Face(palm)Book

[Reality]

I would think most individuals would want to buy something and hold it -- i.e., be an investor, not a trader -- so as not to worry about short-term fluctuations in price.

That is exactly the most important point that many individual investors fail to comprehend. They should invest in stocks, not trade in stocks. Playing stocks like playing slot machines will rarely lead to huge pay outs.

#reality

 

[YosemiteSam]

That is exactly the most important point that many individual investors fail to comprehend. They should invest in stocks, not trade in stocks. Playing stocks like playing slot machines will rarely lead to huge pay outs.

#reality

I agree. *Traders* are algorithmic traders or HFT. (high frequency trader) HFTs make profits at very high risk levels and usually have to be well funded. (beyond what most people can fund on their own) To do this, you had better be a quantitative analyst with a post graduate mathematics degree or something similar. The risk is already through the roof for people who do this for a living. If you try to do it without being properly trained, you are setting yourself up to fail.

 

[CowboyMcCoy]

The tech industry caused the DOT-COM crash 12 years ago because VC firms overvalued pre-IPO stock prices and convinced additional rounds of investors it was a solid investment. In the real world, we call this a ponzi scheme, but in the venture capital world, apparently it is the "genius" way to make money.

People have been so high on Facebook because everyone uses it. I do not nor have I ever, but almost everyone I know does. However, there is a flaw in that thinking. There is a HUGE difference between everyone buying something and everyone using something for free.

If a company gives everything away for free of course they will become "popular", but history has shown that when you start out free and try to switch to get revenue from your users later, most of the users leave for yet another site that is "free".

Companies like Apple, Microsoft, Google, etc. all have real revenue streams which justifies most of their valuations. A company like Facebook is valued more on hype than revenue. It's the thought that because everyone uses it, everyone has their lives in it, it "will" be valuable. However, if you stop and think about it, Facebook just pulled a pre-DOT-COM IPO out of a post-DOT-COM-CRASH world.

#reality

That and if you think about ******* or yourspace since that one is censored, or also friendster.. they all proved to be somewhat worthless in the long-term. I expect the same thing for facebook.

 

[vta]

That and if you think about ******* or yourspace since that one is censored, or also friendster.. they all proved to be somewhat worthless in the long-term. I expect the same thing for facebook.

How valuable can a pumped up chat or forum be? It's not a tangible product and yes while it has that aspect of connecting and advertising, for the most part it's just a life diversion with people yapping and ignoring the ads. The whole 'value' of such a thing is an illusion based on a 'potential', but I'm guessing most people aren't entrepreneurs and the greater percentage use it to talk with people they don't see every day and post pictures.

 

[CowboyMcCoy]

How valuable can a pumped up chat or forum be? It's not a tangible product and yes while it has that aspect of connecting and advertising, for the most part it's just a life diversion with people yapping and ignoring the ads. The whole 'value' of such a thing is an illusion based on a 'potential', but I'm guessing most people aren't entrepreneurs and the greater percentage use it to talk with people they don't see every day and post pictures.

Indeed.

 

[Reality]

How valuable can a pumped up chat or forum be? It's not a tangible product and yes while it has that aspect of connecting and advertising, for the most part it's just a life diversion with people yapping and ignoring the ads. The whole 'value' of such a thing is an illusion based on a 'potential', but I'm guessing most people aren't entrepreneurs and the greater percentage use it to talk with people they don't see every day and post pictures.

When anything comes along and diverts the attention and time of a large number of people from existing entertainment mediums such as TV, it becomes valuable because it represents potential or lost revenue depending on how direct it replaces other mediums.

The really scary thing is that any time you put your personal information on a site, especially with the level of detail you see on Facebook, the site becomes a highly desired target for criminals and governments. The fact that people make this so easy by voluntarily adding and regularly updating their personal information is rather unbelievable.

#reality

 

[vta]

When anything comes along and diverts the attention and time of a large number of people from existing entertainment mediums such as TV, it becomes valuable because it represents potential or lost revenue depending on how direct it replaces other mediums.

The really scary thing is that any time you put your personal information on a site, especially with the level of detail you see on Facebook, the site becomes a highly desired target for criminals and governments. The fact that people make this so easy by voluntarily adding and regularly updating their personal information is rather unbelievable.

#reality

And it probably isn't sustainable in the long run. People get bored of these things, especially when they're not really a tangible product you can put to great use. Let the economy slump a little further and jerking around in front of a computer will fast become history.

And the crap some people put on their Facebook amazes me. Their cell number and their address, then blurt out on their feed that they're going away for vacation or worse that 'hubby' is going away for the weekend. Insane. I've had to private message some people on this and give it to them from a another perspective.

 

[theogt]

Anything that derives its value from people looking at it seems like an inherently risky investment to me.

 

[vta]

Anything that derives its value from people looking at it seems like an inherently risky investment to me.

From what I understand pron is a multi billion dollar industry. :laugh2:

 

[kmd24]

Anything that derives its value from people looking at it seems like an inherently risky investment to me.

I'm not too optimistic about ads as a vehicle for their success. It works for GOOG because a significant percentage of searches are to buy stuff or research stuff to buy. People don't use FB to buy stuff, they use it to socialize.

Ultimately, I think their success will turn on what's going on in the online gambling arena in the US. It would require them to execute well in a lot of areas, and it's no slam dunk, but it seems almost certain that the US will have regulated online gaming in the next few years, and when that happens, there will be hordes of companies trying to capitalize on FB. I wouldn't be surprised if FB already has a plan in place.

 

[Reality]

Anything that derives its value from people looking at it seems like an inherently risky investment to me.

It really comes down to why the users are there and what do they get out of the site. In the case of Facebook, they are there because everyone else is there. If a lot of people were to leave Facebook, it would cause a domino effect of users leaving. What they get out of it is communication with friends and family that is less cumbersome than email and less annoying than phone calls. More importantly, it allows them to say something once and have several people hear about it rather than make phone call after phone call or rely on others to spread the word.

The problem is that so much of what is posted on social networking sites, even by your friends and family, is worthless dribble that serves no other purpose than to dilute the overall quality and benefit of communication. The fad of Facebook has passed and while I do not believe it will go away, I do believe its popularity has peaked and its usage will continue to decline at least in this country.

#reality

 

[theogt]

Morgan Stanley, JP Morgan and Goldman Sachs were joint book-runners on the deal. You can see the full list of banks here.

http://www.sec.gov/Archives/edgar/data/1326801/000119312512240111/d287954d424b4.htm#toc287954_19

Ultimately it was the company's decision as to how to price and size the deal, so they deserve as much blame, if any, as the banks. I'm not sure anyone deserves blame, though. The people that bought into the IPO did so at a price they were willing to pay. And later sold at a price they were willing to sell at. In 6 months the price may be 20% higher than the IPO price. That's just the nature of valuing equity securities.

I don't ever buy into IPOs. And I don't "trade" securities. I would think most individuals would want to buy something and hold it -- i.e., be an investor, not a trader -- so as not to worry about short-term fluctuations in price.

To back up what I said here, below is an except from a current WSJ article:

In some phone calls, Morgan Stanley bankers have mentioned that, while they and other underwriters helped set the price and size of the deal, [Facebook CFO David Ebersman] and other Facebook officials made the final decision to boost the price and number of shares in the $16 billion initial public offering. Facebook and Morgan Stanley agreed with the decision to boost the price and size of the deal, people familiar with the matter added.

What should be the price of Facebook's stock? MarketWatch columnist Mark Hulbert joins Markets Hub with what he says is a fair-price calculation for the social-media giant. Photo: Reuters.

Michael Pachter, an analyst at Wedbush Securities, said all the underwriters on the Facebook deal "botched it" by letting Facebook bump up the number of shares. "I think they all believed the hype and made a mistake," he said.

http://online.wsj.com/article/SB100...6593357063940.html?mod=WSJ_hps_LEFTTopStories