Facebook IPO

Exactly. Excellent observation on your part.

 

No, the public is in the dark. It never goes into the market statistics. The SEC wants to try to control it, but can't seem to do so. Here is a pretty good description of what goes on.

SEC Speech: Statement on Dark Pool Regulation Before the Commission Open Meeting (Chairman Mary L. Schapiro; October 21, 2009)

 

And this is precisely the dark and unsavory side of capitalism. If a company pollutes the air and waterways, knowingly sells defective products that kill people, undermines the national welfare or even the national security to make a profit, uses sophisticated and calculated methods of disinformation to get children to eat foods that lead to a national obesity epidemic, or engages in practices that cause national or global economic crises, no matter: As long as you can make a profit it's all good. In other words, greed justifies everything. That is unsavory. It's unavoidable in our system, but it's unsavory.

People are intentionally misunderstanding me when I say that I like to put a little bit of risk money into a company that is actually trying to make the world a better place by building electric cars. A start-up company with savvy management and brilliant engineers.

And then further intentionally distorting what I say when I say that a competent fund manager can do a better job of picking stocks than I can.

Day trading is gambling. I've never met a casino gambler who admitted to losing money. They all claim they win. Likewise, I've never met a day trader who admitted to losing money. They all claim they make money at it. I figure at least half of them are lying, which is why I advise people not to gamble in casinos, and not to think they can do better than the professionals at picking stocks. Yes, there are incompetent professionals. I do my homework when picking a fund. I'm not deluded enough to think that I can do better than them at picking individual stocks.

I don't give advice to professionals. I tell ordinary folks that the market is a mug's game and you're likely to lose your shirt if you try to beat the pros. And then, as an aside, I add a caveat: If you like what a company is doing to make the world a better place, and if you feel like putting a little money in it, then you're not trying to make money; you're just buying a toy: something that makes you feel good, and there's nothing wrong with that. There's nothing wrong with buying a stock for reasons not related to profit potential. Greed does not have to motivate every decision you make.

 

You are not being misunderstood. It's just not good investment advice.

Nobody ever said that there is anything wrong with using a fund manager. It was just said that you can do better than a fund manager if you take the time to learn. Big difference. Again, another distortion.

Again in one sentence you admit you don't know how to trade, or invest, and in another you call it gambling. Why isn't it gambling when the mutual fund manager does it? Trading is only gambling when you don't know Wth you're doing!!! I have certain trade set-ups that yield a 68-75 percent chance of profitability. Do you know any casinos that offer those odds?

Of course not. I don't expect a return when I give money to charity. Most people do expect a return when investing. If they didn't they would just give the company a check, and tell them to do what they want with it. Did you do that with Tesla? No, you bought their stock with the hope of making a return. I guess that makes you greedy.

 

Morgan Stanley cut Facebook estimates just before IPO:Insight: Morgan Stanley cut Facebook estimates just before IPO | Reuters

In the run-up to Facebook's $16 billion IPO, Morgan Stanley, the lead underwriter on the deal, unexpectedly delivered some negative news to major clients: The bank's consumer Internet analyst, Scott Devitt, was reducing his revenue forecasts for the company.

 

No, there are speculators and investors. In the case of commodities, there are speculators and consumers.

Speculators are not interested in products, services, or commodities; they are only interested in the price of these items. Speculators are not interested in ownership, they are only interested in turning a profit through a buying/selling transaction.

Take for example petroleum. An oil speculator buys oil futures because he believes oil prices will go up. He has no use for oil, and in fact must sell the oil futures before he is forced to take delivery. An airline, on the other hand, buys aviation fuel because they burn it in their airplanes. One is a speculator, the other a consumer.

In the case of stock we have partial ownership of a company. Stock speculators buy stock hoping they can quickly resell it at a profit. Stock investors buy stock to own companies.

Warren Buffet is a great example of this. Warren Buffet looks for under-valued companies that he can purchase at a good price. He isn't a speculator, he is an investor. He buys a company, improves it, and then pockets the profits. Warren Buffet is an owner, not a speculator.

The fact that you couldn't tell the difference between speculators and investors is a sign of how perverted the market has become. The majority of people in the market today are speculators, not investors. Without real owners, corporations run without proper guidance. Short term profit becomes the almighty goal, and because of it, we have a lot of rudderless companies drifting through our market, crashing into things and damaging society.

Tom

 

No matter how much you dislike speculators there would be no market without them so please get over it. Stocks go up and down because speculators, day traders, swing traders, and yes investors buy and sell the stock.

Please imagine if everyone were a long term holder, and there were no speculators or day-traders. How would the price move? Everyone thinks it's a great company so they want to hold. Hmmm, all of sudden there are no sellers. You need buyers and sellers to make a trade. Who is going to want to sell? And if an investor sells his stock how long would he have had to hold the stock to keep his title of INVESTOR? 6mos? 2 years? Ten?

The next time you sell your car on the open market make sure you find out what the purchaser intends to do with the car. Suppose he was going to flip it, and sell it to someone else for a 500 dollar profit. Are you going to tell him "no, I will not sell it to you because you are what is wrong with this country"?

Whatever you do don't trade your car in because that nasty dealer may have speculated on it, and decided to sell it after one day to the dealer down the street. For shame, for shame.

 

There are some parts I agree with, there are some part I don't. Good fuel for a decent discussion. Here are my main disagreements.

1) Ownership in a company is only meaningful when you have a significant percentage of the shares. Basically you have to be a billionaire. 99% of those who own stock do not fall in that category. So while Warren can truly be an "owner", everyone on this thread is a follower with no ability to affect the CEO or board of directors decisions.

2) Once a company eliminates dividends, or reduces them to essentially nothing, the value of a stock (except to the billionare) is entirely in it's resale value. What else is there? Now in fairness to your point, if there is a significant dividend, then some of your points apply. If not, the stocks only effective value is it's speculative value.

 

Exactly. It always amuses me when I get mailings about "Shareholder's Meetings" in New York or something. Yeah right. Does any regular Joe actually go to those?

 

Failure? They have $84 Billion in market cap! They're now one of the most highly valued corporations in the world.

In my opinion, failure is selling half of your company for half of its worth. If he'd IPO'd at $20 and it went to $35, he would have given away a fortune. He sold those shares at $41.00. He succeeded big time.

 

Once again, you are focused on the notion of trading, which is about speculation. It's a circular justification: Essentially you are saying that you can't have trading without trading, which is true but not a useful statement.

I will acknowledge two things:

1) Traders increase liquidity, which is useful up to a point. We have way, way more speculators than necessary for liquidity.

2) Trading is a fact of life. It won't go away, as it is a natural side effect of having free markets. That doesn't mean that it is good or useful, only that we have to put up with it, just like we are forced to tolerate political parties.

There isn't anything else. Dividends used to be the driving force for owning stock, or control of a company so that you could benefit in some other way. The trading mentality has largely eliminated that, unfortunately.

Smaller stockholders can band together and control a company, but that isn't likely to happen in today's world of huge holding companies and mutual funds. As I said before, the system is what it is, but it doesn't mean it's a good thing.

Individual stockholders exert control just as individual voters exert control of the country. It takes a whole lot of them working together.

As for billionaires, that helps if you want to control huge corporations, but it's not necessary to be a billionaire to control a company. My family owns controlling interest in our corporation, and we certainly aren't billionaires.

Tom

 

Good comments. One note to add. The present SEC rules are optimized to reward the corporation overlords and render the vast majority of small stockholders at the mercy of hard to uncover, hard to stop, and hard to prosecute abuses. One of the most astonishing institutionalized corruptions of the SEC rules is that the Board of Directors can take all unvoted shareholder votes in a public company and vote with them as they see fit. It's as if Congress can take all uncast voter ballots and then fill in who they want to be president once the public is done voting.

 

Well I'm not going to keep this going forever, but I will end with the following:

There have been speculators and traders in every free market that has ever existed including the barter system. This is not a new phenomena, and what they do does not make them unsavory. They are a very important part of the market. The market is a puzzle that needs ALL of it's pieces.

If a corporation does anything that hurts the environment, or people in general, it is not because of day traders or speculators. Bad corporate behavior is not a side effect of speculators, or day traders. Corporations are run by the CEO, and board of directors. These people do not control whether a speculator, or day trader will purchase their stock. They only control the direction of the company.

What somebody does with whatever they purchase is their business as long as it is legal. If I sell my house to someone who wants to speculate that the market will go higher, it is none of my business, and it doesn't mean that person is bad for our country.


It's called capitalism, and it has created the best country in the world, at least for now.

 

Haha. Well, apparently, a lot of shareholders of Berkshire Hathaway flock to Nebraska for their annual shareholder's meeting.

From what I read in press coverage, it seems like such meetings for large cap companies are attended by at least a few hundred people. I think most are those who hold very large stakes though (in the millions of $).

 

Don't overlook that a lot of employees attend, not because the have large stock investments, but that the CEO will tell a roomful of strangers things that they routinely would never bother to tell the employees.

 

If fleas could talk they would tell us how essential they are to dogs.

 

I enjoy HaveNoCents posts, but this was a funny reply none the less.

 

LOL, very true, and if spotted owls could talk they might tell us it wasn't the lumber companies causing their possible extinction, but alas that's not going to happen.

Thanks, but I'm confident you're the only one. You don't make many friends when you disagree with some of the popular long-standing members of the board. I disagreed with two of them in one thread. I should be banished from the face of the earth. My extinction is imminent. :cheer2: