Friday’s Facebook Flop Status Quo? Down Down Deeper And Down

“Fight Against Stupidity And Bureaucracy”

Way back towards the end of May I wrote a post with a big ‘F’-ing title about the greed-inspired stupidity and madness that preceded the Facebook IPO. Remember, “Furious Flabbergasted Facebook Fools Face Frightening Falls From Fanciful Flagging Financial Flotation Farce”? 

Launched at the ridiculous price of $38 a share, or about 100 times the company's earnings, the price momentarily made it to $45, but then quickly plummeted to $34. 

In my post in May I suggested that the shares were worth more like $18 a share rather than $38. As of yesterday (August 16th) the price had fallen below $20.

I'm not saying this by way of blowing my trumpet, because I now think that my $18 peg may have been rather optimistic too. Investors have by and large turned against Facebook.

Apart from the odd blip, the stock has been on a downward trend pressured by disappointing earnings and by the fact that from today the so-called "lockups" that have prevented some early Facebook backers from unloading their stakes begin to expire. This simply means they will be able to sell shares into the market and with around two billion shares eligible for a sell off between now and May 2013, with a big one coming in November, the signs for a price recovery are ominous.

In fact further falls are more than likely.

Those who can are shorting the stock like crazy. (Shorting is where your broker borrows shares which you sell immediately in the hope that you can buy them back later at a lower price.)

The number of Facebook shares on loan to short sellers has risen from 63 million a month ago to more than 93 million.

So is it a good buy now at $18? I think not. Not for a while anyhow, until these locked shares find their way into the market and the price stabilizes and that will probably be well into 2013.

In the short term the status quo is probably down down deeper and down.

Forget Facebook and enjoy some music from the 70s instead.

http://www.youtube.com/watch?v=IKe2OfXLxuc

The small print.

Fasab disclaimer: this blog post does not constitute professional advice as regards investments on the stock exchange, such advice would only be given and indicated thus if an outrageous fee were being charged and this blog is being given to you for free. Also any investor should always be aware that shares can fall as well as plummet and should act accordingly by not investing any money they can not afford to lose.

London 2012, Proof That When You Give Bureaucrats An Olympian Sized Task, They Will Make An Olympian Sized Mess Of It!

“Fight Against Stupidity And Bureaucracy”

The London Olympic Games 2012 will finish later today. I'm interested to see what they have in store for the closing ceremony, bearing in mind that the opening ceremony was good in parts, but confusing in others. 

As for the games themselves, after a shaky start I think you could say they were successful and very enjoyable for the public at large. I certainly enjoyed what I saw of them. 

But what the whole show did illustrate very well was the sheer stupidity and incompetence of the politicians and the bureaucrats. They took a large, but relatively simple event, and made a laughing stock out of themselves.

Why?

Simply because the politicians and bureaucrats thought they could run everything better than people who know about staging events like these. They can't! 

Right from the start the inefficiency was evident in the vast rows of empty seats at the various venues. 

It got a little better as the Games went on, but a friend of mine who was there on Thursday evening told me that even for the much heralded Men's 200 meters showdown featuring the extremely popular Jamaican runner Usain Bolt, there were at least 500 vacant seats in the stadium.

The problem was twofold.

First, a lot of tickets had been allocated to the corporate sector, far more than was necessary.

Second, for the rest of the people there was only one practical way to buy Olympic tickets, and that was through the 'official' government/bureaucrat controlled office.

These morons even tried to destroy normal commercial activity by making it a criminal offense for individuals to resell Olympic tickets.

But when you logged on to the government's official website to try to buy tickets legally, bewildered visitors quickly found out that they had to jump through all sorts of ridiculous hoops to get them.

A bit like an airport arrivals lounge, UK residents were directed to follow one set of procedures; residents of the EU, but not of the UK, had another set of rules; and residents of other countries, yet another set.

Of course, you couldn't just buy the tickets. First you had to set up an online profile, revealing all sorts of details about yourself that had not the slightest relevance to buying a ticket for the Games.

And when you'd finished all that you could print out your ticket, just like an electronic airline ticket or boarding pass.

Don't be daft, of course you couldn't. That would be far too efficient and sensible.

The bureaucrat way, despite the fact that they were directing everyone to use the online system, was to mail your tickets to you  -  hold on, let me repeat that  -  mail as in M-A-I-L, as in snail-mail NOT email - and they could only do that to the legal residency address you gave them in your profile.

Tough luck on "Johnny Foreigner" whose legal residency could have been on the other side of the world, in China, Australia, or New Zealand for example.

There was an alternative, if you could call it that. You could waste a few hours of your life going to one of the ticket offices, the locations of which the bureaucrats had ensured were in the most inconvenient places possible.

And when you eventually made it to the front of the queue you were confronted by a poorly trained and ever more poorly informed individual who had little idea what tickets were available at any given time.

The inefficiency of the availability of information was so staggering that an event that had been deemed 'sold out' at 10am, could turn out to have hundreds of seats available an hour or two later.

That was why there were thousands of empty seats. The bungling bureaucrats hadn't even the wit to assign them to the soldiers who had been drafted in at the last minute because of another foul-up in employing a private security firm who had not the manpower to do the job.

So could you get tickets by other "illegal" means?

Well, of course you could. The bureaucrats desire for total control is as inefficient as everything else they do. The ticket touts were doing business as usual, but as usual they were charging two or three times the face value of the tickets. Whether that practice is right or wrong is a question for another time. But they couldn't have done it had the idiots in charge not made such a hash of the whole thing.

I’m looking forward to see how they cope in Rio in 2016. My feeling is they should study what happened in London and do the complete opposite!

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Signs That You Live In The 21st Century

“Fight Against Stupidity And Bureaucracy”

Unfortunately a lot of the things below have become true in the 21^st Century.

Number two particularly pisses me off.

Numbers five and fourteen are a poor reflection of what we have become.

And numbers twenty thru twenty-two are just plain sad. 

I hope you will do numbers twenty-four and twenty-five though!!

Enjoy.

1. You just tried to enter your password on the microwave.

2. You have a list of 15 phone numbers to reach your family of three.

3. You text your son's cell phone to let him know it's time to eat. He E-mailed you back from his bedroom, "What's for dinner?"

4. Your daughter sells Scout Cookies via her web site.

5. You chat several times a day with a stranger from South Africa, but you haven't spoken with your next door neighbor yet this year.

6. You check the ingredients on a can of chicken noodle soup to see if it contains Echinacea.

7. Your grandmother asks you to send her a JPEG file of your newborn so she can create a screen saver.

8. You pull up in your own driveway and use your cell phone to see if anyone is home.

9. Every commercial on television has a website address at the bottom of the screen.

10. You buy a computer and 6 months later it is out of date, and now sells half the price you paid.

11. Leaving the house without your cell phone, which you didn't have the first 20 or 30 years of your life, is cause for panic and turning around to go get it.

12. Using real money, instead of credit or debit, to make a purchase would be a hassle and take planning.

13. Cleaning up the dining room means getting the fast food bags out of the back seat of your car.

14. Your reason for not staying in touch with family is that they do not have e-mail addresses.

15. You consider second-day air delivery painfully slow.

16. Your dining room table is now your flat filing cabinet.

17. Your idea of being organized is multiple-colored Post-it notes.

18. You hear most of your jokes via blogs and e-mail instead of in person. (Yipes!!!!)

19. You get an extra phone line so you can get phone calls.

20. You disconnect from the Internet and get this awful feeling, as if you just pulled the plug on a loved one.

21. You get up in the morning and go online before getting your coffee.

22. You wake up at 2 am to go to the bathroom and check your e-mail on your way back to bed.

23. You start tilting your head sideways to smile. :-) 

24. You're reading this, and...

25. ...even worse; you're going to forward it to someone else.

=========================================

If You Believe Government Statistics About Improving Exam Pass Rates Just Watch A Few Quiz Shows On TV

“Fight Against Stupidity And Bureaucracy”

Saying that another Monday has rolled around again, let’s ease into the new week with a few funnies from the quiz show answers file. As the title suggests it lays to rest any doubt that anyone may have that the education system is working.

When will governments learn that the key to improving education is to teach people more, not to lower the examination pass rate so that the statistics look like things are improving.

You want proof?

Read on…..

Cognac is a fine brandy made from the juice of which fruit?

Coconut.

What 'P' is the Spanish word for quick and is used in English to mean 'at once'?

Pacy.

Who became US president when Nixon resigned?

Kennedy.

Cantaloupe, Galia and Honeydew are types of which fruit?

Orange.

In athletics in which discipline does the competitor hold a metal ball under their chin before throwing it?

Discus.

What word can mean touch-down of an aeroplane or the level floor between two staircases?

Step.

In America the Golden Gate Bridge is a feature of which city?

New York.

What surname do actors Beau and Jeff share with their father Lloyd?

Derek.

The bushwhacker and outlaw Ned Kelly was born in which country?

Canada.

What 'T' is the answer to any addition sum?

Takeaway.

Cantonese and Mandarin are languages which originated in which country?

Spain.

Elderly people are described as being what '..in the tooth'?

Old.

The longest day of the year occurs in which month?

Winter.

What is thirty-nine times two ?

Sixty-four.

What is three hundred and sixty divided by three?

One hundred and sixty.

An annual event takes place how many times a year?

Twelve.

A usual sign for a pawnbrokers shop is how many brass balls?

Five.

What is the capital city of Chile?

Peru.

Juan Peron was the president of which South American country?

Peru.

What is thirty-four minus fourteen?

Twenty-six.

What is twelve plus thirteen?

Thirty-five.

The Johnny Cash song was called 'A Boy Named..' what?

Joe.

Following the death of Roosevelt in 1945 who became US president?

Abraham Lincoln.

What is 358 minus 357?

Four.

The word 'ape' is an anagram of which small vegetable?

Apple.

Which three-letter word means to cut grass?

Trim.

What is a quarter plus a quarter?

An eighth.

What country has the highest number of Portuguese speakers?

Spain.

Vietnam has land borders with Laos and Cambodia and which other country?

America.

Which Indian leader, whose last name began with 'G', took the name Mahatma?

Geronimo.

Which organ of the human body is used for smelling and breathing?

The lungs.

Which Cluedo character has a military rank?

Colonel Sanders

Furious Flabbergasted Facebook Fools Face Frightening Falls From Fanciful Flagging Financial Floatation Farce

“Fight Against Stupidity And Bureaucracy”

First of all, well done if you were one of the people who tried out the quiz. I hope you enjoyed it.

Today’s blog, if the alliterated title full of “f” words hasn’t given it away already, is regarding financial matters. No, hang on, stick with it. It’s not that bad really.

Were you one of the “zuckers” who bought shares in Facebook? I hope the answer is no, because it is another example of the stupidity and madness that greed can provoke in people who should know better, but frequently don’t.

I can’t predict the future, but I knew that the Facebook IPO would cost a lot of idiots a lot of money.

The IPO launch price was tagged at $38 per share or something like 100 times the company’s earnings. It is easy to know why they priced it so. They set the price that high because they thought they could get away with it. Because the herd, unknowing and unthinking, would swallow the crazy hype about the company and buy, buy, buy!

Does that show more than a little contempt for the people you want to invest in your company?  Sadly I think that it does. Not that it is all down to the greed of Zuckerberg. The advising and underwriting banks had a lot to do with it and we know for a fact that they have nothing but contempt for ordinary mortals like ourselves. We are the marks, they are the conmen!

Usually they take the time to milk us dry before abandoning the market and leaving the ordinary investor to lick their wounds. But this time it happened fast. Within hours in fact!

Those who were not in the “loop” and couldn’t buy pre-launch, waded in on launch day and bought, bought, bought from $38 right up to $45 which the shares reached for a couple of minutes.

The poor fools got whacked almost straight away.

The market very quickly began to realize it had been conned, that this was not a LinkedIn IPO and the issue price had been set far, far too high to ever double on launch. An element of sanity crept in. Facebook  promptly started to fall, by about 11%.

In other words if you’d invested $1000 in the morning you would have turned it into $868 in the space of a few hours. If you were unfortunate to buy at the peak price, your $1000 would now be worth just a little over $700. OUCH!

But it wasn’t just individual investors that got caught. Almost every large mutual fund etc., most of whom are run by, let’s be kind and say, poorer quality managers, felt compelled to purchase Facebook shares, not because they though they were a good buy but because they saw other idiots doing the same and they were frightened about the possibility of missing out “the next Big Thing”.

Little do most investors realize, but the situation could have been even worse had the price not been artificially propped up for a while by the investment bank underwriters.

For the benefit of those who aren’t investors and/or who don’t know how the market works in things like this, here is a quick summary. IPOs are unwritten by investment banks like Morgan Stanley. The investment banks therefore have their reputations on the line. If the IPO goes really bad so does their reputation and their chances of being asked to underwrite future IPOs (and they get huge gigantic enormous fees for this work so they don’t want to lose it.)

Thus, in the case of Facebook, when the share price stopped climbing and quickly fell back to the $38 launch price, the investment bank underwriters stepped in and bought heavily. Without their intervention Facebook could have fallen catastrophically on its first day of trading.

Facebook does generate cash, mainly from advertising revenue. It has a vast following and that advertising revenue should rise substantially over time, so the company may one day be worth the $38 and even more. Google launched at $85 and is now worth $600, but it is a proven quantity revenue-wise and the price rise took time.

But, and it’s a big BUT, Facebook would need to be a hell of a lot better managed than at its market launch.   

But for now, I’m with my other “mad” friend Jim Cramer of Mad Money fame who rightly and sensibly advised a pass on the Facebook IPO. There may be a time to buy into Facebook, but the writing on my wall says “not today thanks”. Booyah Jim!

There’s an obvious question that I haven’t addressed. It is, “So what do I think Facebook is worth?” Well for what my opinion on these matters is worth (i.e. probably not much) I would peg the value at a lot closer to $18 than $38. I may be right, or I may be wrong, but I really don’t care because I haven’t bought any. I might reconsider if it the price comes a bit closer to my valuation, but it’s only a might.

The small print.
Fasab disclaimer: this blog post does not constitute professional advice as regards investments on the stock exchange, such advice would only be given and indicated thus if an outrageous fee were being charged and this blog is being given to you for free. Also any investor should always be aware that shares can fall as well as plummet and should act accordingly by not investing any money they can not afford to lose.