Oh, So "Uncle Mark" Told You Facebook was Short Term and a Sure Thing...Right?

I just don't get it! Watch the video below on the rising fury in the aftermath of the Facebook (FB) IPO and you are tempted to believe “Rome is on fire”. Let’s first examine the facts. Facebook on Friday May 18, 2012 went public at the offer price of USD38 on the advice of Morgan Stanley and other Brokers. Understandably with all the hype the stock traded frenetically reaching a high of USD45 and closing at USD38.23 that same day.

Ok fine…so it was not a great start but already the “financial mobs” had gathered ready to declare the stock a disaster zone. In my own estimation, premature conclusion casting extreme doubt, some even writing of the stock… compounded by an already shaky stock market and global economic recession of sorts and a long weekend to fan the flames of doom, there was nowhere for FB to go on opening day Friday but down.

Ok, so a nervous end on Friday and just over 11% down on the second day of trading and today, down overall just under 16% since opening. To my mind, of course there should be some concern at this point about pricing. All things being equal, correctly priced, the price of a stock should at least hold on IPO barring any unforeseen circumstances. But the FB IPO was no ordinary IPO…it came with unprecedented hype and speculation which means in no way should any well-thinking analyst expect the stock to behave normal.

Not only shouldn’t we expect the FB stock to behave normally, we should also bear in mind that stock investments are usually 7 to 10 years in terms of an investing horizon and determining whether the “carry” was worth it in terms of a financial return. At the most basic level the uniqueness of the FB offer and the long term nature of equity investments must be understood.

If I can understand this, why is this Yahoo Finance analyst spewing garbage and adding to the idiotic commentary and conclusions.  Excuse me…”FB has done a lot of reputational damage to its brand”? If you’re in la la land you’d better wake up now for whether you’re a diehard (FB) fan (who has spent every waking moment and ounce of energy building an asset they don’t own) or not...you will know that stocks are a very risky investment so it’s “buyer beware” even if “Uncle Mark” hugged, kissed you and told you otherwise.

This Analyst and the many others I have seen on since the weekend have made me sick to the belly...FB hired a bunch of high profile advisors...why should they take the blame for a stock price that goes down in a few days of trading? So what if some speculators get burnt? That is why they are called speculators and even if you were at Zucks’ party and front row at the wedding and reception, complain all you want but the company promised zilch. So you were punch drunk on the weekend just past and now you are going to sue Morgan Stanley, FB and your hero Mark for misleading you? Come on now!

And what about the 99% and this cockamamie argument that Wall Street “highflyers” have ganged up and robbed them again? What about doing your own analysis and getting independent advice? How about not “betting the farm” on a very risky investment which everyone knows to be true? Forget about “Joe Blow” for a moment though. Are you telling me that Morgan Stanley and company, FB and other Brokers will now experience “push back” from the regulators? Where were they in the first place? Don’t they approve these deals? Yes they do…but they will never accept the blame.  

Here’s the deal though. It’s the damn media creating news and hype…building up characters and events when they want to and feeling they have enough power to tear them down at their behest. What great news it would be if the FB saga continued…how great it would be for the media if FB failed. It’s already a feeding frenzy…and the fire is being stoked to milk the cycle.

I worry a lot…I worry about the everlasting economic stagnation and about the financial markets. To me it’s no longer about fundamentals and understanding short term against medium against long term investing. It’s all about the here and now, the 24 hour news cycle and media behemoths who couldn’t care less as long as ratings remain sky high!

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Digital Estate Planning: Will My Information and "Millions" be Divulged and Shared as I Wish?

Image Credit - Cagle.comA good majority of us simply carry on with our day to day lives and couldn’t care less about the afterlife and those left behind. Others were well intentioned but met an untimely demise.

The luckier and more conscientious of us are keen to ensure that family, loved ones, charities and even pets are well taken care of when they die.

They ensure that their assets are distributed equally between family members. They create a will that will leave all of their assets to those who are closest to them or to causes they are passionate about. They take into account their car, the house, the bank accounts, and any other valuable tangible assets. But, what about their digital or online assets? And what too of the less wealthy who are addicted to the virtual world?

Let’s first put online assets in context. I like to think of them as all those virtual items, programs, or accounts with (or without) monetary value that we accumulate online. They can be in the form of domains, websites, blogs, receipts for bill payment, online bank accounts, other accounts containing valuable information, or any type of account that can help you to reap financial gains over a period of time.

Notice the “help” in bold. It’s worth emphasizing as the “streets” of the virtual world are not “lined with gold” as some may have us believe but in many ways it is just the hint of financial benefit that is heightening awareness and interest among “first adopters” in first inventorying their digital footprint then finding ways to “protect” that footprint in the here and ever after. If there is no monetary value, the sentimentality of photos, love letters are just as important. The thought process and approach is no different from the planning or preservation strategies for real tangible assets most of us are familiar with and have accumulated in the real world.

The fact is most of us still see the “Internets” as “fun and games”…an “appendage” although with obvious growth, that should not be taken seriously. Consider though that your daily online visitations and access to the fun and games require the use of a password used to safeguard accounts containing the user’s personal information. And isn’t this the same personal identification we are so uptight about in the real world? It being “fun and games” though, people simply tend to memorize passwords, rather than to write them down. It’s not a healthy practice. Online accounts are vulnerable to infiltration. If you can’t recall your password, how can you verify that your account was compromised and how do you assist with any ongoing investigation.  

Apart from being “careless” about passwords, people are also reluctant in disclosure to family or friends because of privacy concerns and the belief that no one can be trusted. Even more, it may seem disclosing their passwords to family members (or friends) is not the ideal thing to do especially if monetary gains or the possibilities thereof are involved.

All of the above are understandable but what about persons who are incapacitated to the point where they have poor memories or disabilities which leave them unable to access their accounts? What if they die? What happens to these accounts? Do they disappear into cyberspace, or does the owner of the sites inherit them along with whatever “treasures” they bear? 

These are profound questions. At the very least, if you are unsure of what happens to these accounts should the unthinkable happen, then it is best if you divulge the information regarding your passwords to someone you can trust. This can be a family member, a friend, colleague, spouse, or any other person that you deem trustworthy enough to guard this information and use it only when it is necessary.

For the more conscientious among us, the solution to protecting the online digital footprint is in the virtual world itself. Early adopters are already flocking several sites that are available online offering a way to protect your passwords and promising pass them on to others based on your own instructions. These sites offer a fool-proof way for you to enable other persons who you deem trustworthy to access your information and most able to execute your “will” as you so intended. .

Virtual or digital estate planning, I predict will be a huge industry. It’s just the simple realities of life. We know neither the day nor the hour we will pass on. This may happen instantly such as, an accident, murder, heart attack or any other circumstances which may lead to sudden death or over a period of time such as critical illness. It’s all about awareness and as more internet users come to realise the risks, the demand for the services will increase and so too the space provided online estate planning (both online and offline). Here are some resource sites: 

• The Digital Beyond - a blog about your digital existence and what happens to it after your death;
• Legacy Locker – a website claiming to offer the safest and most convenient way to pass your logins and web passwords to your family and loved ones;
• Entrustet – website allowing people to quickly, easily and securely prepare last wishes for their digital assets. 

Even before you start the search though, you can start by creating a list of your accounts along with your accessible information, passwords, username and do some simple research to find out about the sites which offer this type of service to individuals. I understand if you don’t trust the sites. Afterall the great irony is that all sites are vulnerable to infiltration. If that’s the case, then a simple list will suffice. You can then pass on to trusted family or friends…people who you would want to access to what could be, among other things, some of more most private thoughts. 

You may also check the user agreement that you had signed for your account. This will give you the information in regards to who may be able to access your account and who is not authorized. However some sites stipulate that no third party is allowed to access your information and in this case passing your information on to a trust worthy individual will only be necessary for the likely event of death. A sealed envelope/container or safety deposit box is a simple traditional way of entrusting your online information to others.

Whatever method you chose, the most important thing to take from this post is to start now with your virtual estate planning. Make a plan, protect your information and online assets in the here and now so doing protect your legacy and your family for the inevitable eternal ever after!

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If it’s Purple, We Can Kill It!

Say what you want about Arnold Schwarzenegger and his braggadocios lustful ways but for me, he delivered one of my all time favorite movies and most memorable onscreen “lines”. I speak of the Predator (Part 1)! It was years ago that this unforgettable flick was released in cinemas around the world and I still watch it every time I flip the channels and see it on.

In one scene, after the very believable alien from a distant world just butchered another member of the crack team of Commandos sent to the jungle ostensibly to hunt the same creature, Schwarzenegger in being told the “invisible killing machine” is bleeding replies rhetorically…”if it bleeds, we can kill it!” That line turned out to be the pivotal point in the movie but I won’t spoil the fun, go watch it!

What is the relevance though, of Predator and an onscreen line delivered so long ago? Well, it reminds me of the West Indies cricket team and its tale of woe since…uhm, I can’t even recall. Back in the day when I played completive sports there were those teams we knew we could “kill”. You know, kill as in write-down-the-points-even-before-we-play-kill…and if you follow cricket…that team others know they can kill is the “men of purple”. A shout of "purplish-red" comes from the back but what's the difference? When you have been harrassed like this once proud team of West Indian cricketing superstars, what's a few shades got to do with anthing?

I hope I don’t end up eating my words but the current Test Series underway in England bears testament. The swag and manner of the English team feels familiar…we are playing the West Indies and it’s batting and fielding practice just like they do Bangladesh. It’s painful…I am just logging on to ESPNCricInfo and I see the headline…”Chanderpaul tries to keep West Indies afloat”. Wait just a minute, wasn’t that the same situation in the first innings…in fact, wasn’t that the same headline throughout the entire tour against Australia and which concluded just recently?

Aye caramba, don’t look now but everybody's “beating stick” is currently struggling at just over 100 runs for 4 wickets, England leading by 50 runs with 2 days to go. Shall I call the result? Anyways, I do hope I get to eat my words. Maybe Chanderpaul and the long tail will fight off the marauders and set them a decent total. The irony of all of this is that this is not a young muscular Schwarzenegger slaying a beast…this is puny Chanderpaul almost at retirement age, yet again, being asked to fend off the inevitable "kill".

Sigh! There was a time, you know, when the West Indies was the only Predator in the jungle…but not since like forever. I can see the opposing team locker rooms these days…I don’t even think the players look anymore…they simply know that if it’s purple…er...purplish red, then they can kill it and for every proud west Indian who can recall the glory days, the killing has become a habit but it still pains as hell!

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The video below is the scene with Arnold Schwarzenegger delivering the line…”if it bleeds, we can kill it!”

Regular Housefly or First Wave of "Green Martian Plague" Sent to Decimate Mankind?

I get very paranoid about things I see and don't understand this being 2012 when the world is supposed to end and all. Someone sent me the image above which looks like a regular housefly but looking so robotic and brightly adorned in green, I'm mystified.

The sender is a Baker by profession and apperently is just as obssessed with flies just much as he is with baking.Well, I should clarify. He's madly obsessed in finding ways to keep them out of the contained baking area) and studies them much like a scientist in a lab. I was surprised to learn that flies were that smart, following the baking scent and entering the factory through every vent or opening they can find. He tells me that as soon as they locate a breach and seal off, these smart flies are on the hunt for the next vulnerable zone.

Flies as we all know are not only a big "germ agent" for Bakers, they present a real problem to everyone. My Baker buddy is convinced that the "martian" in the image is in fact part of a national program of pest control involving enginered robots...er...I mean flies that are released in a controlled and strategic manner to reduce overpopulation of the regular housefly we're used to. He snapped the picture just outside his factory so these guys clearly understand the encoded "search and destroy" mission...or were they seduced into defecting...hmm!

Anyways, the explanation from my buddy sounds credible enough (sort of, I'm mulling it)...In the meantime, have you any other possible explanation or is this part of the first wave of "green martian plague" sent to wreak havoc on mankind. Maybe I'm just paranoid...did some googling and found the post just above right. Maybe green flies are not so uncommon after all!

If JP Morgan's Trader Got Knocked Out By Muhammad Ali's "Anchor Punch"...Is He Rogue?

In the 1965 boxing rematch classic, The Champion - Muhammad Ali - took out Sonny Liston in the first round with what Ali himself later described as the "Anchor Punch". To add to the legend, Sports Illustrated apparently timed the punch connecting at four one hundredth of a second. That's real quick. Mr Liston didn't see the right coming and most of us wouldn't either. It's a telling point which brings me to Banks, JP Morgan and ROGUE Traders.

Years ago, I was a part of of a week long Bourse training course put on by Citibank. I was practicing my trade, let's just say, in one of the lesser developed financial markets and so was more used to trading (Forex in this case) of the manual variety. We were confident too...we traded huge volumes, made big profits and some of us even had the "Star Trader" label. Yep...every country has its own King. 

The Bourse took us altogether into another realm. It was simulated Forex trading using computers and hardly any phones like we were used to...we just watched the screen looked for news items and other triggers and traded...well, we were supposed to. It was the experience of a lifetime!

Never had I seen so much overwhelmed and flustered Star Traders and support staff in one place. It was trading at the "speed of light"very unlike the "snail's pace" we were familiar with back in "Flintstone" land . Grown men (and women) simply sat and stared at their screens in utter bewilderment.

Now consider today...if you can. By and large, the Star Trader has been replaced by machines. It's called quantitative or algorithmic trading where computers are programmed to simply execute trades. No human input. Once certain preset conditions exist, the "trigger" is pulled electronically..no noisy Traders, no Runners, no messy back office...just very obedient machines executing diligently.

And execute they do at real lightening speed...not the kind of "lightning" we would have experienced way back with the Bourse course...real lightening speed! In many ways,  it's a blessing for for financial Houses, They get to trade volumes previously unimagined and seven if spreads are razor thin, the incredible  numbers justify it all.

On the other hand, the lightening quick execution means that as quickly as super profits can be made so too, are super normal losses. It's a real dilemma in today's computerised world. It's become a question of who is in control...man or machine?

Here's comfort for fools. At the very highest level, stock exchanges have inbuilt triggers that simply suspend trading after the market has passed a certain threshold in a given trading day. It's that hot. Literally, in the blink of an eye,  much like Muhammad Ali's "anchor punch" which took out Sonny Liston in their rematch, Banks and whole economies could lose Billions.

So what of my Star Trader, the open trading position and that anchor punch on which he blinked. What of the Billion (or two) that he has just cost the Bank? Is he ROGUE? And don't mention anything to me about stop losses as I have personally seen those melt away like a "hot knife through butter".

The market being so creative and so solutions oriented have sought to ease my fears by having tiered stop losses...you different  (while making money of course) but I would not bet the "bank" on it. Always well calculated positions so that even if my once very "obedient Trader" gone crazy, we don't have to duck an anchor punch we certainly won't see.

P.S. I have added the Muhammad Ali/Sony Liston "anchor punch" knockout below for your viewing pleasure. Enjoy!