« | Home | Recent Comments | Categories | »

Cartoon

Posted on January 18th, 2011 at 16:28 by John Sinteur in category: Cartoon


Write a comment

Goldman to Offer Facebook Shares Only to Non-U.S. Clients

Posted on January 18th, 2011 at 14:37 by John Sinteur in category: Robber Barons

[Quote]:

Goldman Sachs Group Inc. slammed the door on U.S. clients hoping to invest in a private offering of shares in Facebook Inc., because it said the intense media spotlight left the deal in danger of violating U.S. securities laws.

Goldman’s decision to allow only non-U.S. investors to buy shares in the social-networking site is a black eye for the Wall Street firm, which sent jealous rivals scurrying for look-alike deals when the Facebook agreement surfaced two weeks ago.

So only foreign suckers are allowed to lose their money?


Write a comment

Comments:

  1. So foreign suckers get protected by foreign regulation?

    Surely you’re not trying to imply that U.S. regulations are so perfect and wise that they should be followed anywhere anytime regardless of locale? :)

  2. Regardless of regulations, foreign or otherwise, people investing in Facebook are being swindled.

  3. Why is that? Are the books cooked? Are there facts the investors cannot reasonably know?

  4. They are swindled because they are not looking at the facts. Just take the (proposed) marked value of Facebook and divide it by the number of “customers.” This number will still be quite high, like 100 dollars or so. The question then is: “How do you make 100 bucks per Facebook user.” That is a tough act to follow. Even with this conservative estimate and not counting interest. Remember when AOL bought Time Warner? Or WorldOnline, etc. etc. Maybe the number of users will double, but so what? So it’s not cooked books, or lies, or even statistics, it’s lack of common sense.

  5. Lack of common sense among investors does not mean anyone is getting swindled.

  6. @Desiato: I think we agree on the matter but have a different definition of “swindled.” I have seen widows sinking the insurance money that should have lasted the rest of their lives into products like these “encouraged” by nice bank representatives. I call that swindle. Just having to invest money, does not make you money wise. When people hear “investor” they often think: big guy in a big car smoking a big cigar. But in practice it is the pastor heading the charity fund, or the work-accident invalid that got a compensation, or the shop owner that sold out at 70 years. They typically have like half to a whole million to invest, and they need a steady low risk investment to live off. However, “advisers” make their money on return, so they “push” towards higher yields meaning higher risks. Some go too far, they don’t care enough about the risk, it’s not theirs. Well, you can paint in the rest.

  7. @Jan-Mark: I don’t doubt that there are a lot of investment advisors who have led their clients to easily avoidable losses. I support legislation to require disclosure and ethical behavior. But investing is inherently about taking risk. If you have “half to a whole million to invest”, especially on behalf of others (e.g. your church), you cannot skip doing some minimal homework that educates you about this and about possible conflicts of interest.

    But here, those cases aren’t really relevant.

    I’m responding specifically to John saying above, “people investing in Facebook are being swindled”. That’s an accusation of criminal behavior, and it requires something to back it up, specifically a credible claim that people who can afford to make a $2M investment are being deceived by GS or FB.

    This blog exposes a lot of unjust behavior and has a posture of “look at all this corruption and deception”. To remain credible and interesting, the blog has to be careful and accurate itself–otherwise it’s just more name calling. I would strongly prefer that John and others who post avoid pot shots and careless claims. So I asked John to clarify, because it’s not clear to me what deception is being carried out here.

    (And the fact that some think that Facebook will never generate enough ad revenue to justify its valuation does not prove a swindle. The prospectus for the investment may well be up-front about this. Have you read it?)

  8. @Desiato: I agree with you to some degree that calling it swindle is a pot shot. However if you take the stand that the whole marked is a swindle since it is rigged (and there is proof of that) under regulated (my opinion) and basically a ponzi scheme with some side influx (by definition), you might argue that this is a swindle just like all the other trade. It’s a matter of definition, not my definition, but a definition that a great many people hold. Hell, some people even think pension funds are a swindle. (And yes, I have to read these prospecti, I am a trader, but I have to admit, with the Facebook bid, I only read the abstract, I don’t do tech.) For what it is worth, I have to say, don’t swindle yourself, stay away. :-)

  9. @Desiato: I forgot, from what I remember, Facebook made 1.4B turnover and is valued at 30 times that. Twenty times profit (not turnover) I would consider dangerous. Also the reason GSG does not sell to Americans is because they made a huge mistake by advertising Facebook in an unlawful way. If they sell to even a single American they would be indicted for swindle. So maybe that was what John had in mind. They can sell using these hype tactics to non Americans but they can’t sell this way to Americans because according to American laws they are willingly misrepresenting the value of Facebook by means of hype. You have to admit, that is a bit strange. Besides they are also at fault in using different values (50B and 70B) for Facebook to different customers based on the applicable laws in different countries. That alone to me is a red flag. Technically it is not swindle, I’ll grand them that, but I am not buying.

  10. High-level bit: John hasn’t chimed in with a response, so apparently it was a potshot as Jan-Mark suggests.

    @Jan-Mark: I appreciate that you’re sharing your thoughts, but some of it doesn’t seem to apply. For example, even if the stock market is a “swindle” (because of electronic front-running of trades by market makers, I presume?), this FB investment isn’t happening on that market. Or if you mean it’s a swindle because of mass deception on what is or is not a reasonable P/E ratio… such is the nature of bubbles; bubbles are necessarily swindles. GS are investing (I believe) $500M of their own money in FB. Are you arguing that that is merely a deceptive loss leader meant to entice investment from others through which they’ll recoup their losses on the $500M? Really?

    RE American vs other investors: It’s not clear to me why selling to any American would lead to instant indictment for swindle. Why is that?

    And besides that, if I get to drive 200km/h in Germany even though it would not be legal in Holland, is that “a bit strange”? No. See my comment #1: different regulations apply in different jurisdictions and we don’t assume that because something is illegal in one place, it is therefore immoral everywhere. You effectively argue that I should limit myself to 120 km/h Germany inthat is the most that is allowed in Holland and therefore we should all observe that rule no matter where we are.

  11. or perhaps I’m just busy. Expo coming up next week, preparations are taking time.

  12. GS are investing (I believe) $500M of their own money in FB. Are you arguing that that is merely a deceptive loss leader meant to entice investment from others through which they’ll recoup their losses on the $500M? Really?

    On a IPO deal worth 50 billion, that may very well be the case, yes. The best way to evaluate what banks communicate to their clients about investments is to look back. If they’re consistently different from what unaffiliated parties say, you will have to start wondering why. The answer is usually “money”, or rather, what investment by the customers makes the most money for the bank.

    [Quote]:

    In our ranking of the best and worst Apple (AAPL) analysts for Q1 2011, which lists them based on how accurately they predicted seven key numbers — revenue, earnings, gross margins and unit sales — the unaffiliated analysts (blue in the chart at right) took 9 out of the 10 top spots.

    The bottom 20 spots were all held by professionals working for the banks and brokerage houses. Taken as a whole, the numbers they sent their paying clients were off by a margin (9.04%) more than twice as big as those generated by the guys who do it for free (3.94%).

  13. The usual fee for a large IPO is 3% (for a small IPO it can go as high as 7%). For a 50 billion IPO they would still come out ahead if they were to lose all of the $500 mil, which in itself is unlikely enough.

  14. (I was going by the observation that you’d posted a half dozen new items but not responded to comments.)

    OK, so the answer you’re coming back with is that people are being swindled in this particular investment opportunity because analysts employed by banks aren’t performing so well?

    Then you’re suggesting that yes, GS may be putting out $500M as a loss-leader to get the business of leading the IPO for FB. But uhm, so if they successfully manage to get to a $50B IPO (with all the attendant U.S. public offering disclosures than entails), then the people currently investing will be able to sell their shares exactly in line with the current estimated valuation. So much for being swindled.

  15. then the people currently investing will be able to sell their shares exactly in line with the current estimated valuation

    You really missed out on the WorldOnline affair, didn’t you?

  16. Uhm, what? Your justification for calling the FB deal a swindle is that there once was a shady IPO for some other company?

    Can we get a clear and simple statement on what you feel is deceptive in the current non-public FB offering from GS?

  17. No.

    If with all the above comments you still do not see it, there’s nothing I can say that will make it clear for you.

  18. Apparently if you’re a bank, and you’re making a lot of money, that’s enough to prove a swindle. The Daily Irrelevant, where “innocent until proven guilty” does not apply.

Cartoons

Posted on January 18th, 2011 at 9:18 by John Sinteur in category: Cartoon


Write a comment

The Sarah Palin Battle Hymn

Posted on January 18th, 2011 at 8:56 by John Sinteur in category: What were they thinking?

This is, by far, Werner Herzog’s funniest film.


Write a comment

Comments:

  1. …and this is inside a church, I take it? Funny old world.

  2. Please, just shoot me now!

    So, what do we call this, TeaPartaoke?