Facebook Up 10% Linkedin Up by 15%

After a long time the much needed bounce back happened today. Facebook shares are trading at 22$'s up by 10% from previous day closing of 20$. Facebook shares hit a high of 22.16$ for the day and going good after the positive jobs data. Facebook shares were down to all time low of 19.82$ after news hit it's 82 million users are fake. At 19.8$'s a facebook share Zuckerberg networth is less than 10billion $'s and he's not anymore the tech's richest person. This values facebook at 42billion 60% less than the IPO price where it got listed . Current P/E is 122 which is too high. 
                                                          Facebook should get its act right . With this kind of market capital erosion it would quickly run out of options to raise capital and get new money inflow which would hinder it's prospects of rising back to profits. Facebook will hit 1000 million users very quickly which would mean a user base of 100 crores i.e, nearly 1 out of 7 has a facebook a/c. 
                                                           Biggest challenge would be to get it's act right in monetizing the platform. Facebook failed miserably to leverage it's platform to monetize the platform to full extent. 
With a daily monthly page views of around 3.88 billion in its quarterly announcement, the business reported revenues of $1.18bn and a loss of $157m for the three months to the end of June.

                                                             Looking from a investment/business perspective it only matters how much an organisation can grow which would determine it's P/E and justify it's valuation. Facebook is already saturated and would grow slowly compared with it's previous growth history. I wouldn't suggest any one to buy the stock unless Mark Zuck turn the company into Green with quarterly profits. The share price gain is a temporary blip . I'm a firm believer of the term "stock's fluctuate within a trend" . Today's spike is just a blip and the long term story looks bleak until FB turns to Green . It may even hit 10$ by the end of the year if the news flow turns negative

Tulip Mania a classic Example of bubble and bust

                                                                                               .                        Have you heard of tulip mania bubble ?           It is a classic example of how stock market bubbles form and bust. If you analyse the story carefully you will understand how humans behave irrationally during times and how you can take advantage of the situation. The story dates back to 1619-22 and happened in Netherland's. It  was a period in the Dutch Golden Age during which contract prices for bulbs of the recently introduced tulip reached extraordinarily high levels and then suddenly collapsed. At the peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsman. It is generally considered the first recorded speculative bubble (or economic bubble). People were so crazy that at one point 12 acres (5 ha) of land were offered for a Semper Augustus bulb. I would say WTF!!!!!!!! ??? This is called peaks of speculation. 

                                                        

                                                               The above image is a graph that shows the price's of tulip's vs time. on Feb 3 is the highest point at which the bubble started bursting and one general trend if you observe the entity comes down at a faster rate than the rate it which it started to move up. It takes long time for the bubble to get built and its gets bust very quickly. this is what I term as crowd behaviour. The same people are buying 2 days before and once the bust happens every one wants to sell and it causes a vicious loop which have cascading effect. And this trend goes on . even in our current economoy lot of bubbles are getting built we don't know when which one will gets bust. Generally the times after bust are the periods where you see some stagnation before an upmove.  I would suggest investors to buy in this period since it offers a signifcant limited downside risk and huge upmove.

                                                      Speculation  is a financial action that does not promise safety of capital investment along with the return on the principal sum.[1] A person or entity that engages in speculation is known as a Speculator. Speculation typically involves the lending of money for the purchase of assets, equity or debt but in a manner that has not been given thorough analysis or is deemed to have low margin of safety or a significant risk of the loss of the principal investment. The more the speculation the bigger the bubble being built. 

                                                        

Stock Market Game

                                                                    Stocks always constantly move up and down in a trend . The motive behind this is to catch the traders on wrong side.  Stock markets are designed to cause losses to 90% of the players.  The stock market by its very nature is designed for you to lose money.  The rallies and reactions within any trend ensure this process is at work constantly. It is created automatically. The market behaves this way because it has to! The weak have to perish so that the strong can survive. Professional traders are fully aware of the weaknesses in traders under stress and will capitalise on this at every opportunity. 

                                                                     Just imagine if a stock is following a constant trend , then there wouldn't be any losers ideally. everyone would bet on the trend side right ? so in a market if some one has to win some one has to lose(*not always true). Hence the big fat people also called as professional traders aka syndicates design and move the stocks in a direction majority of people will get caught on wrong side. 

                                                                     A small trader(small by the size of $'s ) will always have majority odds against him.The professional traders are sooo big that they can move the market in whichever way they want irrespective of news , events, economy, other factors. If god has the ability to turn events I consider these guys analogous to gods in stock markets. Hence I would suggest to "follow the professional traders trend". We 're limited by the resources, knowledge, internal news and the best way to survive among these sharks is follow them :)

Salesforce.com's Purchase of Buddy Media

How Will Salesforce.com's Purchase of Buddy Media affect Facebook?

Salesforce.com is all set to buy Buddy Media for a rumored $800 Million. Salesforce supposedly beat Google in the bidding. This deal follows Oracle’s recent purchase of Vitrue for $300 Million dollars. These two deals are great for all the companies operating in this space (Involver, Wildfire, AppAddictive) Companies that offer a suite of applications for Facebook publishing, Facebook page management, and Facebook ad campaign management stand to benefit the most. Among the independent enterprise Facebook platforms, only AppAddictive has all the components – Pages, Publishing and Facebook Ads API access.

Buddy Media and Vitrue are the platforms agencies and brands use to publish, design pages, and buy ads on Facebook.

When Google IPO’ed in 2004, it created the entire Search Engine Optimization and Search Engine Marketing industry where thousands of multi-million dollar companies exist around Google. (See image below)

Likewise Facebook’s recent IPO means Facebook will create the Social Media Marketing and Social Advertising industry where thousands of multi-million dollar companies will exist around Facebook in the future. (See image below)

When Google went public, its market cap was at $23 Billion. Google’s market cap is now $193 Billion. Google supports an ecosystem of several companies.

The theory of the Wisdom of Crowds and George Soros’ Theory of Reflexivity state that for most of the time, the market is relatively quite good about predicting the future valuation of a company. On the other hand, the theory of value investing is that at times, the markets can be terribly wrong about valuations. For instance, in the Internet boom, the markets were clearly wrong about the valuations of several dotcom companies that ultimately went bust.

But unlike the other dotcoms that held negative losses, both Google and Facebook are hugely profitable. In the case of Google, the “Wisdom of Crowds” seem to have held true. Google went on to become much bigger than its IPO price. What will be the case with Facebook?

Source: dailystocks.com

Nifty View for this week.

                                               This is my first blog post on Nifty trading. I intend to use this blog as a log of my trading activity. I am a 23 year old , dribbling with stock markets from past 2 years. I am not an experienced trader or investor. I would consider myself as a guy who trades on opportunities rather than technical or fundamental analysis.
                                                My journey so far made decent amount of money in stocks and commodities to keep my self recharged for the next bull run (I'm expecting after a crash ). I still believe I have one more year to accumulate my funds to invest in the bull run. I haven't seen any bull run's in my stock career but read about them a lot. Let's see how I will ride the wave.  I would be updating my daily thoughts and my views on stocks here.
                                                I will also share my investments and my portfolio suggestions and articles here . so that everyone can see the live performance of my stocks. I will also share my views on investing and my thoughts on the stock markets.                                                                         

Nifty Future is trading @ 5130 now. Nifty future was in discount for the whole month and it reversed yesterday. Nifty is quoting at a premium of 5 points which is very good for bullish traders who are on the long side.  upcoming days Nifty would be higly volatile since two major events RBI policy on 18th june and greece election results.
                                              RBI is expected to cut the rates since IIP came at a very meagre growth of 0.12% . If the RBI don't cut the rates on mid quarter review date 18th june Nifty is expected to go and retest the levels of 4800 again.


My take for now : short nifty around 5180 with Stop loss of 5250. Buy out of money options if you don't want to take too much risk . my target is nifty would test atleast 4900 by the end of this month. if things don't pan out as expected. But that said if the greece elections and RBI policy turnout to be positive we can see nifty moving ahead breaking targets of 5400. So keep a tab on the news and trade safely.


Technical stuff :
                            The recent run up in nifty is not supported by volume if you look at the chart.


Image courtesy : hbjcapital.com I am a regular reader of this blog and I would suggest everyone
to read/follow this blog since it is a gold mine of financial information.

 Key take aways from the chart : volume seems to be drying up. Hence wait for an exact signal as per the VSA trading strategy to pounce upon the opportunity.

Upcoming events which will impact nifty trend
Greece election result
Inflation data
RBI : 18th JUNE .