Okay America, How long Are You Going To Take This BS?

“Fight Against Stupidity And Bureaucracy”

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A few days ago I had a bit of a rant against the banksters. You’d have thought that would have done me for a while but there’s more, prompted by yet more procrastination and what can only be called undiluted BS from high government officials.

Banksters-Wanted

This time the main culprit is Attorney General Eric Holder, who Wednesday last testified before the Senate Judiciary Committee.

He told them that he is concerned that some institutions have become so massive and influential that bringing criminal charges against them could imperil the financial system and the broader economy.

Where have we heard that one before?

It’s just his version of the “too big to jail” bollocks that we have been hearing from these gutless government wonders for the past five years.

And unfortunately he isn’t alone in this cowardice. A growing number of lawmakers have effectively suggested the same thing.

Home of the brave? Not as far as these bureaucrats are concerned. They would much rather throw the weight of their bureaucracy against small businesses struggling to stay afloat in the economic storms created by the banksters than tackle the real problem, i.e. the banksters themselves.

Occupy Wall Street Protesters Vs Wall Street Banksters

On the brighter side, if there is one, Holder’s comments and those of his conspirators should bolster an increasingly vocal group of politicians who argue the nation’s biggest banks have become too large and need to be curbed.

Among this group are Sens. Chuck Grassley (R-Iowa) and Sherrod Brown (D-Ohio) who pressed Holder on the issue in a letter sent in February, airing their disappointment that no major criminal charges had been filed against banks or their employees in the wake of the financial crisis.

Also Sen. Elizabeth Warren (D-Mass.) blasted financial regulators during a separate hearing for failing to bring any major financial institutions to trial since the meltdown.

Of course when questioned by Sen. Grassley, Attorney General Holder tried to slither out of answering the issue by saying that, “The concern that you have raised is one that I, frankly, share.”

However, he then quickly added that ultimately the best deterrent would be if they could bring charges against individuals instead of companies, BUT that all of the bad behavior on Wall Street leading up to the crisis may not necessarily have been criminal and that his criminal team has been “as aggressive as they could be.”

In other words, too big to jail yet again. And the government, still afraid to act, continues to pretend to do something while actually doing nothing.

Pathetic!

So over to you America.

You elect these cronies and cowards, or the people who appoint them.

When are you going to demand they act in YOUR best interests and not in the best interests of the banksters?

The March Of Tyranny

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

“Fight Against Stupidity And Bureaucracy”

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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.

Facebook stock has crashed
Facebook stock has crashed

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.

Furious Flabbergasted Facebook Fools Face Frightening Falls From Fanciful Flagging Financial Flotation 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.

Zuckerberg Pre-IPO
Zuckerberg Pre-IPO

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.

zucker
zucker

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!

Zuckerberg Post-IPO
Zuckerberg Post-IPO

But it wasn’t just individual investors that got caught. Almost every large mutual fund etc., most of which 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 underwritten by investment banks like Morgan Stanley. The investment banks therefore have their reputations on the line. If the IPO goes really badly 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.)

Trust Me I'm A Banker
Trust Me I’m A Banker

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.

Thumbs DOWN Facebook stock IPO crash
Thumbs DOWN Facebook stock IPO crash

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!

Jim Cramer "Booyah!"
Jim Cramer “Booyah!”

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. (I know it’s just the same size, WordPress didn’t tell me how to change it.)

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.