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Reply #93 on: May 18, 2012, 03:18:56 AM

Facebook is a bit more solid than people realize.  They are investing heavily into many different areas, trying to turn themselves into the next Google, and not just be a social media company.  Whether they can pull that off is another issue. 

They can't. Their engineering is dogshit. Their API is relatively simple and still has not only a lot of bugs but new bugs being introduced constantly.

If they tried to do something like Android not only would it not work it would explode and fry your face with battery acid.

vampirehipi23: I would enjoy a book written by a monkey and turned into a movie rather than this.
ghost
The Dentist
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Reply #94 on: May 18, 2012, 12:14:35 PM

Well, Facebook hasn't provided the predicted entertainment value I expected today.  It broke in at $42 and has seemed to stabilize out at about $39.  I wanted fireworks (glad I didn't purchase any of this).
Paelos
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Reply #95 on: May 18, 2012, 12:42:27 PM

Facebook is no google.

CPA, Sports blogger, Mount and Blade enthusiast
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Soln
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Reply #96 on: May 18, 2012, 02:37:39 PM

Maybe not but they had the cash before and now after the IPO to hire whomever they want.  Increasingly, I see people going there.  The comp is great apparently (or was a few months ago).
Minvaren
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Reply #97 on: May 18, 2012, 03:10:13 PM

Well, Facebook hasn't provided the predicted entertainment value I expected today.  It broke in at $42 and has seemed to stabilize out at about $39.  I wanted fireworks (glad I didn't purchase any of this).

There was some this morning when a possible typo briefly sent their valuation to about $100 trillion.   awesome, for real

"There are many things of which a wise man might wish to remain ignorant." - Ralph Waldo Emerson
shiznitz
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the plural of mangina


Reply #98 on: May 18, 2012, 03:20:03 PM

Maybe not but they had the cash before and now after the IPO to hire whomever they want.  Increasingly, I see people going there.  The comp is great apparently (or was a few months ago).

Facebook the company is getting no cash from the IPO.  All the proceeds are going to selling shareholders.

I have never played WoW.
pxib
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Reply #99 on: May 18, 2012, 04:02:09 PM

Nope. Almost 40% of it was insider selling, but the other 60% was new shares and sold for about $10 billion in cash for the company.

They can throw money away for years now.

farther refers to physical distance, further refers to metaphorical distance, father refers to emotional distance
ghost
The Dentist
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Reply #100 on: May 18, 2012, 08:07:10 PM

It's a gigantic pyramid scheme.
Sky
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Reply #101 on: May 18, 2012, 10:53:13 PM

Has anyone even mentioned bonds in this thread or is that too stuffy?

I took my federal tax returns in I bonds this year, so I wouldn't blow it on something.

Surlyboi
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eat a bag of dicks


Reply #102 on: May 19, 2012, 12:10:23 AM

Facebook will make money. Eventually and slowly. Maybe.

But. Only if they get their shit together. Faceberg and his boys went on a travelling road show to over the past few weeks to drum up hype for the IPO among the financial class. They failed miserably to manifest said hype because, among other things, they have no idea about why the company is valuable. They believe their own hype that they've done something new and interesting, rather than the true value which is all the rubes updating their status hourly and reading all the ads sent to them and being tooled for whatever the fuck the 'book can get out of them.

If Faceberg and co wise the fuck up and realize what the fuck is up, shit may get real, otherwise, they'll founder and be the biggest disappointment since pets.com. We'll see.

Tuned in, immediately get to watch cringey Ubisoft talking head offering her deepest sympathies to the families impacted by the Orlando shooting while flanked by a man in a giraffe suit and some sort of "horrifically garish neon costumes through the ages" exhibit or something.  We need to stop this fucking planet right now and sort some shit out. -Kail
Viin
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Reply #103 on: May 19, 2012, 12:07:01 PM

Has anyone even mentioned bonds in this thread or is that too stuffy?

I took my federal tax returns in I bonds this year, so I wouldn't blow it on something.

You can do that? Or did you just take that money and buy bonds through your broker?

- Viin
Sky
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Reply #104 on: May 19, 2012, 08:05:14 PM

No, it's an option for the return. Ye Olde paper bonds, even. They've otherwise done away with paper bonds almost completely.

I did a bit of quick homework and they seemed decent (if ultra-conservative, but that's me) to stash some money in to hold some value vs stashing it in a mattress. I really don't want to invest in stocks, but I won't get into my crazy coot rant about how the stock market is destroying 'merica.

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