Facebook Flops, Steve Nash Invests, Fixing California, and More!

So the Facebook IPO came and went on Friday, and the stock closed 25 cents higher than what it opened at $42.00.  Buying IPO's means you are taking ownership of a piece of a business which is being sold to you by the original founders, early investors, and investment banks whose job it is to sell the shares.   Some of the sellers of Facebook include Goldman Sachs, Morgan Stanley, early Paypal and Ebay investor Peter Thiel, and the earliest founders of Facebook.  In the market, there is a buyer for each seller whenever a transaction occurs.  So, a thinking person asks, why am I buying this company at this price, and what am I getting for my dollars? 

Also, who is selling the stock and what might they know about the business that I don't?  On the day, there were over 570 millions shares traded of Facebook stock.  Usually, it is very interesting to see where IPO's trade 3,6, 9, and 12 months after it goes public.  Google had a very successful IPO, one which I thought was vastly overpriced.  Of course, Google acquired a bunch of businesses like Youtube which were very smart.  Not saying Mr. Zuckerberg's creation won't be as successful, just that time will tell on how things play out.


The stock market continues to sell off because of fears about Europe.  The sell off reminds me of 2008 in that it is a slow motion train wreck which builds during each day, and passing week.  Ultimately, there is a climactic event like Lehman crashing.  In this case, it may be Greece or other countries leaving the European Union, and then the bank runs which follow.  If you are an owner of stocks, it is a time when your holdings lose market value.  However, in looking back on 2008, it also is a time when you get presented with opportunities to buy companies at prices which you would have never thought possible.  Are we there yet?  Depends on how you see things and what companies you are looking at.  Saw an article in today's NY Times about how selection of companies does not matter.  Maybe not, but Warren Buffett might not agree with that premise, and he has done pretty well.

Steve Nash, the great NBA player, has gotten into the investment world through venture capital and angel investing.  Great player, and hope he does well-http://www.forbes.com/sites/kurtbadenhausen/2012/05/16/steve-nash-brings-his-nba-skills-to-the-boardroom/


A nice editorial written by a proponent of capitalism of what is wrong with California and how to fix it-http://www.bloomberg.com/news/2012-05-16/yes-there-s-a-case-for-staying-in-california.html


Interesting viewpoint on treasury bonds, which I think are the worst investment anyone could ever make today.  Time will tell but right now, seems like I have been wrong for three years-http://online.wsj.com/article/SB10001424052702303360504577412553217790184.html?mod=WSJ_hp_LEFTTopStories

Finally, a very good article summarizing how serious the Greek situation is-http://seekingalpha.com/article/602951-thoughts-from-the-front-line-dr-frankenstein-s-europe

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