Anyone selling? (stocks)

[cleller]

Was going to post to the old "anyone buying?" thread, then changed my mind, as my question is really the opposite. I've been coasting thru the rally the last few several months like a good troop, hands off. The Europe business has been in the back of my mind for months, but the markets seem to look for the sunny side of everything. Any glimmer of hope for Greece extends the rally.

Somehow, it seems over optimistic for me. The US may be doing better, but I think a sell off in Europe will nail us, too. I've maintained what I consider is a good allocation for me in stocks/equity funds. With the run-up, I'm probably on the high side of that allocation now, and contemplating getting back into that comfort zone. Seems like the WSJ, etc are cautious, but willing to ride a little further, mostly due to a lack of other options.

Closing in on 13,000 on the Dow. What happens in the summer?

[SanJoaquinSooner]

I think Cramer gave a great answer to that in the first 8 minutes of today's Mad Money.


http://video.cnbc.com/gallery/?video=3000073860

[cleller]

I never watch him because I can't take his beating around the bush, machine-gun blathering. I don't doubt that he has more knowledge than me though. I skipped ahead to about the 7 minute mark, and gathered he does not feel selling is a good idea.

I'm not contemplating any wholesale sell off, just a re-positioning back to a comfort level. I had gotten more aggressive around summer of 2009, but don't have that upside confidence as much now. I guess if it is something that weighs on my mind enough to type it out on here, I've already made a decision about what is right for me.

[oudivesherpa]

Ask yourself what usually happens in Presidential election years, the market goes up, I think it will head marginally up until peaking in the summer, but no great fall until the after the election. Obama will win and the tax rate on capital gains will go up to 25% next year. Having said that, I'm waiting until July before I start short selling.

[8timechamps]

I never watch him because I can't take his beating around the bush, machine-gun blathering. I don't doubt that he has more knowledge than me though. I skipped ahead to about the 7 minute mark, and gathered he does not feel selling is a good idea.

I'm not contemplating any wholesale sell off, just a re-positioning back to a comfort level. I had gotten more aggressive around summer of 2009, but don't have that upside confidence as much now. I guess if it is something that weighs on my mind enough to type it out on here, I've already made a decision about what is right for me.

I'm with you brother. I like what Cramer has to say, I just can't listen to him through his "infotainment" shtick long enough to hear it.

I would not give specific advice on the internet, but I can tell you that there is much talk about the future of the oil market. The issue is coming to a head, and when it does, there will be fallout. In other words, there will be significant ancillary effects felt when the oil market moves...and it will.

I love it when clients are talking about selling when the markets are rising. It's a very rare thing. The old saying 'buy low, sell high' sounds great, but rarely is it put into practice. I sold a fair amount of holdings Friday. There are some positions I will ride for a while before pulling the trigger.

[8timechamps]

Ask yourself what usually happens in Presidential election years, the market goes up, I think it will head marginally up until peaking in the summer, but no great fall until the after the election. Obama will win and the tax rate on capital gains will go up to 25% next year. Having said that, I'm waiting until July before I start short selling.

The only issue I see is that once the market begins to fall, everybody and their dog will be shorting. Some times, there is significant gains to be had by shorting early. And, I agree that the market is always sensitive to elections. The biggest problem facing Obama right now is the Iran issue, and there is a lot at stake (oil) that investors are watching. It'll be a very, very interesting 4th quarter.

[dwarthog]

What do y'all think the ceiling on this market is going to be should it manage to get above 13k?

[SanJoaquinSooner]

Cramer's point of Friday's show was that there is always some crisis in the news that can lead to a sell off - whether it's an event in Europe, the Middle East, Japan, or right here in the Americas. And the scrutiny of the today's media exaggerates the crisis making the sell-off worse.

The fundamentals of some companies may potentially be affected, but not all. So the sell-off may include companies whose bottom line is unrelated to the crisis at hand.

His Bristol Myers Theory asks, following each "crisis of the week," What does that have to do with the price of Bristol Myers?" If the price of a fundamentally sound Bristol Myers falls in a broad sell-off, but there's no reason to think the crisis has an impact on Bristol Myers' fundamentals, then it's a buying opportunity.

He also gave the example of turmoil in Eygpt leading to a broad market sell-off that including oil stocks. Turmoil in Eygpt ordinarily leads to an increase in oil prices, helping the oil stocks. Cramer said those who recognized that and bought on the dip made a nice profit.


Personally, I'm not a market timer. Too hard for me to figure out when to get back in and, also, I fear missing a big bull run. So I stay fully invested. I let the mutual fund managers figure out which companies are the Bristol Myers and which are not.

[cleller]

Obviously the wise and true philosophy is to NOT be a market timer. I feel guilty even admitting I am, to a degree. My excuse is that I reduced my market exposure some before the big crash after reading an article by James B. Stewart when he was still with the WSJ. Not enough to escape unharmed, but it was some consolation. Stewart had basically written that market timing was seldom advisable, but at the time things were just nuts.

For the past couple of years I've allowed my exposure to increase a little more than I'm comfortable with, because of the total lack of other avenues for any kind of yield. Bonds have been great, but they could reverse their course, too, if interest rate rise. Very hard to find anything "safe" that will outpace inflation.

One of the things I've always thought was funny is how investor sentiment runs at odds with what happens in the market. It makes sense- if the market rises, you feel bullish, if it falls, you feel bearish.

This graph is a little funny, you have to look closely, but you can see how the best buying opportunities are often when people feel most bearish. Right now bullish sentiment is very high.

http://i701.photobucket.com/albums/ww14/cs6000/Screen-shot-2012-01-19-at-34721-PM.png

The chart is from this site:
http://macrostory.com/contact-us/investor-sentiment/

[cleller]

What you y'all think the ceiling on this market is going to be should it manage to get above 13k?

Picking a number publicly seems like a jinx. I don't have the nerve. Now that we are this high, I'll admit that at one time I had thought that when the Dow hit 12,000 that would be about it. Not a great guess.

[pphilfran]

Obviously the wise and true philosophy is to NOT be a market timer. I feel guilty even admitting I am, to a degree. My excuse is that I reduced my market exposure some before the big crash after reading an article by James B. Stewart when he was still with the WSJ. Not enough to escape unharmed, but it was some consolation. Stewart had basically written that market timing was seldom advisable, but at the time things were just nuts.

For the past couple of years I've allowed my exposure to increase a little more than I'm comfortable with, because of the total lack of other avenues for any kind of yield. Bonds have been great, but they could reverse their course, too, if interest rate rise. Very hard to find anything "safe" that will outpace inflation.

One of the things I've always thought was funny is how investor sentiment runs at odds with what happens in the market. It makes sense- if the market rises, you feel bullish, if it falls, you feel bearish.

This graph is a little funny, you have to look closely, but you can see how the best buying opportunities are often when people feel most bearish. Right now bullish sentiment is very high.

http://i701.photobucket.com/albums/ww14/cs6000/Screen-shot-2012-01-19-at-34721-PM.png

The chart is from this site:
http://macrostory.com/contact-us/investor-sentiment/

If you are bearish you have pulled money out of the market and there is a lot of cash on the sidelines looking for a place to go...

If you are bullish you probably have most of your money in the market and that leaves less on the sidelines for market support....

I am a huge contrarian...

[oudivesherpa]

While I've stated that I think a down turn is coming later this summer, I'm not bullish enough not to have put stop loss orders in on my protfolio at approximately 10% to 15% below their current market price depending on the stock and I'm moving to the sidelines with Apple later this week. But I will move the Apple gains to energy stocks with smaller (5%) stop losses.

[8timechamps]

While I've stated that I think a down turn is coming later this summer, I'm not bullish enough not to have put stop loss orders in on my protfolio at approximately 10% to 15% below their current market price depending on the stock and I'm moving to the sidelines with Apple later this week. But I will move the Apple gains to energy stocks with smaller (5%) stop losses.

It's good to see people placing stop loss orders on their investments. Most people don't understand them enough, and don't even want to mess with them. I tell all of my active stock trading clients that they serve a beneficial purpose at times. So, kudos to you.

Funny you should mention Apple. I sold a very significant portion of my Apple holding last Friday. I don't spend as much time as I should on my own accounts, so I had gotten out of whack with my allocation. Apple has been very good to me, and I figured it was time to trim that position (for many reasons). I'll probably move the gains into something very short term for now. By the time I get back to my own accounts, I have no idea what the market will look like.

[8timechamps]

Cramer's point of Friday's show was that there is always some crisis in the news that can lead to a sell off - whether it's an event in Europe, the Middle East, Japan, or right here in the Americas. And the scrutiny of the today's media exaggerates the crisis making the sell-off worse.

The fundamentals of some companies may potentially be affected, but not all. So the sell-off may include companies whose bottom line is unrelated to the crisis at hand.

His Bristol Myers Theory asks, following each "crisis of the week," What does that have to do with the price of Bristol Myers?" If the price of a fundamentally sound Bristol Myers falls in a broad sell-off, but there's no reason to think the crisis has an impact on Bristol Myers' fundamentals, then it's a buying opportunity.

He also gave the example of turmoil in Eygpt leading to a broad market sell-off that including oil stocks. Turmoil in Eygpt ordinarily leads to an increase in oil prices, helping the oil stocks. Cramer said those who recognized that and bought on the dip made a nice profit.


Personally, I'm not a market timer. Too hard for me to figure out when to get back in and, also, I fear missing a big bull run. So I stay fully invested. I let the mutual fund managers figure out which companies are the Bristol Myers and which are not.

Like I said above, Cramer does have good insight, I just can't watch him.

I agree with his statement on "the crisis of the week", but the current international environment makes the next few weeks very interesting. In other words, it's not just a media driven, attract more viewers kind of environment. The Iran issue is a major one, and there is going to be a resolution (one way or another) at some point in the next year. There is no question that once an event occurs (whether good or bad for the US), the region as a whole will react, and the oil markets will too.

I'm usually pretty even-keel when I talk about my market outlook with clients, however, I'm seeing some rough waters ahead. Now, if I could see the future, well...I wouldn't be posting on here, I'd be too busy sitting in the sun at my private island in the Bahamas.

As for you not being a market timer, that's a great strategy if you're not actively watching your portfolio. The majority of average investors out there should follow your advice. mutual funds are a good place to keep your money until you reach a point that you can hire a private money manager (most managers will accept $100k minimum, but keep in mind that each manager has a specialty, small cap/mid cap/international/etc. So, if you're looking to invest a million or more, then that's the way to go. Like having a private mutual fund). Anyway, I digress. Sounds like you are doing well.

[StoopTroup]

I quit watching Cramer after Jon Stewart made him cry. How's he doing these days? Is he making better calls? Stewart really had him backed in a corner for giving out bad advice. I thought maybe his career was over then.

[cleller]

It's good to see people placing stop loss orders on their investments. Most people don't understand them enough, and don't even want to mess with them. I tell all of my active stock trading clients that they serve a beneficial purpose at times. So, kudos to you.

Funny you should mention Apple. I sold a very significant portion of my Apple holding last Friday. I don't spend as much time as I should on my own accounts, so I had gotten out of whack with my allocation. Apple has been very good to me, and I figured it was time to trim that position (for many reasons). I'll probably move the gains into something very short term for now. By the time I get back to my own accounts, I have no idea what the market will look like.

I've got stops on all my stocks, but have a bigger percentage in mutual funds. Mostly in tax deferred accounts, but it's a stickier matter to plan ahead with them.
It suits me, though. I don't have the experience to make a lot of decisions about when to buy and sell.

[winout]

You could sell your stocks and buy gold. Gold's 11 year run is probably not over. Here is Dow as priced in gold.

http://home.earthlink.net/~intelligentbear/dj-au-ratio-lt.gif

http://home.earthlink.net/~intelligentbear/com-dow-au.htm

[Midtowner]

Cashed in on some Phillip Morris stock the other day. Bought some other stuff.

[SanJoaquinSooner]

RIMM (http://blogs.wsj.com/marketbeat/2012/03/29/rimm-results-not-so-hot-stock-halted-balsillie-resigns-from-board/) Job. Ouch.

[cleller]

RIMM (http://blogs.wsj.com/marketbeat/2012/03/29/rimm-results-not-so-hot-stock-halted-balsillie-resigns-from-board/) Job. Ouch.

Nowhere to go but down.

I was just thinking about this thread yesterday. I still think a sell-off is coming, but for no intelligent reason. The warm weather makes it seem like May, so I'm expecting it any day. Wish there were someplace you could earn a little interest while waiting.

[SanJoaquinSooner]

Nowhere to go but down.

I was just thinking about this thread yesterday. I still think a sell-off is coming, but for no intelligent reason. The warm weather makes it seem like May, so I'm expecting it any day. Wish there were someplace you could earn a little interest while waiting.

Likely a 5% pullback, but who knows when. It will be a buying opportunity to get in on the bull market. Too much cash on the sidelines, with bonds paying squat, the individual investor has yet to jump in heavily.

[cleller]

I've read several stories lately about the whole Apple love affair. This stock has been so hot for so long, no one really wants to say sell it. They will say that funds and ETFs already own so much, that you probably should be happy with that exposure.

A few smaller name writers have been wondering if Apple is in a bubble, and what happens if that bubble bursts. Wish I knew.

Right now everything seems artificial. Interest rates are definitely artificially low. That has led LOTS of cash that ordinarily would rest somewhere else into stocks. It just seems to be a questionable situation.

[pphilfran]

Yep...it is the end of the quarter and time to rebalance...stocks have done pretty good so some will be sold off and moved into fixed...

[hawaii 5-0]

If you are bearish you have pulled money out of the market and there is a lot of cash on the sidelines looking for a place to go...

If you are bullish you probably have most of your money in the market and that leaves less on the sidelines for market support....

I am a huge contrarian...


Remind me to never go to Vegas and play craps with you.

5-0

[hawaii 5-0]

I've read several stories lately about the whole Apple love affair. This stock has been so hot for so long, no one really wants to say sell it. They will say that funds and ETFs already own so much, that you probably should be happy with that exposure.



I think I made a mistake this year and sold some (not all) of my Apple. It's been very good to me.

I also sold some (not all) of my Green Mountain Coffee Roasters. They own Keurig.


But hey, I'm sittin' in two new cars.

5-0

[pphilfran]

Remind me to never go to Vegas and play craps with you.

5-0

I am a little different while on the craps tables...

[hawaii 5-0]

I am a little different while on the craps tables...


I like having 20 people cheering for me.

It's good you're not a contrarian at the table.

5-0

[pphilfran]

I like having 20 people cheering for me.

It's good you're not a contrarian at the table.

5-0

Nothing better than a hot hand on a craps table...lots of fun, hollorin', and chit...

[8timechamps]

I think I made a mistake this year and sold some (not all) of my Apple. It's been very good to me.

I also sold some (not all) of my Green Mountain Coffee Roasters. They own Keurig.


But hey, I'm sittin' in two new cars.

5-0

I sold positions in Apple for over 30 clients (including myself) back in February. I didn't clear out anyone's position in Apple, just trimmed to rebalance. There is still some growth left in that stock this year, and so long as the iPad and iPhone continue to have the "Apple Mystic", the stock will continue to preform. But, given the growth it's had, it was time to reposition.

I've owned GMRC since '09, and really kicked myself for not selling it all last year (when it hit its peak). I don't have a huge position in GMCR, but enough to follow the company. Going forward, Keurig sits in the driver seat for the single serving brewers, so they will continue to control the market. Bob Stiller (the founder) knew good coffee, and made some decisions very early on that put them where they are today. The current CEO, Larry Blanford, took over for Stiller in 07, and has lead the single serving revolution. I really like the management team at GMCR, so holding on to the stock has actually turned out to be a good play (although, I'd still like to have sold of some at the peak....but, who wouldn't?!).

Anyway, You can never kick yourself for not selling at the high (contrary to my own thoughts), but you can be smart enough to sell at "a" high, and buy back in at a low, if you think it's a solid performer.




Oh, and I LOVE playing Craps! If the table gets hot, there's no better place to be in Vegas! The key is knowing when to walk away.

[I Am Right]

No Charts, No Graphs, just buying

[cleller]

Is this is it? No QE3 coming this summer? Armageddon?

Maybe the fact that if you sell your stocks, you'll have nowhere to put the money will hold things together.

[dwarthog]

Is this is it? No QE3 coming this summer? Armageddon?

Maybe the fact that if you sell your stocks, you'll have nowhere to put the money will hold things together.

Isn't that the truth! Once upon a time you could find shelter in a "passbook" savings account, still get a modest return.

[8timechamps]

Go REITS.

[cleller]

Go REITS.

That's a good tip. I do have exposure in a real estate mutual fund, but should probably look more into it. What do you think about actual muni bonds, if you can find them?
Anything you respond would not be considered advice.

[8timechamps]

That's a good tip. I do have exposure in a real estate mutual fund, but should probably look more into it. What do you think about actual muni bonds, if you can find them?
Anything you respond would not be considered advice.

Depends what you're looking for with a muni-bond. Is it just as a cash alternative? If so, you can't really go wrong with a muni-bond, just don't see much out there (with any decent yield).

I like Closed End Funds for REITs. I've been using Federal Reality Investment Trust (FRT) for many years. It's currently yielding about 2.75%. The down side of a closed end fund (for REITS, or anything else) is that it can be a volatile ride (just like any equity). The sector took a hit in 07, but I've been in FRT for well over 5 years, and have been very pleased with how it's performed over that time.

There are good open ended REIT funds (traditional mutual funds) out there, if you want to go that route, you just don't get the benefit of them paying dividends (since mangers typically don't'/won't hold a single position long enough to really see the effect in the fund).

Just be aware that REITs can be sensitive to any housing news, and know what you're getting into.

Of course, none of this is advice...just conversation ;D

Edit: If FRT is too high per share, or if you want more of an index following fund, I also use FRI (First Trust S&P Index). It's a little more conservative, and yields about 2%.

[8timechamps]

I use a lot of Closed End Funds in general, and if you're interested in them, this is a great site for research (on my daily internet schedule/routine):

LINK (http://cefa.com/)

[cleller]

8Timer,
I appreciate your conversation. I've been in the cash doldrums for a few months, thinking I dialed back a little early. It will be interesting to see what the market does in the next few weeks.

I will definitely start researching some of these areas. About 5-6 months ago there were some munis out there that I let get by, and now regret it.
I'm also a big no-load cheapskate.

Anyway, 'ppreciate 'er.

[8timechamps]

8Timer,
I appreciate your conversation. I've been in the cash doldrums for a few months, thinking I dialed back a little early. It will be interesting to see what the market does in the next few weeks.

I will definitely start researching some of these areas. About 5-6 months ago there were some munis out there that I let get by, and now regret it.
I'm also a big no-load cheapskate.

Anyway, 'ppreciate 'er.

Nothing wrong with being a "no load cheapskate"....so long as my clients don't decide to go that route.

The markets were spooked today by Europe (specifically Spain), so I don't know if this is the pull back, or just reaction. Healthcare is always a viable alternative...just stick with the big names (if you're worried about too much movement). And keep an eye on the muni market, something will pop up again.

[cleller]

Today feels like the doldrums are settling in. A couple weeks ago in the ObamaFest area, an ardent supporter was proclaiming the great rebound in the markets this year as an indication that Obama has cured our ills.

That further convinced me the market has no upside for quite awhile. I have a big list of stuff to buy on a dip, but don't think I'll do it until fall. or unless we go down another 500-1000+ on the Dow.

[Oldnslo]

I've been on the sidelines awhile, which means I missed out on the Best Quarter Ever. But I still have the feeling we're all just waiting for some minor Archduke to get shot and set a whole bunch of dominoes over in the process.

[jkjsooner]

Here's a question for you guys. Are the days of average 8-10% yearly gains long gone?

The reason I ask is that we've been sitting on pretty much no gain for about 12 years. Anytime we have some gains (usually preceded by large losses) we start hearing that the market is ready for a selloff. It's almost as if we used to have a built in expectation of appreciation but we now have a built in expectation of stagnation.


Post too long. Shortened it. I guess I also need to consider dividends as well which would generally put the last 12 years in much better light.

[SanJoaquinSooner]

Here's a question for you guys. Are the days of average 8-10% yearly gains long gone?

The reason I ask is that we've been sitting on pretty much no gain for about 12 years. Anytime we have some gains (usually preceded by large losses) we start hearing that the market is ready for a selloff. It's almost as if we used to have a built in expectation of appreciation but we now have a built in expectation of stagnation.


Post too long. Shortened it. I guess I also need to consider dividends as well which would generally put the last 12 years in much better light.

12 years ago the average PE ratio was 30. Now it's 12 or 13. I think the average gain in the next 12 years will be better than the average gain for the last 12 years.

The average annual total return for the s and p 500 for the last 3 years is 23%. It's been on fire, so it has to cool off occasionally, allow for consolidation and rotations, etc before moving forward. The individual investor is not in this market yet.

[pphilfran]

Imo we are going to be in a rising interest rate environment...that will not bode will for stocks....

[jkjsooner]

Imo we are going to be in a rising interest rate environment...that will not bode will for stocks....

Please explain how rising rates affect stocks. Does that assume general inflation as well? Is it based on the fact that companies would have a harder time servicing debt?

I understand the relationship between rates and long term bond prices. You can pretty much calculate the change in one from the other. However, couldn't stocks be considered a competitor to bonds so if less people are buying long term bonds (pushing rates up) then couldn't that mean that more people are buying stocks?

Given, bonds become more attractive as rates rise but to get to that point bonds would have had to be less attractive. True?

[pphilfran]

A bunch of reasons...

Higher interest rate will mean higher inflation...the cost of the product on the shelf will go up prior to the COLA's that will come up at years end...takes some discretionary spending from the consumer...

Higher rates make it more expensive for companies to expand....they have to pay higher rates on loans...

Higher interest rates make bonds look more attractive which can pull money out of stocks...

But you can get royally screwed if you are holding a $1000, 10 year, 4% bond and rates go up to 6% on the same term...this also can give a hit to disposable income...here is why...

You are going to get 4% a year while everyone else is drawing 6%...your 4% bond will probably lose ground to inflation...

So you decide to sell and get one of those 6% bonds...but you are not going to get your full $1000 investment back...no one is going to buy your 4% bond when they can get 6%...so they will only give you $900 (some such amount) for your bond...

[jkjsooner]

But before bond rates can rise one of the following would have to occur:

1. Bonds would have to become less attractive.
2. Companies would have to start offering more bonds which would imply that they are growing or planning to do so.
3. There is just less money overall.
4. Inflation leading the rise in rates causing people to expect better rates.

True?

Either of the first two would seem to be a net gain for stocks - at least initially.

Also, while rates are still rising long term bonds are more and more risky (which would lead to higher and higher rates). Only after the rates stabilized would bonds appear to be a good investment.


I'm not trying to be argumentative. I'm trying to learn. I don't have a background in this.

[pphilfran]

All of that is true but it is the fed that will lead the way....

If they sense inflation raising it's ugly head they will raise the fed rate to slow demand....causing all future borrowed money to become more expensive....

We are sitting pretty currently because the rest of world is in worse shape than the US....hard to believe, but true....we are the safe haven...

If Europe gets their act together we could see more money flowing into the Euro (if it survives) which would put pressure on US bonds...

The way it will play out is anybody's guess...but I can be reasonably sure that US rates are not going to go down from current levels.....and lowering rates help stocks to achieve 10-12% annual return (number out of my butt)...

[cleller]

I can't point to any specific story right at the moment, but I've read many columns and reports that suggest we are in for a long period of low to mediocre returns for the stock market. Something in the 3-5% range, if memory serves. These are just notions I've filed away after reading it from someone who I feel might know what they are talking about.

One fact to consider; the Fed has been contriving a situation which nearly forces investors into the stock market. Holding rates so low for so long. Whether that is sound or not, I don't know. It is just a little concerning, though, when a "not so invisible hand" is pushing investors a particular direction. Yes, bonds have done well, but when interest rates do rise, that will get ugly fast. Bonds will sell to exchange for ones with a higher rate. Where do rates have to go from zero?

Just a little concerned about staying ahead of inflation when the only way to do it right now is to put a large portion of you portfolio in stocks.

[pphilfran]

If you try to time the market odds are you won't do too well...

Understand your risk tolerance and balance your portfolio accordingly...

If you are afraid of losing money and want to pull some out you are probably too heavily exposed to the more risky securities...

Ladder you bonds...

Rebalance the portfolio each quarter...that will force you to sell high and buy low...

[8timechamps]

pphilfran pretty much nailed the bond thing.

We're in earnings season right now, so the market is going to follow earnings reports. As for expected annual returns being in the 10-12% range, there's no guarantee that it will ever return to that, but I'm bullish, and still hold the position that the market is the place to be for growth. Timing the market (again, as pphilfran mentioned), is a losers game.

What the hell?! I'm finding a lot of common ground with pphilfran lately!

[cleller]

pphilfran pretty much nailed the bond thing.

We're in earnings season right now, so the market is going to follow earnings reports. As for expected annual returns being in the 10-12% range, there's no guarantee that it will ever return to that, but I'm bullish, and still hold the position that the market is the place to be for growth. Timing the market (again, as pphilfran mentioned), is a losers game.

What the hell?! I'm finding a lot of common ground with pphilfran lately!

Finally, you show up. Not many of my stops have triggered. Think this is a dip? Go away in May?

To me, this has not been the sell-off I was expecting. Are stocks just the only game in town?

[pphilfran]

pphilfran pretty much nailed the bond thing.

We're in earnings season right now, so the market is going to follow earnings reports. As for expected annual returns being in the 10-12% range, there's no guarantee that it will ever return to that, but I'm bullish, and still hold the position that the market is the place to be for growth. Timing the market (again, as pphilfran mentioned), is a losers game.

What the hell?! I'm finding a lot of common ground with pphilfran lately!

I think we have only knocked heads a couple of times...that isn't too bad over a period of a year or more...

[8timechamps]

Finally, you show up. Not many of my stops have triggered. Think this is a dip? Go away in May?

To me, this has not been the sell-off I was expecting. Are stocks just the only game in town?

Busy day (and week).

Hard to say if this is a dip or a legitimate pullback. We broke through some technical levels yesterday, but it didn't hold and today was better. It's going to be hard to forecast much with earnings coming out. If the financial sector can surprise the market (or even hit their projections), things should look decent for a little while.

Right now, stocks are just about the only game in town.

[8timechamps]

I think we have only knocked heads a couple of times...that isn't too bad over a period of a year or more...

Actually, that's pretty accurate. I think we probably agree more than we disagree.

[I Am Right]

I have a bridge I will sell you!

[8timechamps]

I have a bridge I will sell you!

Thanks for contributing to the discussion.

[SanJoaquinSooner]

Google reports earnings after today's bell. China reports 1st quarter gdp overnight.

[Position Limit]

someone mentioned interest rates. it's all that matters. as long a ben and the boys around the globe stay on full print, lean long and prosper. this market is all carry trade right now and has been for years running. raise rates and it's risk off. AAPL, PCLN and the like are nothing more than hedge fund hotels with 100 lot retail sheep along for the ride. and will get hacksawed when the unwind occurs. until then, enjoy the 15 year rate!!!!

[pphilfran]

Google reports earnings after today's bell. China reports 1st quarter gdp overnight.

China at 8.1%...slightly lower than expectations...

[cleller]

China at 8.1%...slightly lower than expectations...

How can you tell with China? The make up the rules as they go.

China is planning to buy Africa soon, and show the western world how to really go about colonization.

[hawaii 5-0]

After watching Apple's prices drop 5 days in a row I jumped in and bought some more.

Cuttently it's up $18 per share.

Opportunities.........

5-0

[dwarthog]

How can you tell with China? The make up the rules as they go.

China is planning to buy Africa soon, and show the western world how to really go about colonization.

I see I'm not the only one with this particular view.

[Bourbon St Sooner]

I was just reading that 12% of the NASDAQ index is Apple? That seems like a huge weight on 1 stock. The NASDAQ was down yesterday even though the broader market was rallying just because of Apple.

[8timechamps]

I was just reading that 12% of the NASDAQ index is Apple? That seems like a huge weight on 1 stock. The NASDAQ was down yesterday even though the broader market was rallying just because of Apple.

That's because Apple refuses to split (which isn't necessarily a bad thing). But, yeah, that's a huge weight for one stock.

[pphilfran]

That's because Apple refuses to split (which isn't necessarily a bad thing). But, yeah, that's a huge weight for one stock.

Isn't the Nasdaq a market cap index? If so, a split wouldn't make any difference as far as the Nasdaq index itself...

I think all of the Dow indexes are price weighted indexes...a split will cause an adjustment of the index multiplier to keep it at the current level and the new multiplier is used in the future with the split stock causing less influence on the index...

[8timechamps]

Isn't the Nasdaq a market cap index? If so, a split wouldn't make any difference as far as the Nasdaq index itself...

I think all of the Dow indexes are price weighted indexes...a split will cause an adjustment of the index multiplier to keep it at the current level and the new multiplier is used in the future with the split stock causing less influence on the index...

Yep, it sure is. And, you're right. Contrary to my previous post, a split would mean nothing as it relates to Apple's portion of the NASDAQ index, it pulls on market cap and not price. I had Apple (and their non-splitting) on the brain yesterday. I had a mutual fund rep in the office that was talking to me about Apple's price per share, and why this particular fund was reducing their position.

It was either that, or I started drinking much earlier than I realized.

[SanJoaquinSooner]

A colleague at work, Jialing, got a package in her mailbox, opened it, and it was an ipod. She said she's taking it to China this summer as a gift for her niece. Apparently Jialing isn't aware of the problems they're having in Greece and Spain.

[Blue]

We have a bunch of rich Obama Dorks in our presence.

[hawaii 5-0]

We have a bunch of rich Obama Dorks in our presence.


Your lame effort to politicize this thread is noted.

Regardless, the Stock Market has nearly doubled in the past 3 1/2 years and as a Capitalist I'm just trying to take advantage of opportunities when they arise. To sit by the side, complaining, wishing failure on this Country is more than foolish.

5-0

[Position Limit]

Your lame effort to politicize this thread is noted.

Regardless, the Stock Market has nearly doubled in the past 3 1/2 years and as a Capitalist I'm just trying to take advantage of opportunities when they arise. To sit by the side, complaining, wishing failure on this Country is more than foolish.

5-0

there are so many people out there like this guy. bitter that the last 2 democratic presidents have enjoyed massive gains in equities and have more than likely missed the boat both times around.

[8timechamps]

Let's not turn this thread political please. Otherwise, it'll have to be moved to Obamaland.

[Bourbon St Sooner]

Man, all it took was one Obama reference for this thread to go to pot.

Let's get back on track with guesses on the payroll report Friday. I'll go +100,000 jobs.

[SanJoaquinSooner]

Man, all it took was one Obama reference for this thread to go to pot.

Let's get back on track with guesses on the payroll report Friday. I'll go +100,000 jobs.


The take I heard was:


If it's really low, like 70,000, it's good for the bulls because the trend is more clearly down making QE3 morely likely.

If it's 200,000 or above, it's good for the bulls because the bearish trend is snapped.

If it's a tweener, say, 120 to 170 thousand, then it's good for the bears.

[cleller]

I doubt that the traders that really move the market give much consideration to who is president. They only focus on whether or not a situation looks favorable for the next few days or weeks.

I've felt pessimistic for ahwile. The State Street Investor Confidense Index is also very low. That must mean the market is due a rally.

http://statestreetglobalmarkets.com/research/pdf/historicaldata.pdf

[SanJoaquinSooner]

gotta get up at 5:30 A.M. on the west coast for the jobs report

[SanJoaquinSooner]

115,000

[Dan Thompson]

If you had a stop loss on Apple a couple of months ago when the mystery buyer took Apple way, you would have been out of the stock as it returned to it's previous trading range in just a few minutes.

[dwarthog]

Anyone buying now or do you believe this market is still looking for a bottom?

[pphilfran]

I think Europe is going to drag us all down again....

[SanJoaquinSooner]

Anyone buying now or do you believe this market is still looking for a bottom?

Near the bottom is as good as any time to buy.

[8timechamps]

I think Europe is going to drag us all down again....

Yep, The Greece effect will not go away anytime soon either. Thought some good news from the home-builders would give us a little kick, but not enough to make much difference. Not a good May.

[hawaii 5-0]

Anyone buying now or do you believe this market is still looking for a bottom?


I'm very curious about Facebook's IPO.

5-0

[pphilfran]

I'm very curious about Facebook's IPO.

5-0

I say it opens big and slowly dies over the next five years when the fad wears off and kids move elsewhere...

[8timechamps]

I say it opens big and slowly dies over the next five years when the fad wears off and kids move elsewhere...

As you pointed out, it's already been shown that once Facebook reaches 50% penetration in a countries population, membership begins to decline. The western world usage of Facebook has been in a constant decline over the past couple of years. Not a huge decline, but a decline nonetheless. All of Facebook's growth has been international. That's a troubling issue for an investor. It certainly points to the 'fad effect'.

I may be wrong, but other than buying early and selling shortly thereafter, I wouldn't touch Facebook.

[I Am Right]

Nope, buying!!

[SanJoaquinSooner]

As you pointed out, it's already been shown that once Facebook reaches 50% penetration in a countries population, membership begins to decline. The western world usage of Facebook has been in a constant decline over the past couple of years. Not a huge decline, but a decline nonetheless. All of Facebook's growth has been international. That's a troubling issue for an investor. It certainly points to the 'fad effect'.

I may be wrong, but other than buying early and selling shortly thereafter, I wouldn't touch Facebook.

That's a good point about growth in membership -- and that it could be like the popularity of a bar and lose favor when something else comes along.

But what I've heard in favor of Facebook as an investment, is that business has barely scratched the surface in use of social media to interact with consumers. So the future lies in much more than old friends keeping in touch, etc.

[8timechamps]

That's a good point about growth in membership -- and that it could be like the popularity of a bar and lose favor when something else comes along.

But what I've heard in favor of Facebook as an investment, is that business has barely scratched the surface in use of social media to interact with consumers. So the future lies in much more than old friends keeping in touch, etc.

The big question is where will social media go? It's clearly here to stay, but what will make it continue to be interesting...that's where the growth will come from. Facebook relies on advertising dollars to be profitable, I just wonder what will happen with the capital they raise from the IPO. If nothing else, it's going to be interesting to watch.

The big positive Facebook has, is that so much of the youth (worldwide) is plugged-in, so there future market is already established.

[cleller]

Nope, buying!!

Its May! A true contrarian.

[8timechamps]

That's a good point about growth in membership -- and that it could be like the popularity of a bar and lose favor when something else comes along.

But what I've heard in favor of Facebook as an investment, is that business has barely scratched the surface in use of social media to interact with consumers. So the future lies in much more than old friends keeping in touch, etc.

Meant to post this earlier, but this was an interesting article from Forbes today: LINK (http://www.forbes.com/sites/markevans/2012/05/16/warning-stay-away-from-the-facebook-ipo/)

Of course, it's reasons NOT to buy Facebook. :D

[SanJoaquinSooner]

Meant to post this earlier, but this was an interesting article from Forbes today: LINK (http://www.forbes.com/sites/markevans/2012/05/16/warning-stay-away-from-the-facebook-ipo/)

Of course, it's reasons NOT to buy Facebook. :D

Cramer is saying don't pay IPO prices for it. It will be a good investment, but you'll be able to get it cheaper.

[Killerbees]

Cramer is an idiot.

I would be cautious from here. I am getting stopped out of a lot of trades, last time it was happening we had a nice sell off. Not saying that its gonna happen again but there is some significant weakness. I am out until movement accelerates down or we show some recovery. I have found i trade much better if i just trade trending markets.

Silver and gold are at a possible bottom here. The COT shows we should be at a bottom and there is a huge divergence in accum/dist line and price which signals a big upward price move coming. However dollar is showing strength so that points, against all odds, that it is still seen as the primary risk-off trade. So prices could break down farther. I know that if silver hits 26 and gold hits 1480 I am a buyer. Right now if it fails to penetrate down to those levels then we will most likely be stuck for several months, at which point i will start buying in july.

With our large banks so over exposed to the EU with derivitaves, JP Morgan alone carries 70 trillion worth, anything can happen when the EU breaks apart. China is in some major troubles as well. So we have a very volatile situation that could make major moves in every market. I would tread carefully.

I highly recommend steering clear of FB ipo. It is WAY overpriced, you will be able to buy much cheaper down the line. I think these guys are pretty smart, they control when to go public and they dragged their feet for years then all of a sudden rush to get the ipo. I think they see the writing on the wall and are going to cash in. They are going to have to come up with a way to get more money, either from customers or advertisers. I find the first to be unlikely and the second to be difficult given american and european market saturation.

This year has been very good to me so far, after a slow start, i am up big. One thing i have learned is to stop trying and predict the market. Just watch it and do what it tells you to do. I see no reason to doubt the bull market in silver or gold, we are in a major correction and i am not predicting when they will take off again just that they will and under what conditions i will become a buyer. I dont know if the djia or s&p is going lower or higher but i am out again right now because thats where the market is telling me to be. Last 8 trades i made in the last week or so have all gotten stopped out at 2% to 1.5% loss. I have had a 10% or so drawdown in my total. Market tends to rise going into elections so if i had to guess i would say that this is just a minor correction. A lot of strong stocks are rolling over though, and thats what is causing my bad trades.

[cleller]

Still concerned the combination of the earlier run-up, Europe (Greece and Spain esp), summer season, and a general weariness could turn this into a bigger sell-off.

I've got my shopping list, but am waiting for something. Don't know what yet.

[SanJoaquinSooner]

SanJoaquinSooner

Cramer is saying don't pay IPO prices for it. It will be a good investment, but you'll be able to get it cheaper.


Cramer is an idiot.
I would be cautious from here. I am getting stopped out of a lot of trades, last time it was happening we had a nice sell off. Not saying that its gonna happen again but there is some significant weakness. I am out until movement accelerates down or we show some recovery. I have found i trade much better if i just trade trending markets.

Silver and gold are at a possible bottom here. The COT shows we should be at a bottom and there is a huge divergence in accum/dist line and price which signals a big upward price move coming. However dollar is showing strength so that points, against all odds, that it is still seen as the primary risk-off trade. So prices could break down farther. I know that if silver hits 26 and gold hits 1480 I am a buyer. Right now if it fails to penetrate down to those levels then we will most likely be stuck for several months, at which point i will start buying in july.

With our large banks so over exposed to the EU with derivitaves, JP Morgan alone carries 70 trillion worth, anything can happen when the EU breaks apart. China is in some major troubles as well. So we have a very volatile situation that could make major moves in every market. I would tread carefully.

I highly recommend steering clear of FB ipo. It is WAY overpriced, you will be able to buy much cheaper down the line. I think these guys are pretty smart, they control when to go public and they dragged their feet for years then all of a sudden rush to get the ipo. I think they see the writing on the wall and are going to cash in. They are going to have to come up with a way to get more money, either from customers or advertisers. I find the first to be unlikely and the second to be difficult given american and european market saturation.

This year has been very good to me so far, after a slow start, i am up big. One thing i have learned is to stop trying and predict the market. Just watch it and do what it tells you to do. I see no reason to doubt the bull market in silver or gold, we are in a major correction and i am not predicting when they will take off again just that they will and under what conditions i will become a buyer. I dont know if the djia or s&p is going lower or higher but i am out again right now because thats where the market is telling me to be. Last 8 trades i made in the last week or so have all gotten stopped out at 2% to 1.5% loss. I have had a 10% or so drawdown in my total. Market tends to rise going into elections so if i had to guess i would say that this is just a minor correction. A lot of strong stocks are rolling over though, and thats what is causing my bad trades.


Killer bees, if Cramer is an idiot, what are you?

[Killerbees]

I guess i wasn't clear. I don't recommend FB at all. They have some big problems to overcome. If however you really believe otherwise and want to buy them then you should wait as the price will fall from extremely overvalued to just overvalued. On that respect Cramer is right, on the other hand he is just as wrong stating that FB is a good investment.

Cramer has been outed as a liar and he has been outed taking positions opposite of what he states publicly. I thought jon stewart settled this long ago.

Cramer is still an idiot.

After 6600 calls since 2010 he is 2% to -2% against the S&P. After you take out taxes and fees you would be way ahead just investing in a S&P index fund, and you wouldnt have had to listen to the rabid barking on tv.

[Position Limit]

yes cramer is an idiot. he specialized in blowing up hedge funds back when free money was abundant. easy, easy money back then. ridiculous edge. very little market regulation back then. he's a total idiot. now he has a circus act on cnbc and the unsuspecting public gets their advice from him. is this a great country or what?

[jkjsooner]

I say it opens big and slowly dies over the next five years when the fad wears off and kids move elsewhere...

I was going to post a thread on this very topic. This seems to be a good candidate for a company that goes from $100 billion to almost worthless.

Given, my wife seems to be a Facebook zombie at times but it has all the hallmarks of a fad.

Positives:

1. Really good at connecting people who have lost their connections a long time ago.
2. Has the critical mass of users.

Negatives:

1. People could easily just tire of it. Maybe they still use it for positive #1 above but much less frequently.
2. Young people could move away from it as they tire of using the same thing their grandparents use.
3. Other than the trouble of moving the critical mass to another platform, there is nothing that really ties people to Facebook. We have no money invested in it. There is very little cost associated with moving away from it. It's not like getting tied to an operating system.

Given, negative #3 also applies to Google.

[hawaii 5-0]

With just a little exposure I got me some FB at $38.

We'll see......... so far it's up $2.


5-0

[Killerbees]

Think you bought facebook think again (http://www.zerohedge.com/news/think-you-bought-facebook-think-again)

[hawaii 5-0]

A broker statement with "Order Filled" and later a confirmation with "bought" seems to work for me.

As noted above, my exposure to the risk is minimal. One of those little 'fun' purchases. < 0.5%

Facebook news sure is active. With their mega-$$$$$$ they can buy a lot of smaller technology companies if they choose.


5-0

[8timechamps]

I was going to post a thread on this very topic. This seems to be a good candidate for a company that goes from $100 billion to almost worthless.

Given, my wife seems to be a Facebook zombie at times but it has all the hallmarks of a fad.

Positives:

1. Really good at connecting people who have lost their connections a long time ago.
2. Has the critical mass of users.

Negatives:

1. People could easily just tire of it. Maybe they still use it for positive #1 above but much less frequently.
2. Young people could move away from it as they tire of using the same thing their grandparents use.
3. Other than the trouble of moving the critical mass to another platform, there is nothing that really ties people to Facebook. We have no money invested in it. There is very little cost associated with moving away from it. It's not like getting tied to an operating system.

Given, negative #3 also applies to Google.

See: GroupOn

[Blue]

Very good article http://www.hussman.net/wmc/wmc120514.htm

He must hate prosperity and Obama though.

[cleller]

Very good article http://www.hussman.net/wmc/wmc120514.htm

He must hate prosperity and Obama though.

Interesting that he titled that "Dancing at the Edge of a Cliff"

Bernanke also recently made reference to an economic cliff:

http://thehill.com/blogs/on-the-money/801-economy/213351-fed-boss-warns-of-massive-fiscal-cliff

[SanJoaquinSooner]

I was going to post a thread on this very topic. This seems to be a good candidate for a company that goes from $100 billion to almost worthless.

Given, my wife seems to be a Facebook zombie at times but it has all the hallmarks of a fad.

Positives:

1. Really good at connecting people who have lost their connections a long time ago.
2. Has the critical mass of users.

Negatives:

1. People could easily just tire of it. Maybe they still use it for positive #1 above but much less frequently.
2. Young people could move away from it as they tire of using the same thing their grandparents use.
3. Other than the trouble of moving the critical mass to another platform, there is nothing that really ties people to Facebook. We have no money invested in it. There is very little cost associated with moving away from it. It's not like getting tied to an operating system.

Given, negative #3 also applies to Google.


At least one other positive, and a big one I think, is the CEO is Mark Zuckerberg. He has been a genius all along the way in Facebook evolution. He may be another Steve Jobs in that respect. When Jobs reclaimed CEO status at Apple, they had low single digit market share with an overpriced personal computer that software developers were abandoning. Jobs did the music/Ipod deal and of course the iphone. Ten years ago, the question was if Apple would go to zero. And now it has the largest market cap of all companies.

I've got to believe that Facebook will evolve beyond our present conception. The interaction between business and consumer via Facebook has barely scratched the surface.

[pphilfran]

I am on the opposite side of the fence....I think it is more fad than function and will be replaced by the next fad somewhere down the road...

i would be shorting before I went long on the stock...

But I have been wrong before...

[hawaii 5-0]

I know a woman who bought Apple at $13. It's well over $500 now.

Facebook hasn't yet touched the Chinese market.


Just saying.

5-0

[pphilfran]

I know a woman who bought Apple at $13. It's well over $500 now.

Facebook hasn't yet touched the Chinese market.


Just saying.

5-0

It is a completely different business than Apple...the metrics to measure Facebook performance don't really even exist since it is so radically different....

Who is to say that Facebook will be the choice of the Chinese people (if it is allowed without severe restrictions)

It has a market cap bigger than...it is about the 25th largest company in the US

Amazon
McDonalds
Pepsico
Cisco
Anheuser-Busch
Abbot Labs]
United Tech
UPS
Goldman Sachs
Abbott Labs
3M
Cat


Now the company will have to report quarterly and will have to answer to shareholders...

It is a whole different animal to operate when a company goes public...

I am staying away...far away...but, like I said...I have been wrong before...

From the BBC http://www.bbc.co.uk/news/business-18105608

Revenue growth

The social networking site has transformed the way in which hundreds of millions of people around the world communicate. It is also transforming the way companies advertise to existing and potential customers.

But Facebook's 900 million users helped the company generate just $1bn in profit last year, and there are concerns about its ability to grow profits in the future.

For while it holds a depth of personal information advertisers dream about, Facebook only generates about $5 a year per user.

This has led a number of commentators to question the company's valuation.

"Facebook will need to generate annual revenue of $30bn-$40bn in order to justify the likely valuation of the business," said Victor Basta at Magister Advisors.

"This is a tenfold increase over the revenues that it currently generates. The question is 'where from?'".

"Number one, we don't know what the guts and the balance sheet of the company looks like yet so that's a big red flag for us. We want to understand the business before we tell people to invest."

[pphilfran]

If you buy keep your exposure low...treat the money like Vegas money....

[pphilfran]

This is from NPR

http://www.npr.org/blogs/money/2012/05/16/150957728/how-facebook-can-live-up-to-the-hype

Facebook will be valued at about $100 billion when it goes public this week. What would it take for that valuation to be justified?

As we noted yesterday, the value of a typical big, public company is 15 times the company's annual profit. So a company valued at $30 billion would typically have annual profits of $2 billion.

Facebook will be valued at 100 times its current annual profits. That's because investors expect the company's profits to go through the roof in the coming years.

For Facebook to achieve that kind of growth, some combination of two things will need to happen: The company will need to add more users, and it will need to get more revenue out of each user it has.

The company has been doing both over the past few years, though growth has been flagging recently.


For Facebook to live up to its valuation, that growth will need to accelerate. If we assume profit margins of 33 percent (lower than the company's current margins, but higher than those of most companies), here's how much revenue-per-user the company would need under different scenarios:

In other words, even if Facebook grows to include nearly half the people on the planet, it will still also need to increase the amount of money it gets for each user by nearly 50 percent.

[cleller]

This part of pphil's post stuck out to me:

"Facebook will need to generate annual revenue of $30bn-$40bn in order to justify the likely valuation of the business," said Victor Basta at Magister Advisors.

"This is a tenfold increase over the revenues that it currently generates. The question is 'where from?'".

Thats a big jump. I read or heard this week that GM was stopping its advertising on Facebook. Not profitable. Here's one magazine's take on the implications of that.

http://www.pcworld.com/article/255671/general_motors_unfriending_of_facebook_ads_spells_ trouble_for_users.html

[Sooner5030]

http://data245.cnbc.com/quotes/FB/tab/1

Facebook? WTF.....they have a market cap of $81.7 billion yet only have $6.63 billion in assets, $1.43 billion of liabilities...resulting in $4.28 billion in common equity. That and they had $3.7 billion in revenue (2011) which resulted in $668 million net income.

P/E of 122.4.

How f-ing stupid are people? $81.7 billion in stock value is chasing the $4 billion delta between assets/liabilities. Hope those new revenue streams are the equivalent of unicorns shiating golden skittles.

[8timechamps]

This part of pphil's post stuck out to me:

"Facebook will need to generate annual revenue of $30bn-$40bn in order to justify the likely valuation of the business," said Victor Basta at Magister Advisors.

"This is a tenfold increase over the revenues that it currently generates. The question is 'where from?'".

Thats a big jump. I read or heard this week that GM was stopping its advertising on Facebook. Not profitable. Here's one magazine's take on the implications of that.

http://www.pcworld.com/article/255671/general_motors_unfriending_of_facebook_ads_spells_ trouble_for_users.html




And the biggest reason Apple/Microsoft aren't Facebook...the product/service they provide vs the product/service Facebook provides. Apples/Oranges.

Here is my personal concern as it relates to Facebook. Revenue will be so dependent on advertising dollars. There will be times when the advertising dollars will cease to grow, and eventually fall. What will FB do to keep the bottom lined balanced for shareholders? There's only one thing they can do: Solicit directly from their users.

Example: Mr. Pphilfran, you are a valued member of FB, and we want to offer you the enhanced (premium) experience. You'll have the ability to make sure your posts are shown first in the New Feed, as well as extra benefits as a premium user, all of this can be done for less than 25 cents a day!,Just choose to pay for 3 months, with an option to renew after the time expires, OR pay $85.00 now <-----your best deal!, for a one year premium experience."

It'll be here before you know it.

[cleller]

What great timing Facebook has, also. Coming out in May, at the end of a bull run-up, while many are not finding much good news anywhere....Nothing like setting sail in the doldrums.

[dwarthog]

Looks like the Tulip trading post IPO, oops I mean FB trading post IPO isn't doing quite so well. Wonder where bottom will be.

[pphilfran]

The old tulip bubble...I like it...

[SanJoaquinSooner]

I guess there's a lot of y'all that will retire rich by shorting FB and watching to go to zero.

[pphilfran]

I guess there's a lot of y'all that will retire rich by shorting FB and watching to go to zero.

I doubt if it goes to zero...but I think it will have a hard time justifying a PE of 100

If it grows by 40% a year it will take till 2017 to get a PE below 20...and that assumes no stock price increase (stays at 38)

[pphilfran]

SJ, did you partake?

[8timechamps]

I'd be surprised if this thing ever gets back to par.

Typical .com trade behavior, IPO run-up followed by quick dumping in the secondary market.

[SanJoaquinSooner]

SJ, did you partake?

No, I don't buy individual stocks - just mutual funds. But I think FB's presence will continue to grow, in ways beyond interaction with friends and family.

[pphilfran]

No, I don't buy individual stocks - just mutual funds. But I think FB's presence will continue to grow, in ways beyond interaction with friends and family.

It will damn sure need to...something like 10 fold in 5 years to justify the PE...

[hawaii 5-0]

Apple up $ 30 today.

Sweet.

5-0

[cleller]

One more thought on Facebook. Steve Jobs, Bill Gates to a lesser degree = This guy looks like he's going places.

Mark Zuckerberg?

[I Am Right]

Buying, just not Faceflop

[8timechamps]

And the slide continues...

FB ▼3.03 $31.00

Most people didn't even know that the lead underwriters for FB (Goldman, JP Morgan and Morgan Stanley) cut earnings estimates pre-IPO, and only a few institutional investors were notified. The good news is that if your mutual fund was one of the lucky few that knew, they limited exposure. The bad news, not everyone knew.

[colleyvillesooner]

And the slide continues...

FB ▼3.03 $31.00

Most people didn't even know that the lead underwriters for FB (Goldman, JP Morgan and Morgan Stanley) cut earnings estimates pre-IPO, and only a few institutional investors were notified. The good news is that if your mutual fund was one of the lucky few that knew, they limited exposure. The bad news, not everyone knew.

More on the NASDAQ fiasco and how it affected today:

http://www.cnbc.com/id/47520037

[Chuck Bao]

And the slide continues...

FB ▼3.03 $31.00

Most people didn't even know that the lead underwriters for FB (Goldman, JP Morgan and Morgan Stanley) cut earnings estimates pre-IPO, and only a few institutional investors were notified. The good news is that if your mutual fund was one of the lucky few that knew, they limited exposure. The bad news, not everyone knew.

I'm appalled, if this is true. This is just another indication of how corrupt Wall Street is.

As head of research for various brokerage firms in Thailand, I made damn sure that:

1) A research report clearly explained EVERY change in earnings estimates and those reports were published and distributed to ALL clients at the same time.

2) My analysts were always extremely careful in views expressed in the reports, especially not to suggest leaning towards a future upgrade or downgrade. They either changed their opinion/earnings forecasts or they didn't backed by solid reasoning.

3) I would never allow the investment banking side to influence my analysts in terms of earnings or fair value estimates. And, I got support from management and the board of directors (who I reported directly to) even if we lost the investment banking deal because we had a very good track record in getting it right and essentially enriching or protecting our clients.

4) I made sure that there was a Chinese Wall between research and investment banking departments. I was over that wall and attended all investment banking meetings dealing with IPOs. Everything was channeled through me so there could be no undue influence on the analysts and their opinions.

5) I made sure that my analysts got the latest earnings guidance from the company prior to producing their reports, the IPO and listing. There is a very, very strict blackout period just before the IPO and listing, but in my experience earnings estimates really shouldn't change that much in the month or at most two months during that period. Otherwise it is just bad information or the analysts are not very good at what they should be doing.

Someone should be fired or at least discredited if there are earnings downgrades just following a major IPO like FB.

[dwarthog]

There is more here than "meets the eye" so to speak.

http://finance.yahoo.com/blogs/daily-ticker/facebook-bankers-secretly-cut-facebook-revenue-estimates-middle-133648905.html



According to Reuters, the underwriter analysts cut their estimates after Facebook issued an amended IPO prospectus in which the company mentioned, vaguely, that recent trends in which users were growing faster than revenue had continued into the second quarter.

To those experienced in reading financial statements, this language was unnerving, because its mere existence could have been taken to mean that Facebook's revenue in the second quarter wasn't coming in as strong as Facebook had hoped (why else would the language have suddenly been added at the 11th hour?)

To those who aren't experienced at reading filings, however, the real meaning of this language could easily have been missed. Facebook's users have been growing faster than revenue for a while, so why would it be news that this was continuing?

In response to the amendment, meanwhile, all three lead underwriter analysts suddenly cut their estimates.

Now, regardless of why the analysts cut their estimates (and this will be important), estimate cuts of any sort are material information, so if this news was given to some institutional clients, it also obviously should have been given to everyone.

That's the first problem.

The second potential question and problem is whether Facebook told the underwriters to cut their estimates--either by directly telling them to, or, more likely, by "suggesting" that the analysts might want to revisit their estimates in light of the new disclosures in the prospectus.

If there was any communication at all between Facebook and its underwriters regarding the analysts' estimates, Facebook will likely be on the hook for this, too.

[Chuck Bao]

There is more here than "meets the eye" so to speak.

http://finance.yahoo.com/blogs/daily-ticker/facebook-bankers-secretly-cut-facebook-revenue-estimates-middle-133648905.html

This smells. The underwriters and their lawyers write the prospectus. I assume the underwriters and research are in a blackout still now. So before the IPO, there was an amended prospectus?

The prospectus and the amended prospectus SHOULD have been public information available through the stock exchange where the shares would be/are traded.

US securities rules are just baffling to me. If any of the Thai IPOs were sold to US investors, we would have to abide by US rules. I would have to get my research reports vetted by a US lawyer and they would make us 1) not post our report online, 2) number our printed reports and detail who they were sent to with a huge disclaimer that they couldn't be copied in any fashion, and 3) completely water the whole thing down without expressing any real opinion.

Maybe it is just poor journalism, but why in the hell would anyone pay attention to the underwriter analysts mentioned in that article unless they mean the supposedly independent research department of the brokerage firm underwriting the deal. Dammit has the supposedly Chinese Wall completely collapsed?

Wall Street is very corrupt. The SEC rules aren't helping matters, in my opinion. They are making it much worse.

[8timechamps]

I'm appalled, if this is true. This is just another indication of how corrupt Wall Street is.

As head of research for various brokerage firms in Thailand, I made damn sure that:

1) A research report clearly explained EVERY change in earnings estimates and those reports were published and distributed to ALL clients at the same time.

2) My analysts were always extremely careful in views expressed in the reports, especially not to suggest leaning towards a future upgrade or downgrade. They either changed their opinion/earnings forecasts or they didn't backed by solid reasoning.

3) I would never allow the investment banking side to influence my analysts in terms of earnings or fair value estimates. And, I got support from management and the board of directors (who I reported directly to) even if we lost the investment banking deal because we had a very good track record in getting it right and essentially enriching or protecting our clients.

4) I made sure that there was a Chinese Wall between research and investment banking departments. I was over that wall and attended all investment banking meetings dealing with IPOs. Everything was channeled through me so there could be no undue influence on the analysts and their opinions.

5) I made sure that my analysts got the latest earnings guidance from the company prior to producing their reports, the IPO and listing. There is a very, very strict blackout period just before the IPO and listing, but in my experience earnings estimates really shouldn't change that much in the month or at most two months during that period. Otherwise it is just bad information or the analysts are not very good at what they should be doing.

Someone should be fired or at least discredited if there are earnings downgrades just following a major IPO like FB.

Unfortunately, it's true. There are regulations in place for this very thing, and I would not be surprised if the underwriters face legal action over this. It's criminal!

I've known several researchers and analysts that were very shady folks. I'm sure there are more good (like you) than bad, but it's just disgusting to me that this is still going on. There was a clear intent to give selected managers a 'heads-up' when this went down. To me, that's no different than insider trading, and someone should face jail time over this.

As an independent broker, getting IPO shares is very difficult but not impossible. Fortunately, I steered clear of the FB IPO (although I had a lot of clients that wanted in).

[8timechamps]

Just read this:


With Facebook shares all but impossible to sell short, investors have sought out almost any related vehicle to bet against the social network. Over the past three trading days, prices plunged on two closed-end funds that owned pre-IPO shares. Firsthand Technology Value Fund and GSV Capital Corp both dropped more than 25 percent even though their Facebook holdings make up only a small fraction of assets.

It appears that GSV and FTV were not in the know. This will probably get worse, and I'm guessing FB will free-fall until something substantial can prop it up.

[Sooner5030]

based on their 2011 financial statements I'm not sure why anyone would think that much stock value was reasonable considering their net income and book equity.........but then again I was an accountantant in a prior life and I never fully subscribed to the finance/economics disciplines/beliefs. Ever since I can remember they've been leaning on the idea that potential "revenue growth" trumps everything else. Sometimes they are right (google) but why take the risk?

[Chuck Bao]

I tried to run a tight ship in Thailand. The times I spent with the Wall Street brokers just reinforced my belief that they are just a bunch of shysters, I don't want this thread moved to the political forum, but the Sec of Treasury is the first clown out of a carload of clowns. Occupy Wall Street!

[Chuck Bao]

based on their 2011 financial statements I'm not sure why anyone would think that much stock value was reasonable considering their net income and book equity.........but then again I was an accountantant in a prior life and I never fully subscribed to the finance/economics disciplines/beliefs. Ever since I can remember they've been leaning on the idea that potential "revenue growth" trumps everything else. Sometimes they are right (google) but why take the risk?

Future earnings is exactly why analysts, who should get a lot of face time with management, should mater. When everything is rising, everyone and their dogs are heroes, but that is not a good analyst. Whistle blowers are not ever really rewarded.

[Sooner5030]

Future earnings is exactly why analysts, who should get a lot of face time with management, should mater. When everything is rising, everyone and their dogs are heroes, but that is not a good analyst. Whistle blowers are not ever really rewarded.

good point. The problem I have as that their revenues and earnings with respect to their balance sheet is pretty good. Usually when I see a P/E of +100 it means bad times and they can turn it around. FB doesn't need to turn anything around.....they are fairly profitable. It was just priced too high....imo. But then again I am not a finance guy.

[8timechamps]

based on their 2011 financial statements I'm not sure why anyone would think that much stock value was reasonable considering their net income and book equity.........but then again I was an accountantant in a prior life and I never fully subscribed to the finance/economics disciplines/beliefs. Ever since I can remember they've been leaning on the idea that potential "revenue growth" trumps everything else. Sometimes they are right (google) but why take the risk?


Yeah, you're thinking way too logically for Wall Street. Potential revenue growth is king, and even though some of us learned a very valuable, albeit painful, lesson in 2000/2001, it appears there is no shortage of insanity (or as Chuck put it "shysters") still alive and well on Wall Street.

[8timechamps]

good point. The problem I have as that their revenues and earnings with respect to their balance sheet is pretty good. Usually when I see a P/E of +100 it means bad times and they can turn it around. FB doesn't need to turn anything around.....they are fairly profitable. It was just priced too high....imo. But then again I am not a finance guy.

That's the problem...there are very highly paid money manager that should have seen that FB was over-priced, that ignored it. Instead, they used the 'first-in, first-out' philosophy, and watched it fall off a cliff. And now we are learning that some of them knew ahead of time the cliff was coming up, while others drove right off the edge.

[cleller]

Hey 8Timer-

Would you describe the typical Wall Streeter as having a an outlook on the market that was mostly focused on what will happen in the next few minutes, hours or days? The "next few days" representing the long end of their focus?

[Chuck Bao]

Unfortunately, it's true. There are regulations in place for this very thing, and I would not be surprised if the underwriters face legal action over this. It's criminal!

I've known several researchers and analysts that were very shady folks. I'm sure there are more good (like you) than bad, but it's just disgusting to me that this is still going on. There was a clear intent to give selected managers a 'heads-up' when this went down. To me, that's no different than insider trading, and someone should face jail time over this.

As an independent broker, getting IPO shares is very difficult but not impossible. Fortunately, I steered clear of the FB IPO (although I had a lot of clients that wanted in).

It is not only disgusting, its millions and billions of disgusting. I get even more incensed when I think that hard-earned money and life savings are being lost in these shenanigans.

[SanJoaquinSooner]

Seems like there was lots of conversation/predictions about May being a pull-back month, and that has certainly been the case. The S&P 500 is about 8% off its April 2 high (high for the year). From this May pull back, I expect the trend to be upward as the election approaches and from whatever happens in Europe, the markets will have somewhat of a clearer picture.

[pphilfran]

I think Europe is going to be a drag on the economy for months....

[Killerbees]

I think any illegal doings should be prosecuted, but if recent history is any indication it won't be. I mean the MF Global disaster should have landed several people in jail by now, they outright stole a lot of money.

With that, i don't feel bad for people losing their *** on FB. The revised info was public info. Anyone could have read through it and come to the same conclusion, I did. In fact if you were going to be buying you it was your responsibility to read it. If you have a fund that invested in it then you have clear evidence that you should no longer trust your money to the idiots running that fund.

Earlier in this thread there was a post that clearly spelled out how outrageously over valued FB is. That information was available to anyone reading the IPO prospectus.

[pphilfran]

I think any illegal doings should be prosecuted, but if recent history is any indication it won't be. I mean the MF Global disaster should have landed several people in jail by now, they outright stole a lot of money.

With that, i don't feel bad for people losing their *** on FB. The revised info was public info. Anyone could have read through it and come to the same conclusion, I did. In fact if you were going to be buying you it was your responsibility to read it. If you have a fund that invested in it then you have clear evidence that you should no longer trust your money to the idiots running that fund.

Earlier in this thread there was a post that clearly spelled out how outrageously over valued FB is. That information was available to anyone reading the IPO prospectus.

I agree...several people posted how overvalued it was...

[8timechamps]

Hey 8Timer-

Would you describe the typical Wall Streeter as having a an outlook on the market that was mostly focused on what will happen in the next few minutes, hours or days? The "next few days" representing the long end of their focus?

Sorry cleller, just saw this.

My personal interaction with 'typical' Wall Streeters is that their number one focus in on the future income they make. Seriously. I talk to a trading desk on the NYSE almost daily, and the guy I've gotten to know over the years, that I deal with most of the time is always telling me how much money he's expecting to make. He's unbelievably proficient at his job, and I'm very happy to have him on my side, but that's his mindset. Of course he's a floor trader, so he's not getting paid to research financials.

I would say that the average Wall Street Analyst will focus a large part on future growth. How far out in the future is usually a function of what their discipline is. A manager of a risky tech fund may only look quarter to quarter (with an eye on the next 12 months), while a manager of a Large Cap Growth fund or even Income & Growth will use parameters that allow for a longer timeframe.

[jkjsooner]

I guess there's a lot of y'all that will retire rich by shorting FB and watching to go to zero.

Problem is the old saying, "Markets can remain irrational longer than you can remain solvent."

[Chuck Bao]

I think any illegal doings should be prosecuted, but if recent history is any indication it won't be. I mean the MF Global disaster should have landed several people in jail by now, they outright stole a lot of money.

With that, i don't feel bad for people losing their *** on FB. The revised info was public info. Anyone could have read through it and come to the same conclusion, I did. In fact if you were going to be buying you it was your responsibility to read it. If you have a fund that invested in it then you have clear evidence that you should no longer trust your money to the idiots running that fund.

Earlier in this thread there was a post that clearly spelled out how outrageously over valued FB is. That information was available to anyone reading the IPO prospectus.

I like your thinking a lot. But, I have some questions since I've been outside the industry for a couple of years.

What do you mean by the term "public info"? Did the stock exchange post the revised Facebook prospectus online before the IPO? Previously, my greatest criticism of US SEC regulations was that the information flow was designed to protect the small investor by not giving them any information at all, as it could be misleading. Correct me if I am wrong, but more information should be better for everyone involved, not just channeled by printed versions through a few thousand privileged clients before the IPO.

Dammit, I think you are right to assume your fund manager should have had access to this info pre-IPO and chose poorly.

And, I never understood the whole point of the required blackout period for research reports for the underwriters and sub-underwriters involved. Every major deal involved every major brokerage firm, even those brought in last minute as sub-underwriters and roped in under the SEC requirements.

A delay in a listing is not unusual, so a revised/updated prospectus isn't really either. But if it contains fundamentally different information, something is definitely wrong.

In Thailand, the Stock Exchange of Thailand posts the prospectus after the IPO and just prior to listing. So, you know someone should be blamed for choosing poorly, even if all research is silenced by that stupid black-out requirement.

[Killerbees]

The filing itself was available. What has people in a tizzy is that some banks did not reveal their own analysts revised projections except to select customers before the ipo. Also the underwriters themselves revised their estimates downward, while trying to get buyers, while other desks in the same institution were feeding the revised estimates to certain clients. Not illegal from what I have read.

I don't know why underwriters cannot share their own research. Makes no sense to me. I am sure there must be some kind of reason, then again maybe not.

Yes, if you go back to that link earlier, the author did some basic math and comes to the conclusion that to justify the ipo price fb would have to have everyone who uses the internet as a member and still they would have to find a way to generate a lot more revenue per user. Not likely.

Edit. Ok I looked back and didn't see the link posted I was referring to, so I must have seen it somewhere else. So I will basically post what it said, drawing from FB sec filings.


2009 Rev: $777 million
2010 Rev: $2 billion
2011 Rev: $3.8 billion
Q1 2012 Rev: $1 billion

Take a guess at the profit by giving the benefit of the doubt and say their margin is 25% which is comparable to Google.

That gives us
2011 Profit: 950 million

at the time the guess was a $35 IPO price with 2.74 billion shares for an approx market cap of 95.9 billion.
they have about 900 million users. Which works out to 1.06 profit per user.
There are 2.3 billion current internet users worldwide per worldinternetstats.

So...They would have an P/E of about 105.
Googles current P/E is about 18, so to apply that P/E to FB they would need to generate about 5.3 Billion dollars or a 550% increase in profits.
That would mean they need 5 billion users, or double what is currently available online. That is obviously not possible. So if they could get 75% of the total internet users which is a stretch, then they would have 1.8 billion in profit. To get the rest they would need to raise the per user profit from 1.06 to 3.06 per user, or triple it.

So you can see that none of those are probably going to happen. In fact with those numbers they should be priced around 5.20 a share. Thats giving them a generous 15x yearly earnings. Google is running at 8x.

Furthermore if you look at the business model you can see further weakness.

They do not generate revenue from mobile users. Mobile usage is growing rapidly.

They are very dependent on some big game makers like Zenga (sp?), if they decide to go on their own or roll out their products to competitors then FB is in real trouble.

The real numbers indicate that the revenue per US user is 10x what it is for an international user, unfortunately for FB that is the only growth left.

They get compared to google but in reality, they have invented nothing since FB was started. Google has become the powerhouse it is because they make smart buys, develop useful software and apps. What has FB developed that is useful? Apart from the original concept, nothing. They can't even do what they do the best, hence twitter and foursquare, which only exist to do what FB can already do, only better.

The ad click through rate is terrible on FB. This will lead to a loss of advertisers, which is already happening with GM pulling out.

The majority of FB usage is the younger crowd, which makes it trendy. What happens when teens flock to a new trend?

Now this is my own thinking here but if you notice FB delayed for years going public. Then late last year there was a sudden rush to go public. Why? Because they wanted to wait until they squeezed most of the money from it then go public and cash in. This you can see by some big insiders selling like Zuck himself dumping 38 million shares on open alone. Now all the regular peons that work for FB are locked out from doing this for 6 months, but not the big wigs like Zuck. They are laughing all the way to the bank on this one. They saw this happening

http://static8.businessinsider.com/image/4f95c5c5ecad045f5400005a-960/facebook-revenue-growth-april-2012.jpg

slowing growth and profits. So they cashed in.

[cleller]

If only some of the newspapers had writers that would go into the depth KillerBees did here....

Good job.

[Position Limit]

as a former floor trader on the phlx which is now owned by nasdaq omx and current member/trader on the chicago board options exchange, i find the most interesting part of this debachle to be what happened on the nasdaq. they will be up to their eyes with lawsuits for thier part in this. in my opinion something like this will bring it all down some day. all exchanges want to do anymore is open thier portal to as much quoting and orderflow as possible and all electronically and everbody is welcome to the party. this is no longer a model based on capital allocation and market making/trading. not a market to provide real liquidity and facilitate order flow. not bona fide market makers risking capital to provide liquidity. now its algo-based everything from stocks to options to futures. it's all connected and its about payment for orderflow, rebates and kickbacks galore. their are new options and stock exchanges opening all the time. why? is retail that abundant anymore? no it's a fuggin electronic casino that can now be gamed to buy for $20.00 and sell for $19.99 and recieve a .05 rebate all day long. or just spend several billion dollars on technology and straight up game it. yes, this the brave new world of wall street today. these exchanges have all gone public and now must answer to momo analyst every quarter. so what do they do? open the portal. beef up on investigations right and left (they must constantly make up new rules on the fly and fine for profits). the most important asset is nano-seconds and rebates and businesses are being built around this model. IT'S NOT REAL!!!! I've been playing this game for almost 17 years now and it keeps getting more ridiculous all the time. cant wait for the next 17. just 12 short years ago wall street was taking crappy internet companies public. they have very little imagination.

[Chuck Bao]

The filing itself was available. What has people in a tizzy is that some banks did not reveal their own analysts revised projections except to select customers before the ipo. Also the underwriters themselves revised their estimates downward, while trying to get buyers, while other desks in the same institution were feeding the revised estimates to certain clients. Not illegal from what I have read.

This is illegal and subject to jail time and penalities. The research department of a brokerage firm underwriting a deal cannot produce any research or convey their opinion to clients by any means during the black-out period extending to a month after listing.

[Chuck Bao]

as a former floor trader on the phlx which is now owned by nasdaq omx and current member/trader on the chicago board options exchange, i find the most interesting part of this debachle to be what happened on the nasdaq. they will be up to their eyes with lawsuits for thier part in this. in my opinion something like this will bring it all down some day. all exchanges want to do anymore is open thier portal to as much quoting and orderflow as possible and all electronically and everbody is welcome to the party. this is no longer a model based on capital allocation and market making/trading. not a market to provide real liquidity and facilitate order flow. not bona fide market makers risking capital to provide liquidity. now its algo-based everything from stocks to options to futures. it's all connected and its about payment for orderflow, rebates and kickbacks galore. their are new options and stock exchanges opening all the time. why? is retail that abundant anymore? no it's a fuggin electronic casino that can now be gamed to buy for $20.00 and sell for $19.99 and recieve a .05 rebate all day long. or just spend several billion dollars on technology and straight up game it. yes, this the brave new world of wall street today. these exchanges have all gone public and now must answer to momo analyst every quarter. so what do they do? open the portal. beef up on investigations right and left (they must constantly make up new rules on the fly and fine for profits). the most important asset is nano-seconds and rebates and businesses are being built around this model. IT'S NOT REAL!!!! I've been playing this game for almost 17 years now and it keeps getting more ridiculous all the time. cant wait for the next 17. just 12 short years ago wall street was taking crappy internet companies public. they have very little imagination.

So, you are saying that we have a cowboy market here? It is really Wild West and the exchanges are basically the saloons in those old timey cowboy movies and the new derivative products are the new whiskeys. Everyone knows that a fight will break out in those movies and everyone knows that someone is going to be thrown out a window.

Edited to add the small bit actor or small investor is most likely the one to get thrown out.

[8timechamps]

The filing itself was available. What has people in a tizzy is that some banks did not reveal their own analysts revised projections except to select customers before the ipo. Also the underwriters themselves revised their estimates downward, while trying to get buyers, while other desks in the same institution were feeding the revised estimates to certain clients. Not illegal from what I have read.

I don't know why underwriters cannot share their own research. Makes no sense to me. I am sure there must be some kind of reason, then again maybe not.

Yes, if you go back to that link earlier, the author did some basic math and comes to the conclusion that to justify the ipo price fb would have to have everyone who uses the internet as a member and still they would have to find a way to generate a lot more revenue per user. Not likely.

Edit. Ok I looked back and didn't see the link posted I was referring to, so I must have seen it somewhere else. So I will basically post what it said, drawing from FB sec filings.


2009 Rev: $777 million
2010 Rev: $2 billion
2011 Rev: $3.8 billion
Q1 2012 Rev: $1 billion

Take a guess at the profit by giving the benefit of the doubt and say their margin is 25% which is comparable to Google.

That gives us
2011 Profit: 950 million

at the time the guess was a $35 IPO price with 2.74 billion shares for an approx market cap of 95.9 billion.
they have about 900 million users. Which works out to 1.06 profit per user.
There are 2.3 billion current internet users worldwide per worldinternetstats.

So...They would have an P/E of about 105.
Googles current P/E is about 18, so to apply that P/E to FB they would need to generate about 5.3 Billion dollars or a 550% increase in profits.
That would mean they need 5 billion users, or double what is currently available online. That is obviously not possible. So if they could get 75% of the total internet users which is a stretch, then they would have 1.8 billion in profit. To get the rest they would need to raise the per user profit from 1.06 to 3.06 per user, or triple it.

So you can see that none of those are probably going to happen. In fact with those numbers they should be priced around 5.20 a share. Thats giving them a generous 15x yearly earnings. Google is running at 8x.

Furthermore if you look at the business model you can see further weakness.

They do not generate revenue from mobile users. Mobile usage is growing rapidly.

They are very dependent on some big game makers like Zenga (sp?), if they decide to go on their own or roll out their products to competitors then FB is in real trouble.

The real numbers indicate that the revenue per US user is 10x what it is for an international user, unfortunately for FB that is the only growth left.

They get compared to google but in reality, they have invented nothing since FB was started. Google has become the powerhouse it is because they make smart buys, develop useful software and apps. What has FB developed that is useful? Apart from the original concept, nothing. They can't even do what they do the best, hence twitter and foursquare, which only exist to do what FB can already do, only better.

The ad click through rate is terrible on FB. This will lead to a loss of advertisers, which is already happening with GM pulling out.

The majority of FB usage is the younger crowd, which makes it trendy. What happens when teens flock to a new trend?

Now this is my own thinking here but if you notice FB delayed for years going public. Then late last year there was a sudden rush to go public. Why? Because they wanted to wait until they squeezed most of the money from it then go public and cash in. This you can see by some big insiders selling like Zuck himself dumping 38 million shares on open alone. Now all the regular peons that work for FB are locked out from doing this for 6 months, but not the big wigs like Zuck. They are laughing all the way to the bank on this one. They saw this happening

http://static8.businessinsider.com/image/4f95c5c5ecad045f5400005a-960/facebook-revenue-growth-april-2012.jpg

slowing growth and profits. So they cashed in.

Since 2000, the SEC has regulated "selective disclosure" (Release Nos. 33-7881, 34-43154, IC-24599, File No. S7-31-99) for this very reason. So, what the underwriting participants did was, in fact, illegal. The real question will be how far the SEC decides to take this. It is all very akin to Insider Trading.

Facebook, as an investment was entirely too risky for me to recommend to any of my clients. I lived through the tech bubble, and maybe that jaded my view on these kinds of offerings, but it all reminds me so much of the companies that went public without any real fundamental basis for long term profit making. At least with Google, you could see their innovate measures and follow the trail (future growth). Facebook is such an (investment) enigma, that the average person should have steered clear.

I agree with most of your points, and while I do partially agree that the entire basis of the IPO was to make several folks filthy rich, I do think that the IPO did have a lot of genuine credibility. I really think Zuckerberg saw it as capital for future growth. Unfortunately, I also think he stepped out of his comfort zone this time, and is going to struggle to keep shareholders happy.

Honestly, I don't know how much FB had it's hand in the pre-IPO financial adjustments, but I'm sure it participated (there are rumors that top executives were influential in the changes). Still, the underwriter(s) should have to face the SEC gun-barrels...and I'm sure they will.

[cleller]

A few weeks ago I did something unusual for me. I put a small amount into a S&P leveraged short ETF. (SPXU, I think). Its helped to offset some other losses, but nothing significant.

I normally would not get involved with something like this, but I really felt the market might have a bad summer, and went ahead. Anyone else driven this direction?

[8timechamps]

A few weeks ago I did something unusual for me. I put a small amount into a S&P leveraged short ETF. (SPXU, I think). Its helped to offset some other losses, but nothing significant.

I normally would not get involved with something like this, but I really felt the market might have a bad summer, and went ahead. Anyone else driven this direction?

Not a bad move if your really bearish, and don't want to put your neck out and actually short a position. ETFs can help for just this reason. If i"m looking at a stock that I think is going to take a bath, I'll use options on occasion. Conversely, I've used covered calls to make money on stocks I think will continue even keel.

[pphilfran]

Facebook $29.32

[Killerbees]

A few weeks ago I did something unusual for me. I put a small amount into a S&P leveraged short ETF. (SPXU, I think). Its helped to offset some other losses, but nothing significant.

I normally would not get involved with something like this, but I really felt the market might have a bad summer, and went ahead. Anyone else driven this direction?

Just note that you should only used the leveraged etfs for short durations. 3x ones you need some very presice timing to make money, 2x ones give you a little more lee way. They use options to gain the leverage so you are exposed to time decay. Not saying don't do it, just watch it closely. If the underlying market gets stuck in a range or is moving slowly then you should be closing your positions in those leveraged etfs.

Trading them is more like trading options than stocks. To see the real gains that they post you need to be right about the direction, right about the timing, and right about the rate of acceleration. I have a bit of cash on the sidelines now and am watching a few etfs, unsure if that is where i will wind up. My experience at trading them and options is low so i tread carefully.

[cleller]

Just note that you should only used the leveraged etfs for short durations. 3x ones you need some very presice timing to make money, 2x ones give you a little more lee way. They use options to gain the leverage so you are exposed to time decay. Not saying don't do it, just watch it closely. If the underlying market gets stuck in a range or is moving slowly then you should be closing your positions in those leveraged etfs.

Trading them is more like trading options than stocks. To see the real gains that they post you need to be right about the direction, right about the timing, and right about the rate of acceleration. I have a bit of cash on the sidelines now and am watching a few etfs, unsure if that is where i will wind up. My experience at trading them and options is low so i tread carefully.

I put in a small enough figure that I can live with whatever happens. So far, its been fine, but didn't look after yesterday's little uptick. I just have had a bearish tilt since the earlier run-up, combined with the trouble in Europe and the "fiscal cliff" issue after the elections.

Its part hedge, part annoyed response to the limited areas to look for any reliable yield right now. My feeling is that I'll leave it thru August, then decide if it was a stupid idea or not.

I've warmed up to ETFs, but am no expert. I like them in place of index funds in some accounts. There sure are a bunch out there.

[Position Limit]

I put in a small enough figure that I can live with whatever happens. So far, its been fine, but didn't look after yesterday's little uptick. I just have had a bearish tilt since the earlier run-up, combined with the trouble in Europe and the "fiscal cliff" issue after the elections.

Its part hedge, part annoyed response to the limited areas to look for any reliable yield right now. My feeling is that I'll leave it thru August, then decide if it was a stupid idea or not.

I've warmed up to ETFs, but am no expert. I like them in place of index funds in some accounts. There sure are a bunch out there.

forget the reverse leveraged etf as some kind of hedge. skew is getting steep enough again in VIX options. start putting on 1x2 call spreads for close to even for downside protection.

[cleller]

forget the reverse leveraged etf as some kind of hedge. skew is getting steep enough again in VIX options. start putting on 1x2 call spreads for close to even for downside protection.

Sorry, man, you've got me on the technical side.

Looks like quite a day right now. I'm just glad I pulled back some, but (like always) wish I'd done more. That ETF (SPXU) is up about 15 percent since I bought it, but the amount was small enough that the effect will be negligible. I should probably dump it soon, and just be satisfied.

Now the question is when is it oversold, and a buying opportunity? I'll probably wait it out until the tone of WSJ or Smart Money turns positive, which will be about one month late. September? February, after the "fiscal cliff"?

[8timechamps]

Sorry, man, you've got me on the technical side.

Looks like quite a day right now. I'm just glad I pulled back some, but (like always) wish I'd done more. That ETF (SPXU) is up about 15 percent since I bought it, but the amount was small enough that the effect will be negligible. I should probably dump it soon, and just be satisfied.

Now the question is when is it oversold, and a buying opportunity? I'll probably wait it out until the tone of WSJ or Smart Money turns positive, which will be about one month late. September? February, after the "fiscal cliff"?

If it makes you feel any better, I didn't really follow his post either. But, I'm not a trader/analyst.

The Greece issue is really picking up steam, which makes me a little bearish in the short term. I'm in a holding pattern for the immediate future.

[cleller]

If it makes you feel any better, I didn't really follow his post either. But, I'm not a trader/analyst.

The Greece issue is really picking up steam, which makes me a little bearish in the short term. I'm in a holding pattern for the immediate future.

How about calling the bottom? A fool's game?

Being a pessimist on the macro scene my guess for the Dow is 9800 around early 2013. If the European problems abate by fall, add 1000 points.

The good news is its like predicting the Second Coming. I'm sure to be wrong.

[Position Limit]

VIX is the volatility index of the s&p 500. options are listed on it. very deep. very liquid. perfectly priced. as in very little arb. when volatility picks up in equities, demand for vol goes up. premiums values in the s&p 500 go up with said demand. that rise is priced into the VIX. so basically when equities fall, vol rises and vix goes up. currently out of the money calls in the vix are is heavy demand relative to the at the money calls (skew). you can buy one call and finance it by selling 2 calls far out of the money. gives you a free ride on the downside of the market. unless the world comes to an end like in 2008. if so, you blow out and start over. black swans arent here yet. it's worth the risk. i have on as much as clearing will allow me to. dont cost nothing.

[8timechamps]

VIX is the volatility index of the s&p 500. options are listed on it. very deep. very liquid. perfectly priced. as in very little arb. when volatility picks up in equities, demand for vol goes up. premiums values in the s&p 500 go up with said demand. that rise is priced into the VIX. so basically when equities fall, vol rises and vix goes up. currently out of the money calls in the vix are is heavy demand relative to the at the money calls (skew). you can buy one call and finance it by selling 2 calls far out of the money. gives you a free ride on the downside of the market. unless the world comes to an end like in 2008. if so, you blow out and start over. black swans arent here yet. it's worth the risk. i have on as much as clearing will allow me to. dont cost nothing.

Gotcha. I think it was a wording issue in your previous post. Are you a trader?

[8timechamps]

How about calling the bottom? A fool's game?

Being a pessimist on the macro scene my guess for the Dow is 9800 around early 2013. If the European problems abate by fall, add 1000 points.

The good news is its like predicting the Second Coming. I'm sure to be wrong.

I don't play the bottom calling game. It's too hard to predict (impossible really). However, I don't think there's much good news on the horizon. Europe is in trouble, and until there is some stabilization there, I don't expect a recovery here. Greece could put the Eurozone banking in a very unstable position, and if that happens, it's going to play out as a deep recession.

[Position Limit]

Gotcha. I think it was a wording issue in your previous post. Are you a trader?

yes. trader/market maker (cboe) in a crap ton of exchange traded derivatives. what i was trying to explain was that nobody has a crystal ball and knows where anything is going. but the market in vix options is giving you a cheap play on the downside if you can take the risk. which in my opinion is a good bet against the end of the world. i could be wrong. it's only money.

[cleller]

VIX is the volatility index of the s&p 500. options are listed on it. very deep. very liquid. perfectly priced. as in very little arb. when volatility picks up in equities, demand for vol goes up. premiums values in the s&p 500 go up with said demand. that rise is priced into the VIX. so basically when equities fall, vol rises and vix goes up. currently out of the money calls in the vix are is heavy demand relative to the at the money calls (skew). you can buy one call and finance it by selling 2 calls far out of the money. gives you a free ride on the downside of the market. unless the world comes to an end like in 2008. if so, you blow out and start over. black swans arent here yet. it's worth the risk. i have on as much as clearing will allow me to. dont cost nothing.

Comparing you to me is like Sonny and Fredo Corleone.

I know basically what the VIX is, but only as a yardstick to volatility. When it comes to calls and puts, etc, I'm on the outside. I try to follow the principles and hope for the best.
Things just seem so tough to navigate right now. Nowhere to hide. Well, nowhere that you won't get hurt by inflation.

Seems like buying land and cows might be safer.

[Killerbees]

I was warned to stay out of the market this weekend by a relative that is highly connected to the markets specifically trading international markets. Not much info but i took it to mean equities. He knows i also am dabbling in futures and now after reading this http://market-ticker.org/akcs-www?post=206796 i am starting to think he was refering to futures.

At any rate, things are getting very hectic. I am already out of any short term trades and in cash. I am thinking now of exiting those and holding cash. Maybe try to make a little if this thing breaks down hard, or just wait for a bottom to set in. Dunno if anything is going to happen but sure are a lot of things starting to point to it.

[hawaii 5-0]

The Gyros at the new Greek restaurant are waay overpriced.

I miss that hole in the wall place on Boyd and Asp.

5-0

[SanJoaquinSooner]

I was warned to stay out of the market this weekend by a relative that is highly connected to the markets specifically trading international markets. Not much info but i took it to mean equities. He knows i also am dabbling in futures and now after reading this http://market-ticker.org/akcs-www?post=206796 i am starting to think he was refering to futures.

At any rate, things are getting very hectic. I am already out of any short term trades and in cash. I am thinking now of exiting those and holding cash. Maybe try to make a little if this thing breaks down hard, or just wait for a bottom to set in. Dunno if anything is going to happen but sure are a lot of things starting to point to it.

What indicates that a bottom has set in?

[cleller]

What indicates that a bottom has set in?

Wouldn't we all like to know.

I guess its when a bunch of big traders simultaneously say, "stocks sure look oversold".

[8timechamps]

The Gyros at the new Greek restaurant are waay overpriced.

I miss that hole in the wall place on Boyd and Asp.

5-0

The Greek House? Mmmmmmmm.

[cleller]

The Greek House? Mmmmmmmm.

What great memories. Best gyro meat, puffy pitas, intense grill smoke....

[hawaii 5-0]

Yep. That's the one.

I loved them. Eat two and I wasn't hungrey for awhile.

5-0

[Killerbees]

Wouldn't we all like to know.

I guess its when a bunch of big traders simultaneously say, "stocks sure look oversold".

While i agree its impossible to correctly call the exact bottom every time its not to hard to determine a trend change and buy in close to the bottom. Of course once you buy in you have to watch very carefully for weakness that indicates a bull trap before it continues downward.

I use ta for this. Mainly moving avgs, a couple oscillators and price volume indicators. Which by the way the bounce this week was on low very low volume which would indicate weakness.

[cleller]

It seems like we've been willing this market along for 9 months in spite of red flags all over the globe. That's why I've been feeling like a big drop is still to come.

Would love to be wrong, though.

[Killerbees]

I have pulled back 3 or 4 times in the last year thinking that we are in for a big drop. So far it hasnt happened, market just keeps going up and i wind up back in. I am going to wait a bit longer right now though. Perhaps if the next 2 weeks are decent then i might start playing again.

[8timechamps]

I have pulled back 3 or 4 times in the last year thinking that we are in for a big drop. So far it hasnt happened, market just keeps going up and i wind up back in. I am going to wait a bit longer right now though. Perhaps if the next 2 weeks are decent then i might start playing again.

It doesn't help that there are so many global factors weighing in right now. It's going to be bumpy in the immediate future. Still waiting on Greece and the Eurozone to take full effect.

[SanJoaquinSooner]

It doesn't help that there are so many global factors weighing in right now. It's going to be bumpy in the immediate future. Still waiting on Greece and the Eurozone to take full effect.

The question is, will they do an FDIC-like guarantee (in Euros) on money in the banks of Spain?

[8timechamps]

The question is, will they do an FDIC-like guarantee (in Euros) on money in the banks of Spain?

We'll see. If Greece free-falls, I'm not sure the Eurozone banks will be in a position to guarantee anything. I think that's the real fear.

[cleller]

Oh yeah, What about the dollar? Will it continue to rise? Commodities/oil fall?

[8timechamps]

Oh yeah, What about the dollar? Will it continue to rise? Commodities/oil fall?

I don't see any way it can weaken against the euro in the intermediate term. I know the euro rose slightly against the dollar in the past week, but I think that will be short lived. Once Spain makes a call as to whether or not they will ask for a bailout, then I suspect the dollar will be a good bet.

Oil? I have no clue. I used to spend a lot of time on oil futures, but honestly haven't been in the game in a while.

[SanJoaquinSooner]

The Spain Deal is shaping up...

http://www.cnbc.com/id/47747620

[pphilfran]

The Spain Deal is shaping up...

http://www.cnbc.com/id/47747620

A 125 billion into a economy with 1.4 trillion in GDP....

[8timechamps]

Moved more money into Apple today. While nothing at their developers conference was groundbreaking, the fact that they continue to increase their apps/third party development signals more growth. The new mapping software and integration with Facebook was nice, but nothing jaw dropping.

[SanJoaquinSooner]

Moved more money into Apple today. While nothing at their developers conference was groundbreaking, the fact that they continue to increase their apps/third party development signals more growth. The new mapping software and integration with Facebook was nice, but nothing jaw dropping.

One analyst today set a target of 1650/share on Apple by 2015 - based earnings prospects and market share of the triad of iphone, ipod, and the forthcoming TV.

I heard some report on the China market being the most significant news coming out at today's Apple event.

[Killerbees]

I wouldnt touch aapl, until it decides to start making new highs. Right now its trading range bound and still looks toppy to me. I see the estimates and yes i know the revenue and growth support a much higher price but i don't buy in until the price starts doing what its supposed to do.

That said, i do see that it looks tempting. It appears to have based nicely on the pullback so the likely hood of it falling further is much lower. Would be a nice price to get in at.

[Killerbees]

If anyone is going to be buying PMs then i suggest you get to buying. If your going to buy paper then i would wait a while yet maybe another month or maybe 2. Watch for a sharp drop below 27 for silver and below 1560-1550 for gold, may not happen but it would be nice if it does. But if your buying physical then i would start buying now.

[SanJoaquinSooner]

I wouldnt touch aapl, until it decides to start making new highs. Right now its trading range bound and still looks toppy to me. I see the estimates and yes i know the revenue and growth support a much higher price but i don't buy in until the price starts doing what its supposed to do.

That said, i do see that it looks tempting. It appears to have based nicely on the pullback so the likely hood of it falling further is much lower. Would be a nice price to get in at.

schizophrenic much?

But if I understand correctly, you think it's best to buy it at a more expensive price.

[Killerbees]

schizophrenic much?

But if I understand correctly, you think it's best to buy it at a more expensive price.

Lol

Obviously I assume too much when posting.

I would not currently by AAPL because the price action has diverged from what the fundamentals show. Either the fundamentals will change to worsen the outlook OR the price will began to move upward again and breakout of the current range bound trading. Until that second one happens, i think its not a good buy. With that said I can see how its tempting to buy at this price given all the crazy estimates and positive outlook. With the buying support showing up the chart doesn't show any major negatives like it did a few weeks ago so the risk to the downside is lower. While this would be a nice price to get in at if it takes off again, I would wait until it does even tbough that means buying in at a higher price.

[Killerbees]

schizophrenic much?

But if I understand correctly, you think it's best to buy it at a more expensive price.

Lol

Obviously I assume too much when posting.

I would not currently by AAPL because the price action has diverged from what the fundamentals show. Either the fundamentals will change to worsen the outlook OR the price will began to move upward again and breakout of the current range bound trading. Until that second one happens, i think its not a good buy. With that said I can see how its tempting to buy at this price given all the crazy estimates and positive outlook. With the buying support showing up the chart doesn't show any major negatives like it did a few weeks ago so the risk to the downside is lower. While this would be a nice price to get in at if it takes off again, I would wait until it does even though that means buying in at a higher price.

Reading comprehension, I has it.
http://i809.photobucket.com/albums/zz18/peteyvee/ihasit.jpg

[diverdog]

A 125 billion into a economy with 1.4 trillion in GDP....

Europe is going to cause us huge problems and I think Greece will be the one to seriously hurt the Euro. The issue is they have a common currency and no central bank. On top of that they do not have a plan b if Greece decides to leave the Euro. I recently took 90% of my money out of stocks and put into either cash, mma or short term instruments like government backed bonds. We have no idea of the exposure that US banks have to this mess and on top of that we are not in a situation where we can bailout the rest of the world. The only reason I am not sitting 100% in cash is because it is not an option in my 401K.

On top of all this the economy is not doing well. It would not take much to put us back into a recession. i am deeply worried about the next two years. It would not surprise me one bit if we go into an even deeper recession.

Most people look to the upside in the market. If there is one think I have learned over the last 14 years is that it is better to manage the downside. One bad month can take years to recover.

[SanJoaquinSooner]

Well, looks like Greece is sticking with the bailout and the Euro currency for the time being. We'll see Monday if traders sell on the news.

[cleller]

Well, looks like Greece is sticking with the bailout and the Euro currency for the time being. We'll see Monday if traders sell on the news.

Yeah, it may be enough to chug along for a week or two. Here's a good quote I ran across concerning the whole Europe thing:

"What one does see, again and again, in the history of financial crises is that when an accident is waiting to happen, it eventually does."

[SanJoaquinSooner]

Well it will be interesting if tomorrow the Supreme Court hands down its decision on Obamacare. I've heard every possible scenario regarding its effect on Wall Street. Rally if it's tossed, rally if it's upheld, sell-off both ways too.

[cleller]

I'm eating a little crow this morning. A few months ago 8TimeChamps mentioned a REIT, FRT that he was pleased with. I looked at it, was a little scared of its high P/E, and put it on my watch pile. I'd resolved to wait out the summer before doing much.

As best I can tell, FRT is up about 15% since that time. About 10% in the last two weeks. Aye yi yi. You get good advice dumped in your lap, and you dither it away.

P/E's may be way different in REITs for all I know. It has been a bit or a choppy ride, like he mentioned.

[8timechamps]

I'm eating a little crow this morning. A few months ago 8TimeChamps mentioned a REIT, FRT that he was pleased with. I looked at it, was a little scared of its high P/E, and put it on my watch pile. I'd resolved to wait out the summer before doing much.

As best I can tell, FRT is up about 15% since that time. About 10% in the last two weeks. Aye yi yi. You get good advice dumped in your lap, and you dither it away.

P/E's may be way different in REITs for all I know. It has been a bit or a choppy ride, like he mentioned.

The best part is I use this more for an income investment. It's at it's 52wk high now, so I wouldn't be surprised to see it bump down a little here soon, but it's a solid REIT CEF.

[cleller]

Well 8Timer if you're still monitoring this:

I'm still feeling bearish about the global picture, and read a recent article recommending long puts on the S&P. Without asking for advice, I'm curious if you believe these type options are above the head of the typical do it yourself investor?

I'm currently reviewing some free online "course" materials on such things at TD Ameritrade, but not yet feeling comfortable options. (I may have just answered my own question) I already have stops on all my stocks, but have a bigger pecentage in mutual funds in deferred accounts. These mutual funds are my main worry in the event of a broad, fast downturn.

[8timechamps]

Well 8Timer if you're still monitoring this:

I'm still feeling bearish about the global picture, and read a recent article recommending long puts on the S&P. Without asking for advice, I'm curious if you believe these type options are above the head of the typical do it yourself investor?

I'm currently reviewing some free online "course" materials on such things at TD Ameritrade, but not yet feeling comfortable options. (I may have just answered my own question) I already have stops on all my stocks, but have a bigger pecentage in mutual funds in deferred accounts. These mutual funds are my main worry in the event of a broad, fast downturn.

Options can be intimidating to anyone that doesn't work with them on a regular basis. In fact, years ago when I took my Series 7, options were the part everyone warned me about. It didn't end up being as bad as I was expecting.

Anyway, given what I've discussed with you, I think you'd do fine with options trading. I don't really think there is anything out there that's really "above the head" of the average DIY investor. It's just a matter of putting in your research, and being comfortable with the vehicle you're working with. My recommendation would be to start slow, get a good feel for how they work, then see if it's something you want to do long term.

99% of the option trading I do involves covered positions. So, my clients only risk is being called out of the position before the contract expires. Which, can be a win/win if done correctly. If you're going to write uncovered options, just be careful.

On a side note, I read above (Killerbee's post) about staying away from Apple. I didn't, and it's up significantly since I moved more that way. I read your (Killerbee's) thoughts on Apple, but I just disagree. Right now, Apple owns their market space. Even the recent ruling in favor of Samsung had no effect on the stock. Unless/until a real competitor steps up (or at least starts taking market share), Apple is a blue-chipper.

[SanJoaquinSooner]

Google's Marissa Mayer as new CEO of Yahoo! is an innersting hire. I still use Yahoo all the time in spite of the pesky ads. I'd go there over ESPN.com for sports most times.

[cleller]

Google's Marissa Mayer as new CEO of Yahoo! is an innersting hire. I still use Yahoo all the time in spite of the pesky ads. I'd go there over ESPN.com for sports most times.

Yahoo has been my homepage forever. I like their newsy approach, but I do use a google search box. They were talking about the hiring of Mayer on NPR as an example of the "crisis CEO". Their is apparently a trend to bring in a female, who can be perceived as more empathetic and uniting. And she's pregnant, to boot. Who would root against that?
I feel guilty mentioning this, but she's also about the best looking CEO I've ever seen.

[SanJoaquinSooner]

Yahoo has been my homepage forever. I like their newsy approach, but I do use a google search box. They were talking about the hiring of Mayer on NPR as an example of the "crisis CEO". Their is apparently a trend to bring in a female, who can be perceived as more empathetic and uniting. And she's pregnant, to boot. Who would root against that?
I feel guilty mentioning this, but she's also about the best looking CEO I've ever seen.

I use Yahoo alot too. I understand they are far behind in mobile, cloud, and other important trends and this is what Ms. Google Babe will need to fix asap.

[8timechamps]

The fact that Yahoo is still around gives it some merit. Mayer did good things at Google, and promises to deliver at Yahoo. I'm going to watch it for awhile, but it could get interesting.

[Killerbees]

schizophrenic much?

But if I understand correctly, you think it's best to buy it at a more expensive price.


Lol

Obviously I assume too much when posting.

I would not currently by AAPL because the price action has diverged from what the fundamentals show. Either the fundamentals will change to worsen the outlook OR the price will began to move upward again and breakout of the current range bound trading. Until that second one happens, i think its not a good buy. With that said I can see how its tempting to buy at this price given all the crazy estimates and positive outlook. With the buying support showing up the chart doesn't show any major negatives like it did a few weeks ago so the risk to the downside is lower. While this would be a nice price to get in at if it takes off again, I would wait until it does even though that means buying in at a higher price.

Reading comprehension, I has it.
http://i809.photobucket.com/albums/zz18/peteyvee/ihasit.jpg

Todays aapl action is exactly what i was talking about. Something had to give and it finally did. Until a stock, like aapl, shows some kind of trend i try to stay out.

[hawaii 5-0]

I bought my new SUV with AAPL stock.

5-0

[8timechamps]

Todays aapl action is exactly what i was talking about. Something had to give and it finally did. Until a stock, like aapl, shows some kind of trend i try to stay out.

Maybe I don't understand what you mean by "trend". I've had about 75% of my clients in AAPL for the past two and a half years, and they are all up significantly. I moved additional money into AAPL about a month ago, and even with today's drop, all positions are up. Here's how AAPL's price has trended:

1 month: ▲ .70%
3 months: ▼ 5.7%
6 months: ▲ 22.3%
12 months: ▲ 30.6%

If you're a day trader, or short term (less than 6 months) trader, then I suppose you could have lost money in AAPL. However, if you're in it for the long term, you have been rewarded handsomely. AAPL missed Wall Street expectation for sales, but I doubt AAPL stays down long. It wouldn't surprise me at all to see the price up tomorrow as value seekers look to get in.

I guess I just don't follow your reasoning. Maybe you could explain what it is about the stock that is unattractive to you.

[hawaii 5-0]

I got into AAPL when it was less than $50.

Experts said it was overpriced then.
Then they said it was overpriced at $100. Then $200. You know how it went.

Apple just kept coming out with more and more innovative products that the public just HAD to have.

Whenever someone tells me they got a new iPhone or an iPad I just smile and say, "Thank you."

I just don't have the time (or nerve) for day trading. I look for good stocks for the long haul.

I also got into Microsoft in Jan. of 1998 when I heard they were coming out in August with a new OS called Windows '98.

5-0

[pphilfran]

After the close Facebook announces it's earning for the last quarter...scheduled for 4 pm Central if I am not mistaken...

[cleller]

OK 8timer, got a new-to-me deal here. Eaton Vance eUnit Trusts. Read about these in the WSJ. The story pretty well outlined the positive and negative things about them. Basically, it protects your initial investment from a big market drop (positive), while also limit the rewards you might reap from a big market upside (negative). I hope I understand that right.
http://funds.eatonvance.com/eUnits-2-Year-U-S-Market-Participation-Trust-Upside-to-Cap-Buffered-Downside-ETUA.php

For someone like me who is slightly worried or bearish, yet not wanting to exit completely, this might have a place.

Interesting day on Wall Street. There is a story that 3rd quarter earnings are looking negative, but the market jumps on a statement form Europe that they want to hold the EU together.

http://finance.yahoo.com/news/u-earnings-now-seen-falling-181659439.html

[Position Limit]

OK 8timer, got a new-to-me deal here. Eaton Vance eUnit Trusts. Read about these in the WSJ. The story pretty well outlined the positive and negative things about them. Basically, it protects your initial investment from a big market drop (positive), while also limit the rewards you might reap from a big market upside (negative). I hope I understand that right.
http://funds.eatonvance.com/eUnits-2-Year-U-S-Market-Participation-Trust-Upside-to-Cap-Buffered-Downside-ETUA.php

i'll go easy on ya here. call it my personal food stamp donation. if you're concerned about downside in the market and you want a cheap easy play, buy yourself some 1x2 call spreads in the vix. sell the skew up high enough but make sure you do it as close to even as possible (not hard. markets are tight and deep). think of downside as volatility and own it for cheap. but beware of the black swan, it will blow you out with this position..... .

For someone like me who is slightly worried or bearish, yet not wanting to exit completely, this might have a place.

Interesting day on Wall Street. There is a story that 3rd quarter earnings are looking negative, but the market jumps on a statement form Europe that they want to hold the EU together.

http://finance.yahoo.com/news/u-earnings-now-seen-falling-181659439.html

i'll go easy on ya here. call it my personal food stamp donation. if you're concerned about downside in the market and you want a cheap easy play, buy yourself some 1x2 call spreads in the vix. sell the skew up high enough but make sure you do it as close to even as possible (not hard. markets are tight and deep). think of downside as volatility and own it for cheap. but beware of the black swan, it will blow you out with this position..... .

[cleller]

i'll go easy on ya here. call it my personal food stamp donation. if you're concerned about downside in the market and you want a cheap easy play, buy yourself some 1x2 call spreads in the vix. sell the skew up high enough but make sure you do it as close to even as possible (not hard. markets are tight and deep). think of downside as volatility and own it for cheap. but beware of the black swan, it will blow you out with this position..... .

Sorry, I'm going for something I can understand and sleep with. In the financial sense.

[Position Limit]

Sorry, I'm going for something I can understand and sleep with. In the financial sense.

it's easier to understand than i explained. id be happy to tell you more iffn you interested. and it would mos def make you sleep easier. trading is about finding the cheapest way to get what you want. this is one of those ways.

[cleller]

it's easier to understand than i explained. id be happy to tell you more iffn you interested. and it would mos def make you sleep easier. trading is about finding the cheapest way to get what you want. this is one of those ways.

I have on my short list to go thru an online "class" in options thru either Fidelity or TD Ameritrade. Just a freebie thing they offer, no doubt to try and get more people to use their services. Hopefully, I'll be able to decide if that is something I'm comfortable with.
It goes against my basic plan, however. I'm really more of a hand's off type. The last 6 months I've gotten more interested in downside protection in case some EU flu hits the whole world.

[pphilfran]

Facebook down to 22.96 - 14% today

It was at $29 two days ago...

[SanJoaquinSooner]

Facebook down to 22.96 - 14% today

It was at $29 two days ago...

When does it become a buy?

[pphilfran]

When does it become a buy?
I say there is a good chance at never...

[cleller]

I say there is a good chance at never...

Maybe when Zuckerberg starts shaving.

[cleller]

It just occurred to me that the Dow, at 13000, is back at the level it was when this thread started in Feb.

[SanJoaquinSooner]

So Facebook's a good short at $23.50?

[pphilfran]

I have never shorted a stock...PE is down to 68...

[8timechamps]

OK 8timer, got a new-to-me deal here. Eaton Vance eUnit Trusts. Read about these in the WSJ. The story pretty well outlined the positive and negative things about them. Basically, it protects your initial investment from a big market drop (positive), while also limit the rewards you might reap from a big market upside (negative). I hope I understand that right.
http://funds.eatonvance.com/eUnits-2-Year-U-S-Market-Participation-Trust-Upside-to-Cap-Buffered-Downside-ETUA.php

For someone like me who is slightly worried or bearish, yet not wanting to exit completely, this might have a place.

Interesting day on Wall Street. There is a story that 3rd quarter earnings are looking negative, but the market jumps on a statement form Europe that they want to hold the EU together.

http://finance.yahoo.com/news/u-earnings-now-seen-falling-181659439.html

I don't have any firsthand experience with the Eaton Vance eTrust, but I've talked to the EV rep about it. The bottom line is that you will get to participate in the upside (although not fully), and are buffered to the downside. I would consider this a pretty moderate risk vehicle. I've used market participation funds in the past, and they've been pretty stable. For you (knowing that you don't want to hang yourself out, while wanting some upside), this would probably have a place in your portfolio. Just know that your not going to get to participate fully in any upside, while not being fully protected against the down swing.

While I'm still not bullish overall, there are plenty of unknowns out there right now that could lead me more toward that thinking. As always, I wish I had a crystal ball.

[8timechamps]

So Facebook's a good short at $23.50?

I would never short a stock like FB. There are too many unknowns about how the stock will perform. Unless I can see a price chart for a long time frame, I don't short.

Then again, I don't walk over hot coals or skydive, so take that for what it's worth.

[8timechamps]

I say there is a good chance at never...

The more I watch the stock, the more I think Zuckerberg is in over his head. He has the ability to build a tech company, but building one (and understanding the intricacies) is so different than being a profitable CEO.

I can see this stock dropping into the teens eventually, then settling around $9/$10 a share. But, that is complete speculation. I just struggle to see the upside to this stock.

[SanJoaquinSooner]

Moved more money into Apple today. While nothing at their developers conference was groundbreaking, the fact that they continue to increase their apps/third party development signals more growth. The new mapping software and integration with Facebook was nice, but nothing jaw dropping.


If you rode out the dip, you've been doing well with apple. 648/share.

[Blue]

Well I was way off on this one. I thought this thing would tank 2 years ago. Lesson learned. The can will always get kicked down the road.

[hawaii 5-0]

Luv that APPL.


5-0

[pphilfran]

I would be careful with Apple at these levels....they have done everything right and that is currently priced into the stock...to keep this level they must continue to innovate and not miss on any product introduction...not saying they can't do it but the bar is set very, very high....

[hawaii 5-0]

There's a newer, smaller IPad coming out soon.

Just sayin'.

5-0

[8timechamps]

If you rode out the dip, you've been doing well with apple. 648/share.

Apple is probably the best preforming stock in my porfolio (and most of my client's portfolios). I have one client that got Apple as an IPO (well before I was in the business). He absolutely loves it, which can be good and bad. Good, because he's done so well. Bad, because he has so much of it, and NEVER wants to sell.

I have a target on Apple at around $700. I think that's a fair target, and includes their inclusion in the new smart TV market (which I think they are poised to take the lead). Once the stock gets to that point, I'll have to re-evaluate where they are to know if I'm going to stay in. THIS IS NOT ADVICE TO BUY. Please don't risk your hard earned money on something someone on a message board says. Although I do this all day, every day, unless I know you and your situation (risk tolerance, philosophy, etc.), you'd just be following blind advice.

The stock has had a really nice run since the dip, and I expect to see some pull back in the next week. There are bound to be some profit takers.

[pphilfran]

There's a newer, smaller IPad coming out soon.

Just sayin'.

5-0

Yes, I know...and they are probably already working on the one to replace the new smaller one...just saying they have hit dead center on each product release to date...and if they miss on one of the new product introductions then their astronomical growth will slow...also, at some point in time they will reach some point of market saturation...and to date no other company has come close to introducing a product that is capable of kicking them off their perch..it is always possible someone out there has an iPad killer in the works...

Just saying, be careful at these levels..those with long term holding have made a killing and probably have a large portion of their investments in this one stock...

I am a firm believer in setting a target for amount to hold in a stock or sector...if you want to have 20% of your holding in Apple and the stock price grows so fast vs the overall market that it climbs to 30%...I believe you should sell off enough to get back to the 20% level...I do this quarterly in all my holding...this forces me to sell high and buy low...and eliminates the "falling in love with a stock" mentality...

[8timechamps]

Yes, I know...and they are probably already working on the one to replace the new smaller one...just saying they have hit dead center on each product release to date...and if they miss on one of the new product introductions then their astronomical growth will slow...also, at some point in time they will reach some point of market saturation...and to date no other company has come close to introducing a product that is capable of kicking them off their perch..it is always possible someone out there has an iPad killer in the works...

Just saying, be careful at these levels..those with long term holding have made a killing and probably have a large portion of their investments in this one stock...

I am a firm believer in setting a target for amount to hold in a stock or sector...if you want to have 20% of your holding in Apple and the stock price grows so fast vs the overall market that it climbs to 30%...I believe you should sell off enough to get back to the 20% level...I do this quarterly in all my holding...this forces me to sell high and buy low...and eliminates the "falling in love with a stock" mentality...

Good points pphilfran.

In fact, if the smart TV wasn't on the horizon, I'm not sure how much growth Apple would really see over the next year. Part of Apple maintaining success is that it has such a massive brand loyalty (something that's really hard to find in the electronics sector). People that love Apple, will only buy Apple. Until now, the TV market has been relatively untouched by Apple. Soon, all the Apple loyalist will be in the market to buy Apple's smart TV, and as long as Apple hits close to the mark with it, it'll push them forward.

You are also correct (in my opinion) in your re-balancing philosophy. I've seen investors fall in love with a stock that was booming, only to walk away literally broke because they never wanted to believe it would fall. This happened a lot during the dot.com boom/bust. As always, sound fundamentals and sticking to your risk tolerance are the best bet.

[hawaii 5-0]

I actually took some APPL profits about a year ago.

Then it dropped so I bought some more.

I would never put all my eggs in one basket tho. Diversification is a key.

5-0

[hawaii 5-0]

Any suggestions on some 25 year bonds that are about to mature?

5-0

[cleller]

What ch'all think about the "bonds are dead" stories, and Bill Gross' "stocks are dead" (or similar) statements? Corporate and junk munis are doing well, but with Treasuries yields so low, you wonder where it all ends.

I'm thinking of moving closer to the Swensen Yale model instead of trying to make sense of the markets. Being a little bearish, I'd probably carry more cash, though. Like 8Timer, he has a nice chunk in REITs, which I've been averaging into the last few months.

http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=407

[pphilfran]

I am not real high on bonds...if you buy individual bonds you should have them laddered...you buy equal amounts of the various time frames...when one comes due to you buy the longest available...

If you buy a 30 year treasury at current prices and interest rates climb you will be a screwed pooch...you will be getting a lower rate of return then the new bonds being issued and if you sell you will lose principle...in other words...you lose...if interest rates go down you have a higher yield and if you sell you will get more than the individual investment...

I don't know what to tell you about the current market other than cross your fingers....

[pphilfran]

What ch'all think about the "bonds are dead" stories, and Bill Gross' "stocks are dead" (or similar) statements? Corporate and junk munis are doing well, but with Treasuries yields so low, you wonder where it all ends.

I'm thinking of moving closer to the Swensen Yale model instead of trying to make sense of the markets. Being a little bearish, I'd probably carry more cash, though. Like 8Timer, he has a nice chunk in REITs, which I've been averaging into the last few months.

http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=407

That dude has great diversification...I highly recommend something similar...

I always pick a few individual stocks to spice things up...and sometimes it proves how dumb I am...

[8timechamps]

What ch'all think about the "bonds are dead" stories, and Bill Gross' "stocks are dead" (or similar) statements? Corporate and junk munis are doing well, but with Treasuries yields so low, you wonder where it all ends.

I'm thinking of moving closer to the Swensen Yale model instead of trying to make sense of the markets. Being a little bearish, I'd probably carry more cash, though. Like 8Timer, he has a nice chunk in REITs, which I've been averaging into the last few months.

http://www.myplaniq.com/LTISystem/jsp/portfolio/ViewPortfolio.action?ID=407

Very close to my personal allocation, minus the TIPS.

[cleller]

Very close to my personal allocation, minus the TIPS.

No TIPS? I have them, of course, but I think I can imagine reasons a "pro" might not. I've been dying to ask you what you think of Jim Rogers. I don't like Soros, but do like Rogers.
As you likely know, he is predicting some pretty bad things for the next few years. Its the same way I feel, I guess, and seems so logical. No- where to hide. It covers what I feel is likely to happen after the election: bad times due to debt.
His comments about Myanmar have had me searching for a fund that might profit there.

http://www.youtube.com/watch?v=PPDhJ0XRzpU&feature=related

[pphilfran]

No TIPS? I have them, of course, but I think I can imagine reasons a "pro" might not. I've been dying to ask you what you think of Jim Rogers. I don't like Soros, but do like Rogers.
As you likely know, he is predicting some pretty bad things for the next few years. Its the same way I feel, I guess, and seems so logical. No- where to hide. It covers what I feel is likely to happen after the election: bad times due to debt.
His comments about Myanmar have had me searching for a fund that might profit there.

http://www.youtube.com/watch?v=PPDhJ0XRzpU&feature=related

Investment Biker

Mr. Bow Tie

Did you know he rode a BMW cycle around the world? Him and a chick...he wrote about the finances of each country he visited...he kept payola money hidden in the fork tubes...he was running out of gas in Russia and followed this terrific highway that happened to end up to a military base and had to beg for gas...he was extremely high on China, and that prediction turned out to be true...while on the road the guy he had running his personal fund started screwing around with the money...the book is quite a read...

[cleller]

After a few weeks of study on several things, I logged on and sold off the majority of my mutual funds in deferred accounts over the last week. (not the REITs) I am going to slowly average back into some index ETFs similar to that Yale model, but with not quite so high percentages.

It seems clear that indexes have beaten over 70% of the managed funds, and at a cheaper price over the last decade. With the ETFs I can run trailing stops and have better protection, I think. After listening to Jim Rogers, I am going to save something back to try and locate a play on the Myanmar expansion.

On the spooky side, I know this guy is a perma-bear, but he did call this summer rally pretty well.
http://www.businessinsider.com/bob-janjuah-stocks-rally-collapse-1000-2012-6

He also predicted big bear swings in March 2009 and Oct 2011 that didn't work out for him.

[SanJoaquinSooner]

If I sell shares of a mutual fund this weekend, should I expect the value based on the current NAV, or the one at the end of Tuesday?

[8timechamps]

If I sell shares of a mutual fund this weekend, should I expect the value based on the current NAV, or the one at the end of Tuesday?

Should be close of business NAV on the date the sell order is completed (so, Monday's NAV).

EDIT: Since this past Monday was a national holiday, it's going to reflect Tuesday's NAV.

[8timechamps]

No TIPS? I have them, of course, but I think I can imagine reasons a "pro" might not. I've been dying to ask you what you think of Jim Rogers. I don't like Soros, but do like Rogers.
As you likely know, he is predicting some pretty bad things for the next few years. Its the same way I feel, I guess, and seems so logical. No- where to hide. It covers what I feel is likely to happen after the election: bad times due to debt.
His comments about Myanmar have had me searching for a fund that might profit there.

http://www.youtube.com/watch?v=PPDhJ0XRzpU&feature=related

Sorry cleller, must have missed this.

I don't personally own TIPS only because I am far more aggressive in my taxable accounts. No fundamental reason really. I do use TIPS for a lot of clients though.

I really don't have much of an opinion about Rogers one way or another. Same with Soros. In fact, I don't really listen to prognosticators. I have a discipline that I follow (that I've developed over my career), and I don't stray from it. The fact of the matter is NOBODY can read the future of the markets, and the folks that say they can are usually trying to make a buck selling their "methods". The best thing I ever did was read The Intelligent Investor. If you haven't read it, DO IT. It's been around for a long time, but still very applicable. Sometimes I give a copy to a new client if I think they will read it.

[8timechamps]

Today, I was going through an old box in my office, and found a book that was given to me in 1999 (by a mutual fund wholesaler). The title is "The Dow 20,000". I never read the book, but kinda chuckled at the title.

It reminded me of this beauty (published in 2003):

http://ecx.images-amazon.com/images/I/51Pn1hSCSxL._BO2,204,203,200_PIsitb-sticker-arrow-click,TopRight,35,-76_AA300_SH20_OU01_.jpg

[SanJoaquinSooner]

Kim Kardashian interviewed by Maria Bartiromo on CNBC in a few minutes. Ought to be innersting.

[cleller]

Kim Kardashian interviewed by Maria Bartiromo on CNBC in a few minutes. Ought to be innersting.

What in blazes? I suppose they could justify it because she sells perfume or cellulite cream, or something.

[hawaii 5-0]

Google just went over $700.

5-0

[8timechamps]

Google just went over $700.

5-0

Never got in on Google. It's been a solid performer since '09 though.

Apple has done well this week, and inching toward that $700 mark. I moved a bit into some NASDAQ powershares (QQQ) last week, and those have followed the trend and had a decent week. That will probably be a short lived position for me, but it's been a nice little bump.

[SanJoaquinSooner]

Hey, what are y'all waiting for - the all-time high - before jumping in?

[Blue]

Compared to inflation, anyone in stocks hasn't made jack since 1980.

Ooooh its at 13,000! So what? Gas is 4 bucks a gallon and 100 a barrel. Groceries are outrageous. The cost of living has gone up exponentially compared to your teeny tiny portfolio. Wake up. The majority of Americans are living on the edge or over the cliff. Talking about the Dow Jones (Which replaces poor performing stocks btw) is insulting.

Pump some fake printing press money into, watch it soar for a few months, and then do it again when the fundamentals catch up with the inflated money.

One more question. If we can just print money, why pay taxes? Both parties do it so save the partisan crap.

[cleller]

That's the rub^^.

What CAN you do to stay ahead of inflation? The Fed has rigged the system to try and force you to buy stocks. Nothing else has a yield. In hindsight, rural land in these parts would have been a great play, but it even that seems inflated some now.

Most of the commentary I read seems to say the market may have another 5% upside, but no one seems enthusiastic. I've tried to move to ETFs and stocks I can put stops on, at least.

Wonder what some of the really old timers in the financial world would think of this setup?

[pphilfran]

Blue, you have lost your mind...the ones that have gotten behind are the ones that were not in the market...

Sept, 22, 1980 the S&P500 closed at 130...yesterday it closed at 1461...1200% increase

A gallon of gas cost 1.25 in 1980...yesterday at 3.70...300%
A gallon of milk cost 216 in 1980...
A dozen eggs 91 cents...

http://www.1980sflashback.com/1980/Economy.asp