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(Toronto Star)   Fark Survey: Shorting Facebook stock: When and how much?   (thestar.com) divider line 83
    More: Interesting, Facebook, IPO, euphoria, market capitalization, University of Western Ontario, road shows, institutional investors, Scotia Capital  
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1671 clicks; posted to Business » on 18 May 2012 at 2:03 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-05-18 11:26:07 AM
The normal market decline will be so long-term that the inherent risk in shorting will not be worth it due to market volatility.

Any serious short-term losses will come when quarterly numbers and such are released, so unless you're insider trading, you won't have the necessary information to short them any sooner than anyone else.
 
2012-05-18 11:43:22 AM
Agree with Sid. I would use options and not a short sale in this case if I wanted in. But I'm not touching this one.
 
2012-05-18 11:44:16 AM
not "short sale"...you know what I mean...
 
2012-05-18 12:24:46 PM
I'll just stay the hell away from this one. Plenty of other targets out there. Besides, I'm down about 50% on my Nokia gamble. Not much appetite for that kind of risk again at the moment.

You guys have fun. Let us know how it goes.
 
2012-05-18 02:09:00 PM
13% of the share unlock in 90 days. another 60% unlock in six months (from Thomson IB Deals).

So I would look at short positions in six months, but timing can bone you on there.
 
2012-05-18 02:10:12 PM
Yep, it's a day one 6 month short. Most tech companies end up gaining about 30% on the day of their IPO. Facebook has a chance of ending up down for the day.
 
2012-05-18 02:15:02 PM

OtherBrotherDarryl: not "short sale"...you know what I mean...


Actually, no, I thought you mean short sale too....

Anyway, I wouldn't. If you really want FB stock, wait a week or two at least to see if the price dips on profit-taking and then take a long position. If facebook has any real value, it's in its ability in the long term to turn its massive data stores into a salable product.

If it doesn't have any real value, don't fark with it unless you're employed by a big investment bank. And if that's the case, don't take advice from Fark threads...

Anyway, you don't need to buy at the nadir and sell at the peak. You can profit nicely by not trying too hard to time it and just exercising some common sense.
 
2012-05-18 02:15:04 PM
Why would anyone short this? I am buying in strong today for long term investing.
 
2012-05-18 02:18:15 PM

Saiga410: Why would anyone short this? I am buying in strong today for long term investing.


farm5.staticflickr.com
 
2012-05-18 02:20:49 PM
I wouldn't short this. Wait about 30 days until the hype settles, see what the price is.

However, my bigger problem with FB isn't the IPO. It's "What the hell are they selling?" One of Peter Lynch's principles is that you don't invest in something you can't explain with just a crayon to a kindergartner.
 
2012-05-18 02:23:43 PM

Peki: I wouldn't short this. Wait about 30 days until the hype settles, see what the price is.

However, my bigger problem with FB isn't the IPO. It's "What the hell are they selling?" One of Peter Lynch's principles is that you don't invest in something you can't explain with just a crayon to a kindergartner.


"Well, Timmy, Facebook is kind of like this..."

*shoves crayon up nose*
 
2012-05-18 02:26:22 PM
Yep, it's a day one 6 month short. Most tech companies end up gaining about 30% on the day of their IPO. Facebook has a chance of ending up down for the day.

Nope, the underwriters are propping the stock up at 38 bucks according to this. That frightens me a bit, they may want to do that for some time to avoid a complete Zynga sell off.
 
2012-05-18 02:29:47 PM

H31N0US: 13% of the share unlock in 90 days. another 60% unlock in six months (from Thomson IB Deals).

So I would look at short positions in six months, but timing can bone you on there.


I'm figuring on December or January puts once the options start trading, but I suspect everybody else is, too, and they'll be too expensive.
 
2012-05-18 02:40:06 PM

Wendy's Chili: "Well, Timmy, Facebook is kind of like this..."*shoves crayon up nose*


My point exactly. That doesn't look like a business model to me. It looks like a tantrum.

Zuckerburg's genius was in getting people to give him all their information; he's probably smart to recognize he doesn't the acumen to turn it into a business.
 
2012-05-18 02:40:21 PM
Is it a bad sign when everyone I talk to, every website, and everyone in this thread is trying to figure out how to short this stock? Additionally, anyone in the know seems to be staying away from it completely?

Is this one big troll by good ole Zuck?
 
2012-05-18 02:42:57 PM

Sid_6.7:
Any serious short-term losses will come when quarterly numbers and such are released, so unless you're insider trading, you won't have the necessary information to short them any sooner than anyone else.


Thread over. Anyone buying this that either isn't an institutional investor or reviewed an SEC financial statement (and you're neither) is a moron.
 
2012-05-18 02:43:49 PM

NewportBarGuy: I'll just stay the hell away from this one. Plenty of other targets out there. Besides, I'm down about 50% on my Nokia gamble. Not much appetite for that kind of risk again at the moment.

You guys have fun. Let us know how it goes.


My money goes into RIMM when it hits $10.
 
2012-05-18 02:48:17 PM
I'm too busy shorting Groupon to care.
 
2012-05-18 02:51:51 PM

xtragrind: Is it a bad sign when everyone I talk to, every website, and everyone in this thread is trying to figure out how to short this stock? Additionally, anyone in the know seems to be staying away from it completely?

Is this one big troll by good ole Zuck?


No, not a troll. Just stupid. He is a kid who doesn't understand the first thing about how stock works, and he has a bunch of financial advisers who thought they could make a bundle by taking it public while the buzz was hot. But the whole purpose of the SEC's cooling off period worked exactly as it was supposed to and major investors all asked where the money was going to come from. When nobody could find an acceptable answer, they decided that there is no money in it. And there won't be until Zuck figures out how to work the advertising. Not just figure out how to present it, but figure out how to deal with software like AdBlock over the long term.
 
2012-05-18 02:56:57 PM
At an exercise price of 6 cents a share Zuckerberg himself doesn't NEED to figure ANYTHING out.
 
2012-05-18 03:01:00 PM
and its under $40 and falling...

come on $39!
 
2012-05-18 03:13:13 PM
i.imgur.com
 
2012-05-18 03:19:59 PM
I've never seen an IPO this hyped up (and overvalued IMO), so I assumed that demand for the stock has nowhere to go but down (~20%) in the very short-term. Now I might looks at puts instead.

/subby
 
2012-05-18 03:24:38 PM

D135: I've never seen an IPO this hyped up (and overvalued IMO), so I assumed that demand for the stock has nowhere to go but down (~20%) in the very short-term. Now I might looks at puts instead.

/subby


If it settles out at the end of the day at $38 and change doesn't that mean it was basically valued exactly right?

Honest question. It just seems to me that Facebook and Zuckerberg nailed this.
 
2012-05-18 03:31:06 PM
I'd avoid it completely.

It'll just take solid report on "Facebook advertising doesn't work" and the companies whole business plan is tanked. At the same time, they'll end up getting bought out by some idiot corporation for $Texas in the same manner as every other social fad.
 
2012-05-18 03:33:39 PM

error 303: D135: I've never seen an IPO this hyped up (and overvalued IMO), so I assumed that demand for the stock has nowhere to go but down (~20%) in the very short-term. Now I might looks at puts instead.

/subby

If it settles out at the end of the day at $38 and change doesn't that mean it was basically valued exactly right?

Honest question. It just seems to me that Facebook and Zuckerberg nailed this.


yes that would be right and they would have judged demand for the stock correctly.

I assumed that the banks and underwriters were trying to sell this for far more than it's worth in order to maximize their fees. When I heard about the price increase, and then the increase in the number of shares issued, I thought "fark, now their just being greedy"
 
2012-05-18 03:34:44 PM
*they're
 
2012-05-18 03:36:48 PM
Out at 40.10.
Don't short a stock when you can't valuate The company one way or another. Just walk away, there is plenty of other opportunities.
 
2012-05-18 03:45:33 PM
Well, if you had shorted it right at the opening bell and covered a little later you would have made a tidy profit. Unless you're an insider, hyped up IPO's are for suckers.
 
2012-05-18 03:47:33 PM

D135: yes that would be right and they would have judged demand for the stock correctly.


There's a claim that underwriters were buying the stock to keep it above $38. initially this could be explained (and was explained) as a fix for the trading trouble they had, but it makes one wonder if it's not still happening....

It started a sudden drop shortly before 3 EST which then tapered and has settled very conveniently right on $38.

Meanwhile, Zynga ate it. They're down over %15 and triggered two breakers today.

Regardless of what it does in the long term, I think today's performance justifies all the people who have been saying it's just a lot of hype. I don't think people are overly confident that social networking alone is a particularly valuable business model even when you have the data FB does.
 
2012-05-18 03:48:01 PM

error 303: If it settles out at the end of the day at $38 and change doesn't that mean it was basically valued exactly right?

Honest question. It just seems to me that Facebook and Zuckerberg nailed this.


The way I've heard it explained is that you usually want to have a small bump (15-20%) to reward the initial investors and to demonstrate interest in the stock.
 
2012-05-18 03:52:48 PM

xtragrind: Is it a bad sign when everyone I talk to, every website, and everyone in this thread is trying to figure out how to short this stock? Additionally, anyone in the know seems to be staying away from it completely?



Actually that's the one thing that makes me think it's probably worth buying.
 
2012-05-18 03:55:49 PM

Fish in a Barrel: error 303: If it settles out at the end of the day at $38 and change doesn't that mean it was basically valued exactly right?

Honest question. It just seems to me that Facebook and Zuckerberg nailed this.

The way I've heard it explained is that you usually want to have a small bump (15-20%) to reward the initial investors and to demonstrate interest in the stock.



If the IPO had been $40, it would have settled at $40 and not below. At $36, it would have settled at $36. Not many who bought the IPO at $38 are going to sell at $38, so it provided a "floor" by self-fulfillment, not by nailing the perfect price.

That said, it was very accurately valued if you note the narrow trading range today.
 
2012-05-18 03:55:53 PM

Splinshints: There's a claim that underwriters were buying the stock to keep it above $38. initially this could be explained (and was explained) as a fix for the trading trouble they had, but it makes one wonder if it's not still happening....

It started a sudden drop shortly before 3 EST which then tapered and has settled very conveniently right on $38.



Its still happening, and will continue to be artificially propped up till close. I'd short that biatch the second the underwriters stop propping it if I could.
 
2012-05-18 04:01:57 PM

error 303: If it settles out at the end of the day at $38 and change doesn't that mean it was basically valued exactly right?

Honest question. It just seems to me that Facebook and Zuckerberg nailed this.


No, because the banks are big boys are artificially propping it up right at $38 so they don't lose their lunch on this thing on the first day. If the stock were left alone to the consumer market it would probably be down around $30 today, and to $20 by next Friday.

A good price for this stock is about $12, and I think it will eventually get there.
 
2012-05-18 04:06:45 PM

Why Would I Read the Article: error 303: If it settles out at the end of the day at $38 and change doesn't that mean it was basically valued exactly right?

Honest question. It just seems to me that Facebook and Zuckerberg nailed this.

No, because the banks are big boys are artificially propping it up right at $38 so they don't lose their lunch on this thing on the first day. If the stock were left alone to the consumer market it would probably be down around $30 today, and to $20 by next Friday.

A good price for this stock is about $12, and I think it will eventually get there.


This. Anyone who thinks their money is safe is about to learn a nasty lesson in hype.
 
2012-05-18 04:20:37 PM

D135: I've never seen an IPO this hyped up (and overvalued IMO), so I assumed that demand for the stock has nowhere to go but down (~20%) in the very short-term. Now I might looks at puts instead.

/subby


You slept through Groupon's IPO?
 
2012-05-18 04:45:29 PM
Curious about two things...
First, why did zynga tank so bad today just because FB opened?

Second, is there any good places to try to do low volume trades with? Like talking about under 100 a month? Always been curious about trying to get in and playing a little ... But don't want to do any more than basically leftover luxury money in the budget. Basically treat the market like a monthly trip to the casino.
 
2012-05-18 05:19:05 PM

BizarreMan: D135: I've never seen an IPO this hyped up (and overvalued IMO), so I assumed that demand for the stock has nowhere to go but down (~20%) in the very short-term. Now I might looks at puts instead.

/subby

You slept through Groupon's IPO?


I think anyone who paid even a little attention to Groupon knew that it was going to tank. Yes, the people who bought into the deals really liked it, but nearly every business that offered a deal through Groupon got a poor ROI on it (i.e. few or no repeat customers after the deal ended). Unless Groupon could do something different that would lead to repeat customers on the business side (which they didn't do), they were guaranteed to flop.
 
2012-05-18 05:25:20 PM

Caeldan: Curious about two things...
First, why did zynga tank so bad today just because FB opened?

Second, is there any good places to try to do low volume trades with? Like talking about under 100 a month? Always been curious about trying to get in and playing a little ... But don't want to do any more than basically leftover luxury money in the budget. Basically treat the market like a monthly trip to the casino.


Most online trade sites (eTrade, Scotttrade, etc...) are set up for small investors.

Alternatively, there are also a ton of "stock market game" websites out there if you would rather play with monopoly money.
 
2012-05-18 05:48:13 PM

Caeldan: Curious about two things...
First, why did zynga tank so bad today just because FB opened?

Second, is there any good places to try to do low volume trades with? Like talking about under 100 a month? Always been curious about trying to get in and playing a little ... But don't want to do any more than basically leftover luxury money in the budget. Basically treat the market like a monthly trip to the casino.


1. This has been the source of a lot of speculation. My $0.02 is that people were holding positions in Zynga waiting for FB (essentially hopping from one fad to the next). They dumped Zynga, which triggered a drop, which triggered more dumping...

2. The question is 100 what? Shares? Or trades? 100 trades a month is NOT low-frequency, it's day trading, and it's dangerous. I realize you are thinking about fun money, but you should be very aware that it's easy to lose your shirt. It's still relatively easy to trade on margin (essentially borrow money for trades). Stocks are not like casinos; you can (and should) win with stocks always, but that tends to not work if you hold a position for a short period of time. Stocks are long-term investments. That doesn't mean that you can't have some fun and potentially make money on short-term positions, but be cautious and avoid any market with lots of idiots (e.g., precious metals and currency). Bonds are a place to get your feet wet, as are ETFs. They are low risk and have the volatility to make things fun. Keep a realistic view of how much you can afford to risk AND lose, and never, ever trade on margin.

3. Oh, in case you meant that you would trade fewer than 100 shares a month, you should be aware that each trade costs you money. It doesn't make much sense to trade in units significantly smaller than a block, which is 100 shares.

4. Another thought is that before you actually start buying, spend a month or 12 or 120 playing a game (essentially trading w/ pretend money). There are numerous free online choices. One thing most investors learn is that they overvalue their wins and undervalue their losses (I can't remember the name of this phenomenon, so if someone knows...).

5. Best lesson about the market is from Peter Lynch, who ran the hugely successful Magellan fund in the 80s. He revealed that most investors lost money, despite the fund returning an average of 29% per year of his tenure. The reason? Buying high and selling low.
 
2012-05-18 06:03:33 PM

Rent Party: NewportBarGuy: I'll just stay the hell away from this one. Plenty of other targets out there. Besides, I'm down about 50% on my Nokia gamble. Not much appetite for that kind of risk again at the moment.

You guys have fun. Let us know how it goes.

My money goes into RIMM when it hits $10.




Monday, probably. It lost another $0.50 today. I don't own it but have been following for the last couple of days since I had gotten a suspicious email from my QNX* salesman.

I use QNX for a couple of clients, but haven't heard from this guy in about 3 years. Just out of the blue, he put the squeeze on me to purchase a bunch of runtime licenses - before the end of the month, no less. Very non-typical and non-Canadian behavior. They are definitely in panic mode.

* [QNX is a unix-like operating system for real-time control softwares. They were bought up by Blackberry a couple of years ago.]
 
2012-05-18 06:12:36 PM

Secret Polish Boyfriend: One thing most investors learn is that they overvalue their wins and undervalue their losses (I can't remember the name of this phenomenon, so if someone knows...).


Confirmation bias?
 
2012-05-18 06:17:20 PM
I would never, ever short a stock that has so much hype around it.

Volatility + shorting = good chance of a big mistake

I'd be more inclined to buy an options strategy that rewards volatility. There are plenty.
 
2012-05-18 06:21:35 PM

Secret Polish Boyfriend: 2. The question is 100 what? Shares? Or trades? 100 trades a month is NOT low-frequency, it's day trading, and it's dangerous. I realize you are thinking about fun money, but you should be very aware that it's easy to lose your shirt. It's still relatively easy to trade on margin (essentially borrow money for trades). Stocks are not like casinos; you can (and should) win with stocks always, but that tends to not work if you hold a position for a short period of time. Stocks are long-term investments. That doesn't mean that you can't have some fun and potentially make money on short-term positions, but be cautious and avoid any market with lots of idiots (e.g., precious metals and currency). Bonds are a place to get your feet wet, as are ETFs. They are low risk and have the volatility to make things fun. Keep a realistic view of how much you can afford to risk AND lose, and never, ever trade on margin.

3. Oh, in case you meant that you would trade fewer than 100 shares a month, you should be aware that each trade costs you money. It doesn't make much sense to trade in units significantly smaller than a block, which is 100 shares.

4. Another thought is that before you actually start buying, spend a month or 12 or 120 playing a game (essentially trading w/ pretend money). There are numerous free online choices. One thing most investors learn is that they overvalue their wins and undervalue their losses (I can't remember the name of this phenomenon, so if someone knows...).

5. Best lesson about the market is from Peter Lynch, who ran the hugely successful Magellan fund in the 80s. He revealed that most investors lost money, despite the fund returning an average of 29% per year of his tenure. The reason? Buying high and selling low.




Thanks.

When I was saying 100 - meant in terms of dollars, max. ie a level where I won't lose my shirt, and it's 'fun'.
I had looked around before, and saw that with the transaction fees required - the plan really didn't work at the time as you pointed out, but sometimes my google-fu is fairly weak and had never asked a broader base to see if something like what I was looking for existed.

My plan (before researching it, based on random internet comments) was to basically take a certain amount at end of each month - play with it, see how it holds out to the next month - add a little more. So it'd be like, probably one or two days a month where I'd be 'active' and then wait to see if I 'won' that month.

Is there any of the 'stock market trade games' you'd recommend? Or perhaps a different form of investing?
 
2012-05-18 06:23:30 PM
Staying away from any stock who may or may not be backstopped longer than I can hold a short. But then I mostly just do index trades... single-company risk is ridiculous these days.

I do wonder how much of today's ferocious volume was really retail investors and not the underwriters or hedge fund action. Who's left to sell to?
 
2012-05-18 06:29:38 PM

Caeldan: Is there any of the 'stock market trade games' you'd recommend? Or perhaps a different form of investing?


Options are a fun thing to learn and trade, even if just pocket change for fun.

I don't have any cash to invest right now, but learning options strategies (I had to for work) was a blast.

Like I mentioned before, of course there are simple strategies to bet on a stock going up and down... but also strategies to make money if its volatile (lots of ups and downs), static (no ups and downs), and all sorts of complicated things.

Also, tons of free online classes and actual free in-person seminars.

I can't really direct you somewhere specific, because one of my clients does this, and I don't feel comfortable mentioning them specifically. But its easy to Google it.
 
2012-05-18 06:30:49 PM

anfrind: Secret Polish Boyfriend: One thing most investors learn is that they overvalue their wins and undervalue their losses (I can't remember the name of this phenomenon, so if someone knows...).

Confirmation bias?


It's similar (and certainly related), but this one is specific to behaviors like gambling.
 
2012-05-18 06:38:55 PM

Peki: I wouldn't short this. Wait about 30 days until the hype settles, see what the price is.

However, my bigger problem with FB isn't the IPO. It's "What the hell are they selling?" One of Peter Lynch's principles is that you don't invest in something you can't explain with just a crayon to a kindergartner.


Ads, I guess. And Farmvile.
 
2012-05-18 06:56:53 PM
With the talk being that the underwriters were propping the thing above $38 today, I wouldn't try shorting it any time soon. Too many shenanigans afoot, and it could take days or weeks for that sort of thing to clear out. Way too many goofy things associated with this stock right now.

A shame that didn't see Zynga coming today. That would have been a good short for anyone that could have anticipated that. I figured the opposite would have happened.
 
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