iPoint (iPoint.cz)
World markets  |  August 22, 2012 11:11:06

The illusion of certainty, or why I shortoval Facebook and Apple!


Equity markets among investors sometimes give the impression that they have a solid foundation on which we can rest - a kind of "security". These include history of prolonged fat profits, a large media interest or unique characteristics of the product in comparison with the competition they have no competition.

By the time this "certainty" considered proven right, and anyone with opposing views is referred to as absolute ignorant and stupid, it's time to disappear from the market and beloved share at least some time to leave.

The greatest interest of the media in recent months deserve titles like Facebook or Apple. While Facebook shares aroused my attention frustrating fall, Apple shares contrary, breaking one record after another growth.

In the case of Facebook shares do not think that would be a drop of nearly 50% since the IPO something dramatic. In terms of major strategic investors who bought their shares on the cheap, in fact this is just a selection of the profits and the fall in the order of only one tenth percent. Facebook shares are still absurdly overvalued, and personally I would not buy even if tomorrow fallen to $ 5. The greatest illusion of certainty Facebook share is that they present themselves as "growth", yet it is only an extremely exaggerated "junk" with a high degree of market risk.

On the part of the founders and original shareholders Facebook is a great success, because thanks to the incredible mass propaganda were able to create from scratch a virtual company worth several tens of billions of dollars. As a current investor but I was shaking with fear, especially affordable for the following reasons:

If we look at the very base of Facebook, so here there are virtually no barriers to entry and transaction costs are minimal. It is only a matter of a few months or quarters than those resulting from other similar sites which his fame and popularity can quite easily overcome success Facebook.
Industry shows no economic profit. Putting together a correlated increase in the number of users with revenue growth and even net profit is very inappropriate interpretation of results expected. The absence of economic profit from ordinary activities need not discourage competition for entry into the industry, because the abnormal economic gain comes from propaganda and subsequent plucking naive investors.
Trends on the Internet that are just "trendy, in a cool," is changing so rapidly that at the mention of "ICQ" or "Twitter" people shake their heads in puzzlement, what you're talking about. At the same time a few years ago was a global internet phenomena ...

It is quite possible that the fall by almost 50% since the IPO is a mere precursor to a complete collapse of shares in Facebook. The company can, and perhaps in the future will continue to operate, but with a completely different performance than today's expectations are set. And the phenomenon within a very short time can become okoukaný, boring and uninteresting project without any media interest and attention of investors.

In any case, I would not compare Facebook with Apple. These two companies are completely different, both in terms of business model, product, management or financial performance.Yet here on the part of investors, there is a similar questionable optimism.

That it is an illusion of security where Facebook is not so hard to recognize, let alone when stocks experienced a relatively rapid decline. For Apple, it is much more difficult ...

Read by Pavel Safarik iPOINT.cz to read:

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