6 ms·

If every time FB hits a new low it makes HN front page then we are going to have a very boring front page. I fully expect FB to drop below 10.

by SeanDav 14y ago

eru 14y ago
Do you hold a short position?
- SeanDav 14y ago
  I realize this is likely a tongue-in-cheek response, but I wouldn't have touched (and didn't) the FB IPO from either a long or short position. Too much emotion and too much hype. Even if I believed the stock was grossly over priced it would have been silly to take a short position because the stock was and is quite capable of spiking hugely. In this case you might be correct about the value of the stock but can still be taken out the market due to "irrational" movements in the price. The "real" value of FB starts becoming "realistic" somewhere below 10 and unless FB announce some major improvement in revenue generation I just cannot see FB going anywhere but south in the short term.
- tomjen3 14y ago
  The market can stay irrational longer than you can stay solvent.
- raganwald 14y ago
  Not everyone invests. I recall some years ago when I was living in a bit of a moral vacuum. I was at UofT and I spent all of my spare time playing bridge, poker, and backgammon, for as much money as possible. One night I had a chance to play an extremely plump pigeon, I think they call them "whales" today. He asked for various handicaps to narrow my edge, and we worked out something I thought was going to make me a lot of money. He then dropped the big kicker: He wanted to play for extremely high stakes, enough that if he got hot, he would bankrupt me. Naturally, this dismayed me. Although I thought I could keep my cool and not "steam," I knew that being the better player, I wanted the chance to let the odds play themselves out, not subject my self to the possibility of a bad swing. So I sought out a friend who had an extremely large and dependable cash flow. Would he back me in exchange for a share of the profits? We both knew I was going to win. He turned the deal down. "I only bet on myself," he said. I was incredulous. Why turn down an extremely lucrative business opportunity? "I like knowing that I made my own money," he said. He didn't see investing in me as being the same kind of thing as running his various schemes and dealings where he had his own hands on the levers of commerce. I'm not saying it's a better thing, but some people simply aren't that interested in investing, they like to bet on themselves.
  - sanj 14y ago
    I tell folks I either invest in the broadest possible market -- namely index funds -- or the narrowest: me.
- veyron 14y ago
  I shorted from 31.50 down to 27 .. wish I held onto the position ...
  - spaghetti 14y ago
    By what percentage did you increase your initial investment? I'm just curious about trading options in general. Would be interesting to learn how holding onto your postition for that time period paid off.
    - veyron 14y ago
      I shorted the equity directly. The main costs are: - Transaction and Margin costs (those are generally 1 cent per share per side, roughly .06%) - Borrow costs (For that trade it was 30% annualized. I held it for 6 days so its .7%) So the cost to the trade was .76%. The gross return (since you calculate returns relative to the starting point) is (31.5 - 27) / 31.6 = 14.28% and the net return is 13.53% Note that I didnt short as much as I could have -- obviously the return would be higher if I borrowed extra money to short.
      - spaghetti 14y ago
        Interesting. +1 for sharing actual numbers as that helps the learning process along quite a bit imo.
- benologist 14y ago
  Would it make what he said less true? Daily updates on FB's stock are boring.
  - tatsuke95 14y ago
    Lots of articles on the front page are, in my opinion, boring. My solution is to not click on them. I happen to find media and public sentiment on the biggest, most hyped IPO of the decade (ever?) to be fascinating.
  - marvin 14y ago
    I think the comment was more about his stock prediction. It's very easy to make confident claims about the performance of a stock when you're not invested in it yourself. Financial opinions would be a lot more interesting if they were only given by people who followed their own advice to the letter.
    - georgemcbay 14y ago
      Just because you believe a stock will eventually be at a lower price than it currently is doesn't mean it makes sense to short it unless you also think you can time the drop perfectly, and if you think that you're a fool. The virtually unlimited downside of shorting is a lot of risk that has to be factored into any decision and thus shorting isn't to be taken lightly even if you're pretty damn sure of your opinion.
      - eru 14y ago
        > doesn't mean it makes sense to short it unless you also think you can time the drop perfectly, With the right options, you don't have to time it perfectly. Just good enough. You can limit the risk of shorting relatively cheaply by buying way out-of-the-money call options.
tallanvor 14y ago
Before the IPO when a couple of people asked me when I would buy FB stock, I told them that I wouldn't pay more than $10 for it. They're starting to believe me now.

If every time FB hits a new low it makes HN front page then we are going to have a very boring front page. I fully expect FB to drop below 10.

by SeanDav 14y ago

If every time FB hits a new low it makes HN front page then we are going to have a very boring front page. I fully expect FB to drop below 10.

eru 14y ago

Do you hold a short position?

SeanDav 14y ago
I realize this is likely a tongue-in-cheek response, but I wouldn't have touched (and didn't) the FB IPO from either a long or short position. Too much emotion and too much hype. Even if I believed the stock was grossly over priced it would have been silly to take a short position because the stock was and is quite capable of spiking hugely. In this case you might be correct about the value of the stock but can still be taken out the market due to "irrational" movements in the price. The "real" value of FB starts becoming "realistic" somewhere below 10 and unless FB announce some major improvement in revenue generation I just cannot see FB going anywhere but south in the short term.
tomjen3 14y ago
The market can stay irrational longer than you can stay solvent.
raganwald 14y ago
Not everyone invests. I recall some years ago when I was living in a bit of a moral vacuum. I was at UofT and I spent all of my spare time playing bridge, poker, and backgammon, for as much money as possible. One night I had a chance to play an extremely plump pigeon, I think they call them "whales" today. He asked for various handicaps to narrow my edge, and we worked out something I thought was going to make me a lot of money. He then dropped the big kicker: He wanted to play for extremely high stakes, enough that if he got hot, he would bankrupt me. Naturally, this dismayed me. Although I thought I could keep my cool and not "steam," I knew that being the better player, I wanted the chance to let the odds play themselves out, not subject my self to the possibility of a bad swing. So I sought out a friend who had an extremely large and dependable cash flow. Would he back me in exchange for a share of the profits? We both knew I was going to win. He turned the deal down. "I only bet on myself," he said. I was incredulous. Why turn down an extremely lucrative business opportunity? "I like knowing that I made my own money," he said. He didn't see investing in me as being the same kind of thing as running his various schemes and dealings where he had his own hands on the levers of commerce. I'm not saying it's a better thing, but some people simply aren't that interested in investing, they like to bet on themselves.
- sanj 14y ago
  I tell folks I either invest in the broadest possible market -- namely index funds -- or the narrowest: me.
veyron 14y ago
I shorted from 31.50 down to 27 .. wish I held onto the position ...
- spaghetti 14y ago
  By what percentage did you increase your initial investment? I'm just curious about trading options in general. Would be interesting to learn how holding onto your postition for that time period paid off.
  - veyron 14y ago
    I shorted the equity directly. The main costs are: - Transaction and Margin costs (those are generally 1 cent per share per side, roughly .06%) - Borrow costs (For that trade it was 30% annualized. I held it for 6 days so its .7%) So the cost to the trade was .76%. The gross return (since you calculate returns relative to the starting point) is (31.5 - 27) / 31.6 = 14.28% and the net return is 13.53% Note that I didnt short as much as I could have -- obviously the return would be higher if I borrowed extra money to short.
    - spaghetti 14y ago
      Interesting. +1 for sharing actual numbers as that helps the learning process along quite a bit imo.
benologist 14y ago
Would it make what he said less true? Daily updates on FB's stock are boring.
- tatsuke95 14y ago
  Lots of articles on the front page are, in my opinion, boring. My solution is to not click on them. I happen to find media and public sentiment on the biggest, most hyped IPO of the decade (ever?) to be fascinating.
- marvin 14y ago
  I think the comment was more about his stock prediction. It's very easy to make confident claims about the performance of a stock when you're not invested in it yourself. Financial opinions would be a lot more interesting if they were only given by people who followed their own advice to the letter.
  - georgemcbay 14y ago
    Just because you believe a stock will eventually be at a lower price than it currently is doesn't mean it makes sense to short it unless you also think you can time the drop perfectly, and if you think that you're a fool. The virtually unlimited downside of shorting is a lot of risk that has to be factored into any decision and thus shorting isn't to be taken lightly even if you're pretty damn sure of your opinion.
    - eru 14y ago
      > doesn't mean it makes sense to short it unless you also think you can time the drop perfectly, With the right options, you don't have to time it perfectly. Just good enough. You can limit the risk of shorting relatively cheaply by buying way out-of-the-money call options.

tallanvor 14y ago

Before the IPO when a couple of people asked me when I would buy FB stock, I told them that I wouldn't pay more than $10 for it. They're starting to believe me now.