Friday, March 28, 2014

Facebook: The Most Reluctant Growth Stock in Contemporary Market History

A recent column at asked the question of whether it is time to sell Facebook and Buy LinkedIn.  It inspired me to reflect more on the first part of the question more than the latter because of the recent pull-back in Facebook shares apparently emboldening short-sellers .

As for the first part of the question, I have no issue with LinkedIn (LNKD) but I seriously doubt it is time to sell FB and buy LinkedIn.  I have accounts at both.  I am connected to Facebook every day, throughout the day as are hundreds of millions of their billion+ users.
I rarely go into LinkedIn because the protocol of what is appropriate is so narrow.  I like -having- a LNKD account but only go into it maybe once or twice a month.  If I was unemployed maybe I would step it up there but that would only be a temporary situation.
It reminds me of a local Chamber of Commerce meeting where most of the people there are there to do some "card jamming".  You will have a bunch of sales people like insurance agents all trying to sell to each other.  Nothing wrong with that except it gets boring quickly for the average person not looking to sell something to someone.  The CONTENT is what makes FB so superior to others and that isn't going to change anytime soon.
The FB shorts are going to be in a world of pompous agony just like during last earnings call.  You can see them circulating the same tripe filled, wishful thinking talking points as they did then.  They have happy ears.  They look for some BS to which they can jointly cling and then tweet the living hell out of their insipid fallacies.
They can fool a few people in the short-term but they will die by the sword because they have little perspicacity when it comes to understanding business or the nature of "bubbles" ( a word they parrot ad nauseam and erroneously equate it to 1999, a time they apparently spent in middle school while YHOO had a $200+ BILLION market cap before they had a business plan).  Well they just  have not yet reconciled themselves with the fact that Facebook produces more revenue and eps in a single quarter then YHOO achieved in years.

2 lessons of 1999
1. When the media pundits are crying bubble in every article every day for a year, rest assured, you are not yet in a bubble.
2. REAL success stories still arise during and immediately after a bubble.  Google steadily executed and justified its market cap by delivering revenue and earnings.  Facebook is on the same path as it executes and reveals the ignorant and underhanded in the market.  The short sellers circulate rhetoric about "mo mo" like a flock of sheep.  They are the "mo mo" traders.  They circulate hype in the direction that is expedient for their short positions but the hype they circulate is disingenuous.  They talk in terms of "support and resistance" or the number of Puts or Calls purchased as though that were a sound basis for a legitimate investor to engage in ownership of a company at a particular price - or not.

What they do is not investing.  It is not savvy.  It makes them sound as though they have investment acumen to those with rudimentary understanding of investing.  However, they are no different than those clowns who purport to be sages of sports betting. 

Statistically, when you have tens of thousands of people in a room selling their magical system, a group will ALWAYS have a run of luck but in reality they are no better at it than anyone else.

Rest assured there is nobody on that Forbes 400 list that got there by trading momentum long or short or by magical charts.  Most of the people there own great companies and are more often insiders because insiders do not make impetuous mistakes by taking profits way too soon because they do not allow the bottom feeders to scare them out with constant underhanded scare tactics and baseless criticism.  Most people who have invested early in the MSFTs, AAPLs, GOOGs & FBs usually do not make the fortunes that the less emotional minority make because most of the herd sell too early as they fall for the misconception that a 100% return is an obligatory sell signal.
The interesting thing about the Facebook rise that is so different from the unjust rise in1999 bubble stocks is that the rise in FB's share price from lows after the IPO has been the most reluctant rise I've ever seen in a company's stock. 

I was short all of the right tech stocks in 1999 as I can document with time-stamped proof.  I remember the climate well as I then described it on my radio show.  Virtually NOBODY wanted to talk bubble.  It was "new paradigm..." and the praise by analysts and constant celebratory press releases from those companies came at a constant daily torrent.  FB has not been met with the fanfare. 

The climate around FB since the week the IPO was launched has been a chorus of negativity ever since. Look at Wall Street Journal columns, the daily barrage of coordinated Tweets and listen to financial broadcasts.  Any honest person of discernment will see that with regard to Facebook, negativity and polemical of Mark Zuckerberg overwhelm the total body of work out there.  

Facebook skepticism is always given deference in the media.
Facebook is simply the most reticent and reluctant growth company of its caliber.  They talk about direction but they do NOT hype.  They simply execute.  I will take a pass on the "altruistic" inanity of the mo-mo short sellers and stay the course.

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