

Facebook Shows There's a Sucker Born Every Minute - bond
http://online.wsj.com/article/SB10001424052702304065704577422643666002940.html

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akharris
I spent three years at one of the world's largest hedge funds. I was a banker
for a year before that. Most important lesson I learned: Don't play individual
stocks and think you have anything more than a gambler's chance of success.

There's a public perception that stocks as an asset are simple to understand -
good company=stock goes up! - that is hugely far from the truth. Equity is a
complex instrument. The factors influencing the movement of equities are
complex.

For the retail investor, the best move is a balanced mixed of assets designed
to capture long term market beta - effectively the tendency of asset classes
to gain value over time. That's not so easy either, but if you gamble, it's
better to gamble on a cornerstone of capitalism as a whole rather than an
individual company.

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tosseraccount
Did your hedge fund outperform an S&P 500 index fund during the long run?
Investing in stocks does not have to be complex.

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iamgilesbowkett
There's a great infographic that pits human lifespans against this old idea -
that investing in the stock market is always a good idea because it goes up in
the long run. There were many, many times in the last 100 years where "the
long run" was longer than a normal human lifespan.

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akharris
It's really important not to think of this as just "invest in the stock
market." It's "invest in assets with positive expected return." That means you
need to diversify across asset classes, and that doesn't mean domestic and
foreign stocks.

Also, re: stock market - most people's perception is based on the last 30.
That happens to be the longest sustained bull market in history.

~~~
Drbble
Including two crashes.

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howeyc
This article is dead on!

The warning signs were there; ballooning shares offered, late uptick in IPO
price, companies saying facebook advertising sucks, etc.

People got suckered and are crying foul. Welcome to the stock market. Suck it
up, learn from your failures.

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tlogan
"Investing" is stock market is a gamble: the easiest way to learn that it is
casino is by experience (invest and learn).

The problem is that the new generation will not listen suggestions of people
which already learn things the hard-way - so there will be always fresh influx
of suckers which think these 'old' people don't get it.

However, this does not mean that investment in stock market is a bad idea -
but you need to consider it as 'poker': money management is very very
important, learn to cut loses fast, you need to hedge (especially for
unforeseeable events while market is closed), don't bet blind, etc.

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gscott
All Facebook has to do is tie the advertising platform to having a business
page on Facebook to force businesses to spend something on ads. Individuals
should be able to use Facebook free but not businesses. Once that happens the
stock will go way up.

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ryanmerket
They already do this. <http://allfacebook.com/promote-your-page-button_b89788>

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Drbble
You know who made out well on the FB IPO? People who sold in secondary markets
pre-IPO on the hyped pricing.

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sparknlaunch12
I am all for justice but this type of behaviour happens all the time. It has
just made the front page news because of retail investors discovering shares
go down (as well as up). I know this message will get down voted but the
financial markets are a fickle place. Sorry.

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moron
I work for a financial-services company and I _still_ think investing in the
stock market is crazy. There are people who spend their days figuring out how
to separate "investors" (basically, gamblers) from their money either without
getting caught or in a legal-but-underhanded manner. I know I'm stupid enough
to have my money taken from me without understanding how, but I'm not stupid
enough to actually subject myself to that.

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seanalltogether
I still look back to the old old days when stocks actually meant you owned a
part of the company and could expect to turn your stock back in for a payout
from that company in the future. Those are stocks that make sense to me.

Nowadays you're literally buying into the opinion of a company. Sure we use
things like P/E and future growth to form that opinion, but in the end it's a
lot like Bitcoin, it has value because people believe it has value, many of
these stocks have no hard requirements that peg their value. You as a stock
holder aren't entitled to any of Facebooks profits, and voting rights are
worthless.

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crag
Actually currency is the same thing. The dollar has value because we all agree
it has value. It's not based on gold any longer (though one could argue it's
based on oil). It's based on a host of indices that we, as a group set. And
those indices are traded and have a set value. Decided by the buyer (us) and
seller (us).

I'm not complaining. I'm just pointing out that all of our economy is based on
the same principe/model; as long as the vast majority of the group (us)
believe the dollar is worth something, it will be.

Anyone who invested in FB at any time (and that includes the big boys)
believed that FB was a good investment. In other words, they believed the hype
and didn't understand the business. Until someone who they trusted came along
and told them to bail. And here we are.

I actively trade. All the time. But FB I didn't touch. I asked myself, at ANY
time have I ever clicked an ad on FB? The answer: "No". That meant FB is
vapor. People are betting that people (all of us - including the people making
the bets) might, sometime in the future click on ads. Or that FB might come up
with something. Something. (And I bet it's gonna be selling out personal data
- what we browse, like, etc, etc. It's the only real value FB has).

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seanalltogether
I understand that we could get very abstract about the concept of value, but
what I meant to say is that many stocks have no guarantee behind them. If I
buy a big mac, there's a pretty good guarantee that I can eat it, oil I can
burn, a movie I can watch, virtual swords I can play a game better with. Value
comes from how important these guarantees are to the buyer and seller.

Like FB, many stocks have meaningless voting rights, there's no buyback
requirement, and you have no rights to company assets or earnings. You're
guaranteed nothing when purchasing them, and so value comes entirely from
opinion.

~~~
Drbble
There's a faith that eventually there will be a dividend payout or buyback,
like Cook at Apple finally did. But most companies ride the rollercoaster
until they crash.

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quadrant
Somewhat revisionist it seems from the WSJ, I can't recall any point in the
lead up to IPO that they published anything that alluded to problems on the
near horizon.

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mikeryan
Um. The same columnist wrote on Thursday before the IPO _"Here Are 10 Reasons
Not to Buy Facebook Before You Buy It Anyway"_

[http://online.wsj.com/article/SB1000142405270230387960457740...](http://online.wsj.com/article/SB10001424052702303879604577408724178786822.html)

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larrys
Right and that was his opinion. Obviously in any decision (investment or
otherwise) there are going to be people on both sides of the issue.

The problem is knowing whether to believe them or not.

(Like Wanamaker said about advertising, something like "I know 50% of my ads
work but I don't know which 50%")

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jlgreco
Of course it was his opinion.. what else could it be?

The point is that this columnist is not being revisionist.

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larrys
I'm saying that the fact that the WSJ published something which was negative
to the stock (by the same author) in advance is not conclusive in helping you
make a decision. You can read pieces that are pro and con to a particular
product, service, stock all the time (remember the publicity surrounding
iphone as one example). You can always go back and say "see here is what I
said I was right". The question is how many things has someone said (or a
newspaper) and what percentage turned out correct. My point is it was great
that there was that info saying "stay away" in advance. But there have also
been those writings that have turned out wrong.

I don't think this is done anymore but stock brokers used to call prospects
with hot stock tips saying "not asking you to buy this today". Not everyone
got the same tip of course. They would then call back weeks later but only
call the people who they had told about a stock that increased saying "see I
was right, now buy this stock from me now". (A variation was in "Boiler Room"
I believe).

