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Facebook Could Spawn Thousands of Milionaires
Hugh Pickens writes "Retuers reports that the world's No. 1 online social network is preparing for a blockbuster initial public offering that could create thousands of millionaires as Facebook employees past and present begin hatching plans on how to spend their anticipated new wealth. 'There's been discussions of sort of bucket list ideas that people are putting together of things they always wanted to do and now we'll be able to do it,' says one former employee who expects his shares to be worth $50 million and is planning to book a trip to space with Virgin Galactic that would cost $200,000 or more. 'It's been a childhood dream.' Another group of Facebook workers has begun laying the groundwork for its own jungle expedition to excavate a relatively untouched site of Mayan ruins in Mexico that sounds like Raiders of the Lost Ark. But for many of Facebook's staffers, the IPO will provide the means to pay off school loans and buy a house or new car and many homeowners and real-estate agents are eagerly anticipating a surge of new buyers that could push prime real estate to new heights. 'If a Facebook guy buys a house and wants to remodel it, maybe the contractor will buy another car,' says Buff Giurlani. 'Maybe the realtor will put a car in. There's a trickle-down effect.'"
This is exactly what everyone needs, a bunch of people believing they are going to be rich soon.
Contrary to the popular belief, there indeed is no God.
As opposed to the spending that would have been done had the money not been looted from the workers to begin with. If we're serious about getting out of the recession, perhaps we ought to do something radical like beef up worker protections and protections for small businesses.
As for FB, my bet is still that it goes the way of MySpace before too long.
... will sell their stocks ASAP. Social networking is the next bubble and those who hold on to their stock as speculators will end up taking a bath. I would recommend the first ones who get their stock sell it within a month or less and then figure out what they want to do for a real job once the bubble bursts.
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
Instead, IF this were to even happen, and I thought trickle down economics died when Reagan's body finally followed his brain, then what would REALLY happen is that the 1% become 0.9%.
Average income, ever heard of it? Well, average income is the total of all income divivded by the number of people with an income. The more people have a high income, the more people need to make a low income to compensate.
If you got 10 people and they average an income of 1000 then the total is 10.000. But if one of them makes 10.000, then the average is still a 1000 as long as the others make zero.
Now, do a fun lookup. Research the average wage in the US and look up how much say a Bill Gates make. Then realize how many people are begging on the street so Bill Gate can be so rich.
That is how the whole 1% vs 99% works. And more people becoming millionaires doesn't do anything but make far more people poor.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
That doesnt mean you treat the people on top like deities while treating regular US citizens with contempt.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
No, the way the economy works is you can't afford a house, so a bank put you in debt and gave the money to a developer. So when you want to remodel, you take out an additional loan or renegotiate your current loan and pay cash to a contractor who is maxxed out on his credit cards. He takes your money and gives it back to the bank to pay down his debt, and so the slavery continues. And here you were thinking you were going to break out of your servitude by remodeling because you were fooled by greed into thinking that house prices will go up forever and there will be eternal demand for homes - especially taking into account the inverted population pyramid.
Seven puppies were harmed during the making of this post.
Really ? I think you have maybe a couple of hours.
Note, there will almost certainly be a hold clause on the stock for normal employees. The ordinary employees will have to hold the shares for a specfic minimum period. This allows the management to dump their shares at the peak price, before the bulk of the supply of shares kicks in.
Groupon dropped from 26 to 16 inside a week. They're still making a loss but there's some muppet out there buying them.
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Before the Fed (which was instigated by the business community who wanted the regulation), the economy was extremely volatile and risky (which business hated). We didn't have recessions and expansions - we had booms and busts where people were filthy rich one month and then begging for food the next.
Once government starts 'regulating business', it means it's there to steal power and sell it and the business that is closest to the trough (the Fed) becomes the government. Since it becomes a part of government that is not beholden to the voters, it can steal without any impunity.
That's overstating it a bit. Before the Fed you still had very powerful people controlling the economy - see any Bio of JP Morgan.The Fed was also created to remove power from people like that.
I like Ron Paul. He brings up some very interesting points and I agree the Fed system needs to be tweeked. But when I read what Ron Paul and the things you have written, there's an obvious lack of knowledge of pre-Fed economic history.
If you haven't read this yet, read Lords of Finance. It's about the Post WWI World Economic collapse and has a wonderful explanation of why we can't be on the gold standard, btw.
I would honestly like to see your take on it. - you're a sharp person who just needs to take a break from the Ron Paul Kool-Aid.
Could someone explain to me how this has a net positive effect on the economy when the reason that the facebook employee made money was because he sold some of his shares to an investor, meaning the investor moved money *into* the stock (which suggests that the investor moved money out of the economy* and into the stock)? Now I suppose the investor has a finite amount of investment money, so he probably shifted money out of other stocks (rather than the economy*) which suggests that other stocks would take a small hit in stock price (since there's a relatively less demand for them), which affects other investors. It just sounds like the whole process would result in a net neutral effect on the economy - i.e. a Facebook employee might buy a new car which helps the economy, but another investor somewhere bought that facebook stock which takes the same amount of money out of the economy (at a different geographical location).
* By "the economy" I mean spending it on consumption.
Wall Street investors don't make money, they take it. You think those dollars are just appearing out of nowhere? If you "make" a million bucks off an IPO, it's because you sold your shares to a sucker who paid more than they're worth. Or maybe your a fund manager, and you just take a few percent off every American's retirement fund every year, as payment for your "skill" at investment (even though you're all but certain to underperform the index in the long run).
Buying and holding a stock for dividends or growth are legit. Venture capital and angel investments are legit. But this IPO pump-n-dump crap is a scam. It's theft. Ditto mutual fund fees and high frequency trading. The robber barons at Wall Street are just siphoning off tiny bits of everyone else's savings every day. It's nice and slow, so you won't notice, but in aggregate it's enough money for them to live like gods.
and so ipo has become the endgame for investors to get out rather than to get _investment_ money into the company.
realistically they don't seem to need an ipo, in the sense that there's nothing they could buy with that 100 billion that would further their business and they don't need the money to keep in operation.
world was created 5 seconds before this post as it is.
Oh please. I've seen experiments in classrooms involving pretend stocks and pretend money and bubbles still form. Once a stock starts to go up, people jump on it hoping to make a buck. And there was *no* control or fluctuation of the money supply in these experiments. So why do bubbles form? Two simple reasons:
(1) People want to earn money.
(2) People are based their predictions of the future on past experience. This means if a stock went up in the past, they expect it to do well in the future. While not everyone falls prey to this all the time, it happens often enough in a market to cause the population, in general, to make very bad decisions, and drive the economy into bubbles.
not the US Fed obviously, but the same idea exactly - people threw everything into tulip growing and flooded the market
No that's not "the same idea exactly" because it happens without government intervention, it happened in the free market, and THAT'S EXACTLY MY POINT.
yes, I'm a victim of the requirement to have somewhere to live when I retire. I had this requirement as a juvenile, and I still have it now as an adult.
I wrote my first program at the age of six, and I still can't work out how this website works.
You make the mistake of thinking users are their customers. They don't need to grow their userbase to grow their customerbase. Customerbase is what is relevant here.
Bullshit. The additional product was what the company sold, which increased its profits, which increased its valuation.
What additional product? Companies whose stock he had bought, or used as a collateral didn't get a single cent from it. The only way anything ended up doing any additional production is if someone else who sold him stocks through some chain of trades ended up buying actually new investment somewhere else. But those money, as I have explained before, are ones injected into the system with a loan. A direct loan to the company that got "real" investment out of this would be far more efficient, so the rest of money just dissipated between investors, brokerages and banks.
Contrary to the popular belief, there indeed is no God.
No, you're a victim of wanting to own a house in a horendously expensive area.
There are plenty of depressed areas. Detroit is the one people hear about the most, but there are LOTS of others. Because there are few or no jobs available in the area (after a plant closing, or whatnot) homes are very nearly given away. I think everyone can muster $1,000 for a place to live, and a little bit more for maintenance. No slavery needed. If you're already set for retirement, the problem of no jobs is a non-issue, and the savings is huge.
That's not the only choice, either. Here in CA, moving to Arizona or Colorado after retirement is pretty common.
And if you insist on living in an expensive area, you still have options. Moving out a bit further from the city centers always helps. Living high-density, ala condos or long-term apartment rental might end up cheaper. There's even the option of mobile homes.
So, you're not a slave of needing a place to live. You're a slave of your desire to live in a certain style and location.
Slashdot gets worse every day... Pipedot: News for nerds, without the corporate slant
They've reached saturation
Precisely why investors should steer clear...
The users of FB are the _product_ and not customers. The customers are the advertisers.
Now I think it is unlikely that the number of users is going to increase significantly. Certainly not by say 100%.
So is the amount of advertising revenue going to increase by 100% - I doubt it.
I suggest you apply the term toxic to this beast - you will lose, its well over valued.
Yes, bubbles form and they burst, but they don't have anything to do with the economy at large. They only cause problems for the economy and not just for the private investors involved if there is a government with an easy money policy backing the deals.
... They only cause problems for the economy and not just for the private investors involved if there is a government with an easy money policy backing the deals." and rewrite it as "Yes, bubbles form and they burst ... and that creates problems for the economy at large". Whether those bubbles affect the whole economy is not dependent on whether or not "there is a government with an easy money policy backing the deals", though I could understand the argument that government intervention could cause additional problems.
I have to disagree with this idea. If other people lose money it affects everyone. We are very interconnected. People who argue for free markets also agree with this idea of people being interconnected. If a bunch of people in an economy waste a bunch of money, then they have less wealth to spend and invest. This makes it difficult for other people trying to sell stuff. If I'm running a business in Detroit or Flint Michigan and suddenly the auto industry leaves, then people have less money and that makes my living as a business-owner much harder. My living as a business-owner depends on what money other people have.
To put this argument in a more modern context: if a bunch of people get over their heads in their mortgage and then default, it causes problems for the economy. That situation can happen whether or not the government provides "easy money". It's easy to imagine real-estate bubbles happening in any economy where home prices are rising quickly, causing people to buy-up expensive homes because they think they can resell them in 5 years for 50% more money - therefore, you should by the most expensive home you can since a larger loan equals a larger return when you sell it again. In that situation, a feeding-frenzy happens and it does not depend on whether the US government is loaning money at 0% interest or 4% interest - in both cases, the value of the real estate is outpacing any 4% interest rate that the US government is offering.
So, I'd take your original statement, "Yes, bubbles form and they burst, but
I'd suggest anyone venturing to invest in stocks to read book The Intelligent Investor by Benjamin Graham