8 ms·

Facebook Shows There's a Sucker Born Every Minute

101 points by bond 14y ago

quadrant 14y ago
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.
- jinushaun 14y ago
  Facebook's mobile problem was widely published before the IPO. Do a Google News search on "Facebook mobile" and you'll find stories from two weeks ago where Facebook admitted that they don't know how to monetise mobile on their S-1 filing. http://sec.gov/Archives/edgar/data/1326801/000119312512034517/d287954ds1.htm#toc287954_2 http://sec.gov/Archives/edgar/data/1326801/00011931251203451... Risks Related to Our Business and Industry: In 2009, 2010, and 2011, advertising accounted for 98%, 95%, and 85%, respectively, of our revenue. ... increased user access to and engagement with Facebook through our mobile products, where we do not currently directly generate meaningful revenue, particularly to the extent that mobile engagement is substituted for engagement with Facebook on personal computers where we monetize usage by displaying ads and other commercial content; ... Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results.
  - chrismcbride 14y ago
    I think he means that specifically WSJ didn't publish anything about it.
- mikeryan 14y ago
  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/SB10001424052702303879604577408724178786822.html http://online.wsj.com/article/SB1000142405270230387960457740...
  - larrys 14y ago
    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%")
    - jlgreco 14y ago
      Of course it was his opinion.. what else could it be? The point is that this columnist is not being revisionist.
      - larrys 14y ago
        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).
howeyc 14y ago
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.
- deleted 14y ago
  [deleted]
moron 14y ago
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.
- tosseraccount 14y ago
  "Investing in the stock market is crazy" ? http://www.mymoneyblog.com/impact-of-inflation-on-stocks-bonds-housing-and-gold-1900-2011.html http://www.mymoneyblog.com/impact-of-inflation-on-stocks-bon... Real Returns from various asset classes: Stocks: 6.9% Bonds: 2.3% Bills 1.0% Gold 2.4% Housing 1.5% Stocks crazy? Looks to me like the rational thing to invest in.
  - muyuu 14y ago
    Every time I've made numbers equities have underperformed gold and housing long term, esp. when considering commissions and tax. One would normally look for 20-30 years max. returns, as 100+ year periods will include one-off historical events that will change the picture completely. Case in point, the hindsight bias is strong on this one, because it's fact that these countries were chosen because they are the "winners" in recent history. What about the "losers"? you don't know where your country will stand in 110 years time. I also work in the finance industry and I agree that Joe Doe outsider shouldn't gamble a significant chunk of his net worth in the stock market. Gambling being the key word here.
    - veyron 14y ago
      Speculation is a euphemism for gambling. Those people who push equities generally are brokers (and thus get a cut of your transactions) or shareholders (who need people to buy their stocks). Unfortunately the capital formation goals have fell by the wayside.
    - pcwalton 14y ago
gscott 14y ago
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.
- ryanmerket 14y ago
  They already do this. http://allfacebook.com/promote-your-page-button_b89788 http://allfacebook.com/promote-your-page-button_b89788
  - deleted 14y ago
    [deleted]
akharris 14y ago
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.
- tosseraccount 14y ago
  Did your hedge fund outperform an S&P 500 index fund during the long run? Investing in stocks does not have to be complex.
  - iamgilesbowkett 14y ago
    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.
    - akharris 14y ago
      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 14y ago
        Including two crashes.
sparknlaunch12 14y ago
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.
tlogan 14y ago
"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.
Drbble 14y ago
You know who made out well on the FB IPO? People who sold in secondary markets pre-IPO on the hyped pricing.

101 points by bond 14y ago

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.

jinushaun 14y ago
Facebook's mobile problem was widely published before the IPO. Do a Google News search on "Facebook mobile" and you'll find stories from two weeks ago where Facebook admitted that they don't know how to monetise mobile on their S-1 filing. http://sec.gov/Archives/edgar/data/1326801/000119312512034517/d287954ds1.htm#toc287954_2 http://sec.gov/Archives/edgar/data/1326801/00011931251203451... Risks Related to Our Business and Industry: In 2009, 2010, and 2011, advertising accounted for 98%, 95%, and 85%, respectively, of our revenue. ... increased user access to and engagement with Facebook through our mobile products, where we do not currently directly generate meaningful revenue, particularly to the extent that mobile engagement is substituted for engagement with Facebook on personal computers where we monetize usage by displaying ads and other commercial content; ... Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results.
- chrismcbride 14y ago
  I think he means that specifically WSJ didn't publish anything about it.
mikeryan 14y ago
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/SB10001424052702303879604577408724178786822.html http://online.wsj.com/article/SB1000142405270230387960457740...
- larrys 14y ago
  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%")
  - jlgreco 14y ago
    Of course it was his opinion.. what else could it be? The point is that this columnist is not being revisionist.
    - larrys 14y ago
      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).

howeyc 14y ago

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.

deleted 14y ago
[deleted]

moron 14y ago

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.

tosseraccount 14y ago
"Investing in the stock market is crazy" ? http://www.mymoneyblog.com/impact-of-inflation-on-stocks-bonds-housing-and-gold-1900-2011.html http://www.mymoneyblog.com/impact-of-inflation-on-stocks-bon... Real Returns from various asset classes: Stocks: 6.9% Bonds: 2.3% Bills 1.0% Gold 2.4% Housing 1.5% Stocks crazy? Looks to me like the rational thing to invest in.
- muyuu 14y ago
  Every time I've made numbers equities have underperformed gold and housing long term, esp. when considering commissions and tax. One would normally look for 20-30 years max. returns, as 100+ year periods will include one-off historical events that will change the picture completely. Case in point, the hindsight bias is strong on this one, because it's fact that these countries were chosen because they are the "winners" in recent history. What about the "losers"? you don't know where your country will stand in 110 years time. I also work in the finance industry and I agree that Joe Doe outsider shouldn't gamble a significant chunk of his net worth in the stock market. Gambling being the key word here.
  - veyron 14y ago
    Speculation is a euphemism for gambling. Those people who push equities generally are brokers (and thus get a cut of your transactions) or shareholders (who need people to buy their stocks). Unfortunately the capital formation goals have fell by the wayside.
  - pcwalton 14y ago

gscott 14y ago

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.

ryanmerket 14y ago
They already do this. http://allfacebook.com/promote-your-page-button_b89788 http://allfacebook.com/promote-your-page-button_b89788
- deleted 14y ago
  [deleted]

akharris 14y ago

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.

tosseraccount 14y ago
Did your hedge fund outperform an S&P 500 index fund during the long run? Investing in stocks does not have to be complex.
- iamgilesbowkett 14y ago
  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.
  - akharris 14y ago
    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 14y ago
      Including two crashes.

sparknlaunch12 14y ago

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.

tlogan 14y ago

"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.

Drbble 14y ago

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