Borrow the idea of a speculative protective put portfolio insurance: max loss = put premium, max gain is unconstrained.
Hit those jargon sundowners.
This is yet another entry about Facebook’s valuation at $50 billion by Goldman Sachs.
I don’t plan to argue whether Facebook is worth that whooping sum. I’m more fond of discussing where investors will make money departing from that valuation.
Advocates roar in triumph "for a company that changes the way we bond, $50b is still not much!" This sentimental message has a lot to do with intangible value of the site, what about tangible assets?
I want to apprise that changing the world is the job of Mark Zuckerberg and Sheryl Sandberg and engineers. What investors are interested in is neither ideas nor dreams, but how they would make money from money.
They know that an IPO almost always drives the value of the company up, and putting money in the final private equity stage guarantees a good deal.
They know that equity analysts, under peer pressure, will be forced to issue positive recommendations.
They know that the cloud covering Facebook’s earnings induces speculation, and with Goldman’s back they hope to win the speculation game.
They know that this is the start of another bubble, and inception of bubbles is good timing to enter.
Image is a screen from Wall Street: Money Never Sleeps
We are living in a Chronocracy where the year one enters the workforce shapes his/her career more heftily than his/her capability. Graduating from school in year 2006 at the peak of global economy (or bubble) where many companies over-expand gives one more opportunities, thus relative social power, than being a fresh graduate in 2008.
Unemployment is an obsession, and our belief, self-esteem, attitude toward career planning is drastically challenged.
What to do about it?
Image courtesy: Daylight saving time
An interesting article on programming for financial modeling
I’ll make a guess what these models do:
Re-written from a 5 Dec 2010 short note when Groupon rejects Google’s $6b bid.
and what it means, financially
Now it’s clear to me that Warren Buffett hates gold.
1998 at Harvard:
Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.
Here’s an excerpt from CNBC in 2009:
Becky: the question is, where do you think gold will be in five years and should that be a part of value investing?
Buffett: I have no views as to where it will be, but the one thing I can tell you is it won’t do anything between now and then except look at you. Whereas, you know, Coca-Cola will be making money, and I think Wells Fargo will be making a lot of money and there will be a lot–and it’s a lot–it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that. The idea of digging something up out of the ground, you know, in South Africa or someplace and then transporting it to the United States and putting into the ground, you know, in the Federal Reserve of New York, does not strike me as a terrific asset.
You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what that’s worth at current gold prices, you could buy all — not some — all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?
Possible reasons why Buffetts chooses equity over gold:
Which makes him Buffett.
Nook might be a good product, but the business behind is questionable:
I’m not sure BKS will survive for long to support it.
It doesn’t look good on social-news, social-bookmarking sites:
Let’s just face it, Digg is so 2007 and even if it might still be a cash cow, future doesn’t look good.
Investor sentiment can be measured by data mining information from stock communities.
A sentiment index can even be calculated.
Correlation between expressed personal view with the index can be attributed to reputation. The gravest pitfall of this approach, however, is myopia of the crowd. It takes time for contrarians’ view to be realized.
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