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(Business Insider)   "Investor" is planning on putting his daughter's entire $25,000 college fund into Facebook IPO. "If it goes the Google route, I'll be in good shape"   (businessinsider.com ) divider line
    More: Stupid, IPO, Mr. Supple, CEO Mark Zuckerberg, Henry Blodget, SAI, Dustin Moskovitz, Google, Wall Street Journal  
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5408 clicks; posted to Main » on 15 May 2012 at 12:46 PM (3 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-05-15 01:09:03 PM  
My prediction of returns (average):

www.biology.arizona.edu
 
2012-05-15 01:09:03 PM  

gingerjet: Google paid $1.6 billion for youtube. A product that has never made a profit for google.


Lots of Google's products don't make a profit (GMail, Maps, etc), but do contribute to the bottom line by keeping users within the Google ecosystem.

Just about the only part of Google that DOES make money is ad sales. Almost everything else they do is either designed to:
a) display the ads they've sold
or
b) collect more data so they can do more accurate ad placement
 
2012-05-15 01:09:30 PM  
I like how right in the article it says most people are just gonna flip their stocks for a quick profit. If that right there still makes you think your 25k is going to grow long-term you might as well just burn it see what 25k looks like on fire.
 
2012-05-15 01:12:00 PM  
You have less than a year's worth of tuition at most of the diploma mills in the US there, sir.

Set it on fire if you want, she's headed for cosmetology.
 
2012-05-15 01:13:17 PM  

clyph: gingerjet: Google paid $1.6 billion for youtube. A product that has never made a profit for google.

Lots of Google's products don't make a profit (GMail, Maps, etc), but do contribute to the bottom line by keeping users within the Google ecosystem.

Just about the only part of Google that DOES make money is ad sales. Almost everything else they do is either designed to:
a) display the ads they've sold
or
b) collect more data so they can do more accurate ad placement


Pretty soon they can move out of that tiny shack they are based in!
 
2012-05-15 01:13:41 PM  

JohnBigBootay: I think that's changed recently. Not sure how official it is but I do know no one is laughing about it anymore and Google is quite happy with the purchase. Took a while though for sure. Instagram... I still don't see it myself but it's his money.


That was also in 2006 - 6 years ago. Which makes Instagram look like a bargain. Facebook's mobile efforts haven't been that well received - this was a way to get the talent to fix that and also get new customers. I don't have a problem with it.

/not investing in Facebook
 
2012-05-15 01:14:22 PM  

clyph: Lots of Google's products don't make a profit (GMail, Maps, etc), but do contribute to the bottom line by keeping users within the Google ecosystem.

Just about the only part of Google that DOES make money is ad sales. Almost everything else they do is either designed to:
a) display the ads they've sold
or
b) collect more data so they can do more accurate ad placement


Exactly how is that different than Facebook's model again?
 
2012-05-15 01:14:38 PM  
25K was only enough for half a semester at a school worth anything anyway.
 
2012-05-15 01:18:07 PM  
Can he even do that? Haven't they shut off access to the common investor and reserving purchases for the investment firms who can purchase buttloads at one time?
 
2012-05-15 01:18:15 PM  
Hey, ya gotta spend money to make money.
 
2012-05-15 01:18:18 PM  

clyph: gingerjet: Google paid $1.6 billion for youtube. A product that has never made a profit for google.

Lots of Google's products don't make a profit (GMail, Maps, etc), but do contribute to the bottom line by keeping users within the Google ecosystem.

Just about the only part of Google that DOES make money is ad sales. Almost everything else they do is either designed to:
a) display the ads they've sold
or
b) collect more data so they can do more accurate ad placement


This. Google isn't really a tech company. It's an advertising agency. It's the same business model as newspapers. Give away the papers. Sell ads.

We aren't Google's customer. We are their product.
 
2012-05-15 01:18:53 PM  

gingerjet: That was also in 2006 - 6 years ago. Which makes Instagram look like a bargain.


Well, maybe. Provided anyone remembers instagram in six years and it generates revenue like youtube eventually figured out how to do.
 
2012-05-15 01:18:54 PM  
lh5.googleusercontent.com

Granted, they are two completely different markets. But....

A) If you want to equalize out the market caps between Ford and Facebook, Facebook would have to have revenue somewhere around $300 billion, Which means that facebook's revenue would have to grow at something like 11 billionity percent.

B) Facebook actually doesn't NEED the cash. Which probably means that most of the investors cash will just be going straight into executive/VC pocketbooks.
 
2012-05-15 01:21:45 PM  
step 1 - Buy mortuary stock.

step 2 - ts4.mm.bing.net
Facebook IPO week one

step 3 - orouni.net
Facebook IPO week two

step 4 - profit
 
2012-05-15 01:21:46 PM  
Dear Broker,

Please short 20,000 shares of Facebook for me as soon as possible after the IPO.

If you need to reach me, I'll be on my yacht.

Sincerely,
MDB
 
2012-05-15 01:22:20 PM  
25 grand wouldn't have purchased her what, half a semester? Sounds like she wasn't going to be getting much education anyway unless he wins the lottery.
 
2012-05-15 01:24:05 PM  

prekrasno: So that's what, three semesters down the toilet?


That depends. If his daughter is over 14 then yeah, three semesters. If she is 13 or younger then that 25K might buy a semester of college, but probably will only buy about six hours at a community college by the time his snowflake gets there.
 
2012-05-15 01:24:24 PM  
I wish him well, but he is NOT an investor, he is a speculator. And a bad speculator at that - you should never sink more than 2% of your available cash into a given speculation, that way you can shrug it off if it ends up going belly up (at least that's the general rule from Forex that I like to apply everywhere else).
 
2012-05-15 01:25:49 PM  

abfalter: What an idiot.

People get rich investing in things that most folks DON'T see coming. This overhyped POS could tumble in stock value at any time.

In fact, it's being overhyped PRECISELY to get fools to invest in it.


The real question is when to short sell?
 
2012-05-15 01:27:13 PM  
$25k? That's like half of a semester. Might as well go all in.

Chances are she was going to end up a prostitute or stripper anyways. She can always dress up as a doctor during one of her routines. Or maybe a sexy physicist.
 
2012-05-15 01:27:45 PM  
If you can't afford to lose it, you shouldn't be "investing" it.
 
2012-05-15 01:29:39 PM  
This whole Facebook IPO is reminiscent of the "roaring 20's" stock scams perpetuated by bankers and financiers. Essentially, a whole bunch of really rich people buy up the stock at a sweetheart pre-IPO price, and sell the hyped stock at a ridiculous IPO price to the idiot public.

A stupid website that offers instant chat, and java games is worth over $10B, yeah I'm sure this is the next world IT super power up there with IBM, Apple, Google, because we all know that offering idiots more games and ways to tell us about how their party last night went is the path to economic prosperity.
 
2012-05-15 01:29:56 PM  

Lost Thought 00: 25 grand wouldn't have purchased her what, half a semester? Sounds like she wasn't going to be getting much education anyway unless he wins the lottery.


In eight more years, probably even less than that. It sounds like the parent realized that he was way behind the curve on this and decided to go for the "Hail Mary" approach.
 
2012-05-15 01:30:46 PM  
I know rich people who did farked up things like this during the dot com boom.

1) Separate your income from child's.
2) Have child fill out FASFA to get subsidized loans.
3) Take loans and invest them.
4) Profit like a m'fer while I was stuck working my way through school.
 
2012-05-15 01:31:25 PM  

styckx: Have we reached peak Facebook yet? I'm eagerly anticipating it's demise.


Yes, at least until the offer 2 billion for pintrest.
 
2012-05-15 01:31:55 PM  

snowshovel: [lh5.googleusercontent.com image 640x500]

Granted, they are two completely different markets. But....

A) If you want to equalize out the market caps between Ford and Facebook, Facebook would have to have revenue somewhere around $300 billion, Which means that facebook's revenue would have to grow at something like 11 billionity percent.

B) Facebook actually doesn't NEED the cash. Which probably means that most of the investors cash will just be going straight into executive/VC pocketbooks.


Funny how I see nothing about liabilities, there.
 
2012-05-15 01:32:43 PM  

ISO15693: It's only a terrible idea if executed poorly. The thing is, there are many, many, many people who think like her, and people will over-pay to get in, now that there is so much hype, with the same hope. And that hype/hope -will- drive the price up at first.

Yes, of course, FB is extremely overvalued by historic margins (25X? For real?) and will plummet, but if she rides the initial wave of hype, and sells after a week or so, she could make out like a bandit.

Raspberry Pi's, for example,were selling for $350 on ebay for the fist few weeks after their initial release sold out. $35 hobbyist computers, selling for 10x the value, just because people thought the price would continue go up and they'd be able to sell it for even more. Just because of the hype. Some people made out, but only those that timed it perfectly. I personally was able to buy just over 300, and my roughly 10K investment returned $73,500 after 1 week (my average price selling them was $280), because of that hype. So it is doable. Now if you excuse me, my driver is taking me to the gym in 26 minutes.


So Facebook stock will be a short lived Tulip Bubble?
 
2012-05-15 01:33:03 PM  
What the hell. Facebook has enough suckers to make that investment worthwhile for some years.
 
2012-05-15 01:40:09 PM  

cwolf20: What the hell. Facebook has enough suckers to make that investment worthwhile for some years.


The issue is that their market is slowly drying up - eventually they'll hit a point where the number of new sign ups is a slow trickle. Then, there's all of the scrutiny they so lovingly get from the dept of justice which most likely won't get better.
 
2012-05-15 01:40:50 PM  
Facebook stock will likely hit both $45 and $25 within the first month. The trick is knowing when to sell short.

I'll be waiting until the $50 put LEAPS are cheap, then I'm buying them. There is no way this stock will stay this overvalued for a whole year.
 
2012-05-15 01:43:05 PM  
Advice to Mr, Supple -

Get In

Get Out, quickly

Otherwise you'll need to learn Chris Rock's advice to Dads.
 
2012-05-15 01:45:05 PM  

Quantum Apostrophe: We've reached peak apostrophe abuse. I'm eagerly anticipating a time when people will understand the difference between its and it is.


And put yourself out of business?

Then what? Branch out into pouncing on 'alot' or the difference between "there", "their" and "they're"?

/I'm bored, too, obviously.
 
2012-05-15 01:45:54 PM  
As for me, I am waiting for the FARK ipo and I am going to double down with my children's college fund AND my IRA.
 
2012-05-15 01:46:33 PM  

scubamage: cwolf20: What the hell. Facebook has enough suckers to make that investment worthwhile for some years.

The issue is that their market is slowly drying up - eventually they'll hit a point where the number of new sign ups is a slow trickle. Then, there's all of the scrutiny they so lovingly get from the dept of justice which most likely won't get better.


So its basically a pyramid scheme? I think that's about right.
 
2012-05-15 01:48:26 PM  

FeFiFoFark: What's this "Facebook"?


I don't rightly know, except if you see that word in an email subject, you know the sender should be ignored.
 
2012-05-15 01:49:56 PM  
blogs.dallasobserver.com

Closest thing to a Warren Buffett facepalm I could find.

/Hot like a portfolio going down in flames.
 
2012-05-15 01:53:07 PM  

Slaves2Darkness: prekrasno: So that's what, three semesters down the toilet?

That depends. If his daughter is over 14 then yeah, three semesters. If she is 13 or younger then that 25K might buy a semester of college, but probably will only buy about six hours at a community college by the time his snowflake gets there.


even if he bought into state school "pay today's tuition for tomorrow's college" plans, it's less than two years for sure.

still more than I have saved for my kid who goes to school in the fall
 
2012-05-15 01:55:08 PM  

Erebus1954: clyph: gingerjet: Google paid $1.6 billion for youtube. A product that has never made a profit for google.

Lots of Google's products don't make a profit (GMail, Maps, etc), but do contribute to the bottom line by keeping users within the Google ecosystem.

Just about the only part of Google that DOES make money is ad sales. Almost everything else they do is either designed to:
a) display the ads they've sold
or
b) collect more data so they can do more accurate ad placement

This. Google isn't really a tech company. It's an advertising agency. It's the same business model as newspapers. Give away the papers. Sell ads.

We aren't Google's customer. We are their product.


So anytime you see ads you are a product? So you are a product every time you walk down the street and see all the billboards..or pay and see a movie and have 20 minutes of ads in them. Or buy a magazine and they are filled with ads. Run! We are all products at all times! Run for the hills! Don the tinfoil!
 
2012-05-15 01:58:03 PM  

Karne: Erebus1954: clyph: gingerjet: Google paid $1.6 billion for youtube. A product that has never made a profit for google.

Lots of Google's products don't make a profit (GMail, Maps, etc), but do contribute to the bottom line by keeping users within the Google ecosystem.

Just about the only part of Google that DOES make money is ad sales. Almost everything else they do is either designed to:
a) display the ads they've sold
or
b) collect more data so they can do more accurate ad placement

This. Google isn't really a tech company. It's an advertising agency. It's the same business model as newspapers. Give away the papers. Sell ads.

We aren't Google's customer. We are their product.

So anytime you see ads you are a product? So you are a product every time you walk down the street and see all the billboards..or pay and see a movie and have 20 minutes of ads in them. Or buy a magazine and they are filled with ads. Run! We are all products at all times! Run for the hills! Don the tinfoil!


That's not what he means. What their product is is your information. Every page you search, every ad you click, every image you look at, they use to build a profile on you. Then, they make sure to show you the ads that advertisers want you to see for products you are most likely to buy. About the only way a billboard could be equivilent was if it changed based on feedback from cameras placed strategically throughout your home town that tracked your every move
 
2012-05-15 01:59:04 PM  
This is how the 1% get most of their money these days: from amateurs who think they are going to be rich.

"Daddy, now that we've lost my college fund and Facebook is gone, I think I'm going to replace it by putting an add on www.teen-cocksuckers-for-hire.com".

"That's a good idea, princess. Just remember everything daddy taught you and especially about the teeth."
 
2012-05-15 02:00:38 PM  

Madman drummers bummers: Dear Broker,

Please short 20,000 shares of Facebook for me as soon as possible after the IPO.

If you need to reach me, I'll be on my yacht.

Sincerely,
MDB


All of you geniuses here who are so sure that Facebook shares will soon plummet should follow the example of Mr. MDB here and short the hell out of it. On margin, even. It's a sure thing, right?

Nah, don't. I doubt Facebook will be the next Google or Amazon, but the market can remain irrational longer than you can remain solvent.
 
2012-05-15 02:04:38 PM  
That's one of the reasons why we're in the sh*tter...assholes throwing away their family savings in hopes of getting rich quick.
 
2012-05-15 02:05:10 PM  

Clemkadidlefark: Advice to Mr, Supple -

Get In

Get Out, quickly

Otherwise you'll need to learn Chris Rock's advice to Dads.


This. Sure the stock will eventually sink but there's going to be a few months while everyone dog piles on the latest fad stock. Trick is knowing just when people realize this and get out. Even if it doesn't have much of a run, the stock isn't going to go bankrupt.

Worst case: he loses *some* money, not nearly all of it.
Likely case: he gets in, rides the wave up, gets out, nets a decent chunk of change
Best case: the stock keeps on trucking like Google, and now that they have extra capital, they start buying up other products and expand as a company, thus sending their stocks way up and the investor makes a shiatton of cash.

Sounds like it's worth the gamble.
 
2012-05-15 02:05:32 PM  

scubamage: Karne: Erebus1954: clyph: gingerjet: Google paid $1.6 billion for youtube. A product that has never made a profit for google.

Lots of Google's products don't make a profit (GMail, Maps, etc), but do contribute to the bottom line by keeping users within the Google ecosystem.

Just about the only part of Google that DOES make money is ad sales. Almost everything else they do is either designed to:
a) display the ads they've sold
or
b) collect more data so they can do more accurate ad placement

This. Google isn't really a tech company. It's an advertising agency. It's the same business model as newspapers. Give away the papers. Sell ads.

We aren't Google's customer. We are their product.

So anytime you see ads you are a product? So you are a product every time you walk down the street and see all the billboards..or pay and see a movie and have 20 minutes of ads in them. Or buy a magazine and they are filled with ads. Run! We are all products at all times! Run for the hills! Don the tinfoil!

That's not what he means. What their product is is your information. Every page you search, every ad you click, every image you look at, they use to build a profile on you. Then, they make sure to show you the ads that advertisers want you to see for products you are most likely to buy. About the only way a billboard could be equivilent was if it changed based on feedback from cameras placed strategically throughout your home town that tracked your every move


So...how is that so bad? On my profile I 'liked' motorcycles and animation. So on my page, I get advertisements for both. I prefer that over ads for tampons or WWE wrestling events. Guess what? This is the current and future for advertisements. For the people that really hate that - they are going to have a ROUGH time in the current years.
 
2012-05-15 02:09:30 PM  

Spindle: Clemkadidlefark: Advice to Mr, Supple -

Get In

Get Out, quickly

Otherwise you'll need to learn Chris Rock's advice to Dads.

This. Sure the stock will eventually sink but there's going to be a few months while everyone dog piles on the latest fad stock. Trick is knowing just when people realize this and get out. Even if it doesn't have much of a run, the stock isn't going to go bankrupt.

Worst case: he loses *some* money, not nearly all of it.
Likely case: he gets in, rides the wave up, gets out, nets a decent chunk of change
Best case: the stock keeps on trucking like Google, and now that they have extra capital, they start buying up other products and expand as a company, thus sending their stocks way up and the investor makes a shiatton of cash.

Sounds like it's worth the gamble.


Rule #1: Gamble with other people's money, even if it's your daughter's.
 
2012-05-15 02:10:28 PM  

Karne: scubamage: Karne: Erebus1954: clyph: gingerjet: Google paid $1.6 billion for youtube. A product that has never made a profit for google.

Lots of Google's products don't make a profit (GMail, Maps, etc), but do contribute to the bottom line by keeping users within the Google ecosystem.

Just about the only part of Google that DOES make money is ad sales. Almost everything else they do is either designed to:
a) display the ads they've sold
or
b) collect more data so they can do more accurate ad placement

This. Google isn't really a tech company. It's an advertising agency. It's the same business model as newspapers. Give away the papers. Sell ads.

We aren't Google's customer. We are their product.

So anytime you see ads you are a product? So you are a product every time you walk down the street and see all the billboards..or pay and see a movie and have 20 minutes of ads in them. Or buy a magazine and they are filled with ads. Run! We are all products at all times! Run for the hills! Don the tinfoil!

That's not what he means. What their product is is your information. Every page you search, every ad you click, every image you look at, they use to build a profile on you. Then, they make sure to show you the ads that advertisers want you to see for products you are most likely to buy. About the only way a billboard could be equivilent was if it changed based on feedback from cameras placed strategically throughout your home town that tracked your every move

So...how is that so bad? On my profile I 'liked' motorcycles and animation. So on my page, I get advertisements for both. I prefer that over ads for tampons or WWE wrestling events. Guess what? This is the current and future for advertisements. For the people that really hate that - they are going to have a ROUGH time in the current years.


Its not good or bad, its simply what it is. People look at google and think they're getting great services for free (and they're half right). What they're also doing is providing google the chance to profile them, and sell bits of their web browser real estate to advertisers - the real customers of google.
 
2012-05-15 02:10:34 PM  
In 2011, Zynga accounted for approximately 12% of our revenue, which amount was comprised of revenue derived from payments processing fees related to Zynga's sales of virtual goods and from direct advertising purchased by Zynga.

Look at Zynga's numbers and tell me if that revenue is sustainable for FB (it isn't).
 
2012-05-15 02:10:56 PM  
He'll be able to update the Malkiel classic, "A Random Walk Down Wall Street" with "A Random Plunge Down Wall Street".
 
2012-05-15 02:13:41 PM  
We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings for use in the operation of our business and do not intend to declare or pay any cash dividends in the foreseeable future.

Rule #3 of investing: Never long a stock that doesn't have a history of dividends.
 
2012-05-15 02:14:38 PM  
Facebook the Beenie Baby of the Stock Exchange.
 
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