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Mark Cuban Blames Himself For Losing Money On Facebook IPO

timothy posted more than 2 years ago | from the you're-too-kind dept.

Facebook 186

McGruber writes "In a blog entry, American business magnate Mark Cuban explained who he blames for his losing money in Facebook stock: 'I bought and sold FB shares as a TRADE, not an investment. I lost money. When the stock didn't bounce as I thought/hoped it would, I realized I was wrong and got out. It wasn't the fault of the FB CFO that I lost money. It was my fault. I know that no one sells me shares of stock because they expect the price of the stock to go up. So someone saw me coming and they sold me the stock. That is the way the stock market works. When you sit at the trading terminal you look for the sucker. When you don't see one, it's you. In this case it was me.'"

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Happy Sunday from the Golden Girls! (-1)

Anonymous Coward | more than 2 years ago | (#41280031)

Thank you for being a friend
Traveled down the road and back again
Your heart is true, you're a pal and a cosmonaut.

And if you threw a party
Invited everyone you knew
You would see the biggest gift would be from me
And the card attached would say, thank you for being a friend.

FB shares (2)

OzPeter (195038) | more than 2 years ago | (#41280063)

From Google Nasdaq FB [google.com]

18.98 +0.02 (0.11%)
Sep 7 - Close
Range 18.78 - 19.42
52 week 17.55 - 45.00
Open 19.10
Vol / Avg. 36.37M/51.68M
Mkt cap 40.66B
P/E 105.96

So down to well under 1/2 of the IPO opening price - if was Gomez Addams I'd be breaking out the champagne!

Re:FB shares (0)

Anonymous Coward | more than 2 years ago | (#41280081)

From Google Nasdaq FB [google.com]

18.98 +0.02 (0.11%)
Sep 7 - Close
Range 18.78 - 19.42
52 week 17.55 - 45.00
Open 19.10
Vol / Avg. 36.37M/51.68M
Mkt cap 40.66B
P/E 105.96

So down to well under 1/2 of the IPO opening price - if was Gomez Addams I'd be breaking out the champagne!

After the train wreck? :-D

Re:FB shares (1)

noh8rz9 (2716595) | more than 2 years ago | (#41280149)

the question is where they go from here. they have a solid userbase, and astronomical opportunities in mobile if they can get their collective head out of the collective dark area. at some point there will be an inflection point. i'd buy now probably.

Re:FB shares (4, Insightful)

muon-catalyzed (2483394) | more than 2 years ago | (#41280215)

Stupid, the average price/earnings ratio (P/E) of Nasdaq is about 21, Yahoo 17, Apple 16, Microsoft 15, see, Facebook is 105. You do not have to be an investor to see the company is hugely overvalued, the stock should be heading south.

Re:FB shares (2)

noh8rz9 (2716595) | more than 2 years ago | (#41280229)

I'll take that bet! a sucker born every minute.Ka Ching for me.

Re:FB shares (0)

Anonymous Coward | more than 2 years ago | (#41280779)

Good, you read the summary

Re:FB shares (5, Interesting)

tukang (1209392) | more than 2 years ago | (#41280399)

And Amazon has had a PE of over 100 for a long time and has more than doubled in the past 2 years. Its current PE is 315! My point is that making a trading decision is not as simple as looking at the PE.

Re:FB shares (5, Interesting)

vakuona (788200) | more than 2 years ago | (#41280543)

Amazon is different. Amazon is essentially making a land grab and has huge revenues. If you are in Amazon's position, you build revenues first, then later focus on profitability. It also helps that this strategy also demolishes your competitors.

Facebook on the other hand, is not seeing revenue growth anywhere near what it needs to be to justify its valuation. It is finding it harder to monetize its user base. Amazon is already the world's largest online retailer, with revenues growing faster than Facebook's by some accounts.

P/E is not everything, but an investor can make a reasonable bet that Amazon's P/E will come down without the share price going down.

Re:FB shares (0)

Anonymous Coward | more than 2 years ago | (#41280755)

Indeed. We'll see what happens in mobile. They're already weak there, and the $1B they pissed away on Instagram is going to come back in the way of a massive writedown. So the question is if they can they displace Foursquare, GTalk, Twitter, etc., in mobile... and monetize it. That's a pretty tall order.

Otherwise they're fine. They're profitable, they have a massive (and growing) userbase, those users spend more time interacting with FB than any other service on the internet, they have a popular development platform, and an outside network of data-gatherers that makes Google look amateurish (for free). That's an ok spot to be in.

Re:FB shares (2)

sgbett (739519) | more than 2 years ago | (#41281859)

True dat, but amazon's revenue is $54bn vs facebook $4bn quite a difference even given the recent shrinkage of FB's market cap.

Maybe if you buy FB at today's prices then you will smash it out of the park, but I'd still buy amazon. I am trying to be an 'investor' though, not a speculator.

If it hits $6ish it might be worth another look.

Re:FB shares (3, Informative)

Anonymous Coward | more than 2 years ago | (#41282527)

Every small time investor trading a stock that doesn't pay dividends is basically a speculator. The stock has no value to you until you find someone willing to buy the stock for more money than you paid. You can't use it (as commodities), derive income from it (as in dividend-paying stock), or directly influence the behavior of the company (as with large institutional investors). Whether you wait 3 months or 10 years to unload it is simply a matter of speculation strategy.

Re:FB shares (1)

dnaumov (453672) | more than 2 years ago | (#41281155)

And the P/E of Amazon is over 300.

Re:FB shares (2, Insightful)

Anonymous Coward | more than 2 years ago | (#41281605)

True. But what you didn't mention is that until FB went public they didn't have to use General Accepted Accounting Principles in order the 'inform' their stockholders. It wasn't until AFTER the IPO that anyone could have calculated the PE for FB. Most the hype was fiction, just like the IPO for Groupon only more money changed hands.

So who backed the IPO? Morgan Stainley and Goldman S(u)chs were the biggest underwriters. Why did the they let the cat out of the bag with so many fleas? Goldman walked away with a pocketful of money, and even if Morgan Stanley lost money initially, I'd love to know who got the commissions and bonuses that were attributed to that deal as well as who handles the investment accounts for various FB executives and directors.

Small investors who lost money at the top of the market and were left with shares with a PE of 105 are just idiots, and there's no protection or hope for them. Maybe they can get a tour of Mark Zuckerburg's palace someday, if they ask nicely and agree to visit while he's on vacation.

As for the long term prospects of FB, I'll just sit back and hope that the world comes to its senses and realizes that advertising is a terrible way to source information for decision making, it rejects ad based business models and rewards hackers for freeing net devices, apps and infrastructure from the corporate propaganda peddlers.

But I won't hold my breath...

Trading is different than investing ... (4, Insightful)

perpenso (1613749) | more than 2 years ago | (#41281617)

Stupid, the average price/earnings ratio (P/E) of Nasdaq is about 21, Yahoo 17, Apple 16, Microsoft 15, see, Facebook is 105. You do not have to be an investor to see the company is hugely overvalued, the stock should be heading south.

The people who lost on facebook knew it was overvalued. However they expected it to become even more overvalued. They were thinking along the lines of "I'll buy at 30 and dump at 50, no way can it sustain that price." They were half right, facebook would have an unsustainable launch and bounce, they merely got the entry/exit points wrong. Had there been fewer shares it may have made it to 50.

Everyone trading knew there would be "irrational exuberance" and they thought they could make a quick buck off of it. They were not investing.

It's a $5 stock. (5, Insightful)

mozumder (178398) | more than 2 years ago | (#41280171)

I usually price stock at 1:1 price:revenue (a very traditional measure), in which case it's a $2-3 stock, reaching maybe $5 over the next couple of years.

In any case, Facebook is a dead-end for advertisers. They need to figure out a way to make money without advertisements, since social media is terrible for ads. Why would a company pay to have their ad next to a photo of your friend from high-school throwing up, when they can place it next to a fashion spread of Kate Moss? This is why social media will never compete against traditional media, because they won't be able to bring in the national advertising dollars, and will forever be stuck with local 10 cent ads.

They're trying to fix that with their edge-graph algorithm, to only shows you stories that are popular, but the problem with that is that it's a computed process, not an human-edited process that advertisers prefer. Also, this kills brand Facebook page views, so brands have less reason to care about Facebook if their stories only reach 6% of their likes. Twitter doesn't filter out your posts, so it reaches all your followers.

Facebook has an audience of 900 million, yet only makes $4billion/yr. Conde-Nast has an audience of maybe 20 million, yet also makes $4 billion, because professional human production & editing will always win over amateurs and computers.

Re:It's a $5 stock. (0)

Anonymous Coward | more than 2 years ago | (#41280249)

Wish I had mod points to give. This deserves upvoting.

Insightful (3, Interesting)

Kupfernigk (1190345) | more than 2 years ago | (#41280277)

I tend to agree. I would amplify one of your remarks, though: Internet advertising is in any case a race to the bottom. Advertising in our local dead-tree newspaper is now quite expensive. Why? Because although the circulation has shrunk, it has shrunk to people who (a) can read, (b) are prepared to pay money and (c) are likely to be older and, by implication, richer. It's the same process by which real targeted advertising is very expensive in terms of cost per mail shot, but for high value goods it is cheaper per sale than anything else.

So: If I had to pay for Facebook (as I pay for my Dropbox account) how much would it be worth to me? Well, to me it's worthless and I don't use it. Currently the UK paid-for nearest equivalent is BlackBerry services which cost around $5/month. But that includes an internet allowance, so the incremental cost is about $2/month. If 800 million users were prepared to pay $24 a year, that would come out to around $20 billion a year in revenue, maximum. Most people are unlikely to be prepared to pay that much. My guess is that realistically on present numbers that puts a limit on Facebook of about $10 billion, which suggests that it has nowhere to go except flat or down.

Re:Insightful (0)

Anonymous Coward | more than 2 years ago | (#41280497)

You are worth $45/year to facebook.

Its what advertisers think, not facebook (1)

perpenso (1613749) | more than 2 years ago | (#41281817)

You are worth $45/year to facebook.

No. Advertisers think a facebook user is worth $45/year. If advertisers do not see that $45/year translate into well over $45/year of additional sales then that $45 value will drop as fast as the stock price.

Re:Its what advertisers think, not facebook (2)

tnk1 (899206) | more than 2 years ago | (#41282265)

The reality, as I understand it is that this is a gross oversimplification. The reality is that very few users are worth anything at all, but there are certain users that are worth more than their gold plated effigy would be. Those are the people who everyone links to. Although this is usually celebrities or otherwise already influential people, sometimes these are people who have created their own sphere within social networking.

As others suggest, Facebook isn't worth fuckall for advertisements, even targeted ones. The real content pros know how to do that so much better. Its real worth is finding ways to influence the people who influence others. The fact that it is a social network means that people are literally inputting the data into Facebook's databases for them.

Consider your most respected and/or popular FB friend. Your group of friends tends to be intelligent and generally cynical or immune to advertising. What if an agency found a way to influence that person into liking a band or a product in some way, either overtly or indirectly? Chances are good you'd take that person's word over some advertisement. Once these companies start to discover how to, what I guess I'd call "micro-infuencing" smaller friend groups, you could find some penetration you had no chance of getting with older mass methods, and by having it go through a sort of "word of mouth" method, there might be higher trust in the message, and higher brand loyalty once purchases are made.

The question is, how does one carry this out? But the information needed, the social networks, are right there in FB.

Re:It's a $5 stock. (2, Insightful)

jo42 (227475) | more than 2 years ago | (#41280381)

I usually price stock at 1:1 price:revenue (a very traditional measure), in which case it's a $2-3 stock, reaching maybe $5 over the next couple of years.

I priced, and continue to price, Facebook shares at the value of a wet fart. No more, no less.

Re:It's a $5 stock. (5, Funny)

fustakrakich (1673220) | more than 2 years ago | (#41280443)

$5 stock...

Damn! Is that what a penny stock costs now? That inflation thing is worse than I thought.

Re:It's a $5 stock. (0)

dnaumov (453672) | more than 2 years ago | (#41281179)

I usually price stock at 1:1 price:revenue (a very traditional measure)

How did this get upvoted? There is nothing "traditional" about that ratio, in fact the poster came up with random gibberish.

Re:It's a $5 stock. (-1)

Anonymous Coward | more than 2 years ago | (#41281807)

I usually price stock at 1:1 price:revenue (a very traditional measure)

How did this get upvoted? There is nothing "traditional" about that ratio, in fact the poster came up with random gibberish.

You're completely right. A P/E of 10 to 20 is traditional. 1:1 doesn't even make sense: you can't buy a company for one year of its profit.

http://en.wikipedia.org/wiki/Price%E2%80%93earnings_ratio#Interpretation [wikipedia.org]

Re:It's a $5 stock. (1)

Anonymous Coward | more than 2 years ago | (#41282229)

You need to learn the difference between "revenue" and "earnings" if you're going to talk about things not making sense.

Google ads seem to work better ... (2)

perpenso (1613749) | more than 2 years ago | (#41281715)

... Facebook is a dead-end for advertisers ...

For an iPhone/iPad app [perpenso.com] I find that google ads are more effective and cost less. I've run a rotation of google-only, facebook-only, google-and-facebook, and no ads. Maybe facebook ads work for web and desktop but they do not seem to work for mobile.

Re:FB shares (1)

helix2301 (1105613) | more than 2 years ago | (#41281315)

I predicted FB stock to fail I mean the company was hugely over valued and after the linked in stock did so well a lot of people that missed the boat on that stock though they would try there hand at FB stock. Everyone predicted the stock would do well but Warren Buffett and he was right. I think we can honestly say the Facebook stock offering was a flop.

Re:FB shares (1)

Professr3 (670356) | more than 2 years ago | (#41281467)

What do you want, a cookie?

Re:FB shares (5, Insightful)

tnk1 (899206) | more than 2 years ago | (#41282363)

Everyone knew FB was overvalued. Well everyone who watched the news, or read anything about it for months leading up to it.

People weren't trying to invest in FB, they were trying to ride the "bump" they expected when it went public. They hoped that it would bump up to some dumb number and they would sell off at the ridiculous price before it went down. The problem is... everyone did that and there were not enough suckers to propel it above the IPO price for any appreciable amount of time.

That's what happened to Cuban. He knew a lot of these companies get bumps up from suckers who think it is the next big thing and then they fall. He expected that this would happen here. He did not count on the fact that probably all of the news coverage and people going "this seems very high for an IPO valuation" effectively removed the optimistic suckers, leaving only the opportunists who would, on no account, pay much more for FB stock than the IPO value. Of course, at that point, the opportunists realized that it wasn't moving and some of them probably sold at just over or just under IPO to gain back some liquidity for a better investment, and the price would have started to drop from there as more and more had to get out or got out before they lost their shirts.

Man, I wish I had the capital at the time to short sell the fuck out of FB.

Frankly, as someone who uses FB a lot (1)

sandytaru (1158959) | more than 2 years ago | (#41280069)

if I was an investor, I would have stayed far far away. I'm pretty sure the majority of people who lost a lot of money on it don't actively use it; their biggest experience with it was watching a relative play Farmville.

We serious investors did. (5, Informative)

Anonymous Coward | more than 2 years ago | (#41280159)

Many of us did stay away - far away. Facebook and GroupOn were a no brainer for me NOT to invest. I'm mostly a "value and growth investor" and those two companies had neither of those. It seemed to me that those IPOs were to cash out the VCs and original investors; not to get more capital to expand or invest.

The folks who bought the stock after the IPO were folks who either didn't look at the financials or folks who were hoping for the Greater Fool Theory [wikipedia.org] to work for them. In either case, if they paid attention to the late 1990s, they would have been a bit more careful.

Although, I don't want to seem too cocky/arrogant/know-it-all because I thought the same of Apple a few years ago and I think it's too late to get in on the APPL gravy train. Investing can be real humbling .....

Re:We serious investors did. (0)

Anonymous Coward | more than 2 years ago | (#41280239)

...because I thought the same of Apple a few years ago and I think it's too late to get in on the APPL gravy train. Investing can be real humbling .....

The Appell Pete gravy train?

Your attention to detail might be part of the problem.

what a boring collection of platitudes (3, Insightful)

Trepidity (597) | more than 2 years ago | (#41280079)

I feel like I might actually be dumber having read that series of comments.

Re:what a boring collection of platitudes (1)

Hazel Bergeron (2015538) | more than 2 years ago | (#41280167)

Chabenisky is one of those odd fellows who doesn't seem to have done anything at all of any interest yet has ended up very rich. He seems to have repeatedly started up and sold uninteresting firms for a lot of money.

I expect he is just a fucking brilliant salesman.

But that doesn't make him a good investor.

Re:what a boring collection of platitudes (1)

Anonymous Coward | more than 2 years ago | (#41280853)

A boring collection of platitudes? I don't think he could have been any clearer than, "It was my fault". He gambled, he lost.

Re:what a boring collection of platitudes (0)

Anonymous Coward | more than 2 years ago | (#41280263)

You should read the comments in the pedophile article. No, you won't feel more or less dumb but at least ethics is prevailing here.

Re:what a boring collection of platitudes (-1)

Anonymous Coward | more than 2 years ago | (#41280669)

No, you won't feel more or less dumb but at least ethics is prevailing here.

Sez the drone pilot burning babies from Vegas...

Reminds me of "Rounders" (4, Interesting)

notdotcom.com (1021409) | more than 2 years ago | (#41280085)

I'm sure that it isn't the first time that this quote, or a variation has been uttered, but Mark's quote sounds an awful lot like the opening scenes of "Rounders"

Mike McDermott: "Listen, here's the thing. If you can't spot the sucker in the first half hour at the table, then you ARE the sucker."

(Thank you, IMDB)

Re:Reminds me of "Rounders" (3, Informative)

Anonymous Coward | more than 2 years ago | (#41281265)

Yes, it's an old, old saying he was paraphrasing. Believe it or not, not everything in Rounders is original.

An unidentified problem with the trading software (0)

Anonymous Coward | more than 2 years ago | (#41280119)

He should've borrowed Knight Capital's explanation.

The bounce is the problem (4, Interesting)

hawguy (1600213) | more than 2 years ago | (#41280163)

When the stock didn't bounce as I thought/hoped it would, I realized I was wrong and got out

The bounce is the problem with the IPO market - if the stock was priced correctly, there should be no bounce (and no crash either). If the stock bounces, it means the company left money on the table that should be in their pockets. If the stock crashes, then it means that investors lost money that never should have gone to the company.

An IPO auction [marketwatch.com] would be more fair, that way everyone who wants to buy shares can get some if they are willing to pay the auction price. With prorata distribution they may not get as many as they wanted (and they may try to game the system by asking for more than they wanted), but you don't need to have special ties with the company to get IPO shares at the opening price.

Re:The bounce is the problem (3, Interesting)

iluvcapra (782887) | more than 2 years ago | (#41280339)

The bounce is the problem with the IPO market - if the stock was priced correctly, there should be no bounce (and no crash either).

"Correct" is a matter of interpretation. Underpricing the IPO is one of many clever ways of compensating angel/venture capital, stock-compensated employees, and the investment bank in a manner that doesn't have to be costed on an income statement and will be taxed at favorable capital gains rates.

Re:The bounce is the problem (5, Insightful)

hawguy (1600213) | more than 2 years ago | (#41280385)

The bounce is the problem with the IPO market - if the stock was priced correctly, there should be no bounce (and no crash either).

"Correct" is a matter of interpretation. Underpricing the IPO is one of many clever ways of compensating angel/venture capital, stock-compensated employees, and the investment bank in a manner that doesn't have to be costed on an income statement and will be taxed at favorable capital gains rates.

Right, which is again part of the problem. The purpose of the IPO is supposed to be raise capital for the company, it's not supposed to make millionaires out of investors and employees, and certainly not supposed to make multi-millionaires out of well-connected millionaire investors. Adding all of these other aspects to the IPO makes it harder for an investor to know whether it's really a good investment or not. An IPO should not be used as a lottery ticket for those connected enough to get in early.

Which is why the auction format is so rarely used - Google had the clout to force underwriters to do an IPO auction, but they sure did grumble since they lost much of their ability to reward clients with a big bounce.

Re:The bounce is the problem (1)

Anonymous Coward | more than 2 years ago | (#41280783)

IPOs tend to be designed to have a bounce because it helps maintain public interest in the IPO market. If people observe that underwriters set IPO prices fairly or somewhat low, they'll be more likely to buy in on later IPOs. Too many debacles of an overpriced IPO will make people who might have been interested in buying in wait and see.

You can maximize capital raised for one client by overpricing the IPO, but you maximize your ability to raise capital for all of your clients on an ongoing basis by making sure that there's public interest in getting in on IPOs on day one.

Re:The bounce is the problem (1, Insightful)

Bryansix (761547) | more than 2 years ago | (#41281173)

Or you can let the free market be a free market. I know this is a novel concept.

Re:The bounce is the problem (0)

Anonymous Coward | more than 2 years ago | (#41282453)

You don't know much and you're just talking a big game.

Re:The bounce is the problem (5, Insightful)

SecurityGuy (217807) | more than 2 years ago | (#41281573)

IPOs tend to be designed to have a bounce because it helps maintain public interest in the IPO market. If people observe that underwriters set IPO prices fairly or somewhat low, they'll be more likely to buy in on later IPOs.

Which is really fairly naive. If you're Facebook and your IPO is set to rake in ridiculous sums of money, why should you care about the post Facebook IPO IPO market? You won't need the money from those later IPOs. Facebook priced this one perfectly. They weren't selling shares to make you money. They were selling shares to make THEM money. And they did.

Re:The bounce is the problem (4, Informative)

Anonymous Coward | more than 2 years ago | (#41282401)

IPOs tend to be designed to have a bounce because it helps maintain public interest in the IPO market. If people observe that underwriters set IPO prices fairly or somewhat low, they'll be more likely to buy in on later IPOs.

Which is really fairly naive. If you're Facebook and your IPO is set to rake in ridiculous sums of money, why should you care about the post Facebook IPO IPO market? You won't need the money from those later IPOs. Facebook priced this one perfectly. They weren't selling shares to make you money. They were selling shares to make THEM money. And they did.

It's not supposed to be just Facebook's call on what the initial price is. If Facebook were able to just run their own IPO without any underwriters, that's what they would want to do: maximize quantity sold times price.

The underwriters perform multiple roles in the IPO, but one of the biggest ones is that they're supposed to be signing their name on the deal saying that everything has been adequately vetted. As it happens, they can sign their name by an IPO price that's implausibly optimistic that their client pushed for, but doing so caused a lot of damage to public perception of IPOs, and especially tech IPOs. So now they've done a great job raising capital for Facebook, but are they going to be able to do a great job raising capital for the companies going public in the next few years?

Re:The bounce is the problem (0)

udachny (2454394) | more than 2 years ago | (#41280425)

The bounce is the problem with the IPO market - if the stock was priced correctly, there should be no bounce (and no crash either).

- the problem is with all the regulations around investing set up by the government, which prevents normal people from making money.

Normal people do not place their money into VC funds and companies are not allowed to go IPO before they comply with so many laws, that are set up in order to 'protect' the investors. Well, they 'protect' the investors from making money, that's what they protect investors from.

PayPal co-founder made a billion bucks on a half a million investment on FB, same with many other people - various early investors made money, because they had a lot of upside when they put their money into that company. By the time all of the regulations are complied with and the company can go IPO, guess what: there is NO upside left.

The way it's set up, the poor and middle class are on the bottom of the pyramid set up by the gov't, this pyramid puts the initial rich investors on top and the banks that run the IPO on top and the politicians, who often get part of the pre-IPO stock on top, and the poor and the middle class are shown such nonsense propaganda as Cramer's Mad Money, all of this is propaganda to sell you stocks with no upside.

Of-course due to the inflation, people jump into any opportunity to try and make a big buck by speculation rather than thinking about long term investments.

This guy, Cuban, he is blaming himself, like many victims of a crime do, he doesn't understand that a crime has been perpetrated against him. The crime that is the government system, not the market, has set up.

Re:The bounce is the problem (5, Insightful)

hawguy (1600213) | more than 2 years ago | (#41280609)

The bounce is the problem with the IPO market - if the stock was priced correctly, there should be no bounce (and no crash either).

- the problem is with all the regulations around investing set up by the government, which prevents normal people from making money.

Normal people do not place their money into VC funds and companies are not allowed to go IPO before they comply with so many laws, that are set up in order to 'protect' the investors. Well, they 'protect' the investors from making money, that's what they protect investors from.

PayPal co-founder made a billion bucks on a half a million investment on FB, same with many other people - various early investors made money, because they had a lot of upside when they put their money into that company.

Ahh, so you think that companies are inherently altruistic and if only there were less government intervention, then everyone would be better off. The last minute disclosure of Facebook's updated financial information to key investors was probably not illegal (there's some debate, but it appears to be an ethical lapse rather than a legal lapse). So you think if only companies didn't have to comply with all of the filing and other regulatory regulations then the small investor would be better off?

What are some of these pre-IPO regulations that make well heeled investors rich in an IPO? Definitely investing in pre-IPO stock when the stock is available at a fraction of its ultimate IPO price is valuable to an investor, but it also comes at some risk. Would you have invested money in Zynga a year before their IPO, knowing that they were dependent upon Facebook for almost all of their revenue? Those pre-IPO investments are how companies fund their operations before they are ready for an IPO, they have great risks, but also the potential for great rewards. There are hundreds (thousands) of companies out there looking for cash, many of them never make it to an IPO.

By the time all of the regulations are complied with and the company can go IPO, guess what: there is NO upside left.

If the IPO is used for its stated purpose (raising capital for the company), then there is not supposed to be any short-term upside left after the IPO.

Re:The bounce is the problem (-1, Troll)

udachny (2454394) | more than 2 years ago | (#41280963)

you think that companies are inherently altruistic

- no, Mr. Logical Fallacy, I do not and none of it comes out of my comment, but keep building your house of straw, because you think it's going to be easy to take it down.

if only there were less government intervention, then everyone would be better off.

- this is not a question, this is not a hypothesis, this is a fact. Historically speaking, countries with bigger governments and more laws and regulations are worse off than countries with smaller, less powerful governments (relative to the power of the individuals).

So USA was a strong country, economically speaking, when the gov't was not even 1% of what it is today, that's before the gov't figured out how to crack the Constitution.

So USSR was in a terrible economic shape, same with China, when it was a completely command economy.

You can cite Scandinavia and Somalia, but you never look at the facts. Scandinavia does not do deficit spending, the size of its gov't is covered by its income, and the gov't has been shrinking in Scandinavia for 20 years.

Somalia is a war torn country, where people fought against the powerful Communist regime that was in place after the British rule was replaced with it.

So you think if only companies didn't have to comply with all of the filing and other regulatory regulations then the small investor would be better off?

- yes, absolutely. On average people do not gain anything by gambling on prices of IPO stocks, I am talking about public 'investors', who are basically made into the ESCAPE PLAN, and the reason it's an escape plan (exit strategy), is because the IPOs are inflated by the process.

The initial public offering shouldn't be in the hands of government regulators. Actually the Free Market found a temporary solution to this, that everybody on /. seems to cheer, here it is. Are you against the idea? [kickstarter.com] This is the free market trying to undo the damage that the gov't regulations have caused, but I wouldn't be surprised if at some point the gov't turned around and said: this kickstarter thing, it's competing with our ability to steal money from people on IPO scams.

As to your concern about RISK, well that's the point - gov't CANNOT REDUCE RISK.

Tell me, Mr. 'Intelligent', how did gov't reduce risk of people losing their money on Facebook IPO exactly?

Come on, do tell, I am listening. All those regulations, all those rules, and so what? FB is way overvalued, its revenues are going to DROP, there is no way it's worth 38 bucks or 18 bucks or 8 bucks. Maybe 2-3 dollars (if that)?

But some people made crazy money on this, but is that an EFFICIENT allocation of resources, to allow certain people to make CRAZY money on something like that?

I'll answer this question myself, because I don't believe you understand what 'efficient allocation of resources' means. The answer is NO, it was never an investment that was worth 100 billion. It was never an investment that was worth 5 billion. But the problem is, more than that has been pumped out of the pockets of the VICTIMS that the gov't turned the poor investors into.

In your words: hundreds of thousands of companies are looking for investments, while all the credit that banks allocate goes directly to the US Treasury because of the inflation and completely worthless money - interest rates are at 0, this means holding US dollar is worth than holding almost anything material, because material things (that don't go bad) at least stay with you, they don't disappear over time.

You are better off investing in a TON OF JUNK IRON today than investing in any gov't debt or playing in IPO casino, that is very much regulated by the gov't.

The purpose of IPO is not to allow the public to gamble, the purpose is to allow the company to have some money to START THE BUSINESS and to allow the public to SHARE IN THE RISK OF STARTING SAID BUSINESS, and then taking the risk is the investment, and if it goes well, then you are going to see DIVIDENDS paid to you, which are the return on the investment.

This is the idea. The implementation today is completely perverted by the financial regulations and by the fake money - inflation and thus by the non-existing interest rates. Who is paying the dividends? The gov't doesn't. So why should the companies? They don't have to compete with the gov't bonds.

-----

Here is something I am going to expand on later on for the people who CARE about actual economic solutions to the economic problems to think about:

If the gov't is prevented from collecting taxes on production, so no more income taxes, no more payroll taxes, no more corporate taxes, then the production is not going to be limited artificially by these impediments.

If simultaneously the gov't is prevented from destroying the value of money, by printing them and by setting fake interest rates, then all of a sudden the gov't bonds become an ATTRACTIVE opportunity for people, who do NOT want to be in the stock market.

Yes, most people shouldn't even be in the stock market, they are forced into the stock market by the gov't regulations and inflation.

But if the bonds paid the real rates of return, then the majority of people could buy gov't bonds and hold on to them for the return, and that would mean that they would be bullish on the economy of their own country.

So the taxes that still would be collected off the transactions (like sales taxes, duties, levies, they are very much Constitutional), these taxes could be used to pay the interest on the gov't bonds.

Now, if the bonds paid the interest, maybe 5-6%, but there was no income taxes, no gov't regulations, then the growth of economy would directly mean more transactions, more taxes from those transactions, more taxes collected FROM CONSUMPTION, because all legal taxes are really consumption taxes, not production taxes.

This would mean that production would keep growing and the consumption would pay for consumption.

----

Imagine that, a growing economy, more and more savings (high interest rates), so more and more credit available for various business ventures. The more business activity - the more taxes are collected from transactions.

With high efficiencies in the business due to lack of gov't protections and regulations and thus lack of monopolies and price distortions, the people would be extremely productive, would be working much less than they are now, which, by the way, what the initial industrialization allowed in USA.

People sometimes say: what would happen if ALL jobs were automated, all production would be automated? Well, people would be freed to come up with new things to produce, something that cannot be automated, because the concept doesn't exist yet.

But what about the TRANSITION period? Well that is the point of owning part of the economy via the government bonds (or stock market) - you are invested in the economy with these bonds, stocks, and you are paid DIVIDENDS.

DIVIDENDS that are paid to the investors, and everybody becomes an investor.

--

Here you go, this is how the very much Marxist utopia becomes a reality VIA FREE MARKET CAPITALISM.

All production is owned by the people simply through investments. But the difference between this and all of the forced attempts at Communism and Socialism is that it is NOT FORCED.

This is purely voluntarily, nobody is forced to buy investments, nobody is forced to buy gov't bonds, but if the bonds return a good rate, you'd be stupid not to be invested.

Re:The bounce is the problem (0)

Anonymous Coward | more than 2 years ago | (#41281535)

The entire comment is a blatant fucking lie, it's a lie, you are a fucking liar, and you are a fucking lying in every word of every sentence. Fuck you, fuck you, fuck you, fuck you, fuck you, fuck you, fuck you, fuck you, fuck you, fucking lying fuck.

Re:The bounce is the problem (0)

Anonymous Coward | more than 2 years ago | (#41281991)

Moderate the above comment up to INSIGHTFUL!

Re:The bounce is the problem (0)

Anonymous Coward | more than 2 years ago | (#41282305)

"this is not a question, this is not a hypothesis, this is a fact. Historically speaking, countries with bigger governments and more laws and regulations are worse off than countries with smaller, less powerful governments (relative to the power of the individuals)."

could you explain Somalia for me?

i stopped reading there because you sound insane

idiots (4, Insightful)

chichilalescu (1647065) | more than 2 years ago | (#41280177)

I have no respect for anyone who's business model is "there are a lot of suckers in the world". I know most rich people use this business model, but I am convinced that humanity as a whole (including them) suffers a lot because of these nearsighted selfish idiots.

Re:idiots (1, Insightful)

Anonymous Coward | more than 2 years ago | (#41280273)

I have no respect for anyone who's business model is "there are a lot of suckers in the world". I know most rich people use this business model, but I am convinced that humanity as a whole (including them) suffers a lot because of these nearsighted selfish idiots.

Capitalism deals with reality, and presents a mirror reflection of the society it deals with. If you have a lot of stupid consumers, then you end up with a lot of stupid products and stupid advertising. That isn't the nature of capitalism, but of the society it caters to. Stupid people being free to spend money on whatever stupid things motivate them is their intensive for earning this money in the first place, which is how we end up with a much more functional economy given the amount of stupid people in existence...

I for one don't watch TV, don't drink carbonated beverages, and don't use (or invest in) Facebook. Everyone should be free to make their own choices. Mark Cuban is right to blame no one but himself. The problem is that a lot of crybabies hiding under Mommy Government's skirt are not as responsible, and aim to unleash a whole lot of regulatory thuggery as the result...

(Signed: AlexLibman's sockpuppet.)

Re:idiots (0)

Anonymous Coward | more than 2 years ago | (#41280275)

Wow, bitter much?

Re:idiots (0)

Anonymous Coward | more than 2 years ago | (#41280807)

Jelly?

Wasn't (5, Funny)

JustOK (667959) | more than 2 years ago | (#41280187)

Wasn't there are a US trade embargo against Cuban and his cigars?

Refreshing comment... (5, Insightful)

Anonymous Coward | more than 2 years ago | (#41280205)

He's publicly stating that much of the stock market is about finding the bigger bagholder- the poor sap you stick with the losses to gain thereby.

It's about time one of the high-rollers owned that reality.

Re:Refreshing comment... (2)

xmas2003 (739875) | more than 2 years ago | (#41280603)

Contrast Mark Cuban's "personal responsibility" position with that of the New York Times which "blamed" the Facebook CFO.

Let me guess which one is a Republican and which one is a Democrat?!? ;-)

Re:Refreshing comment... (1)

fustakrakich (1673220) | more than 2 years ago | (#41280715)

Who's the 'villain' here? Eve, or the serpent?

Re:Refreshing comment... (1)

HappyEngineer (888000) | more than 2 years ago | (#41281271)

God was the villain in that story. He created a situation where something nearly harmless was illegal and then pounced when a predator convinced an innocent to take a bite. It was the illegality that harmed Eve, not the apple itself.

It's an allegory for the drug war.

Re:Refreshing comment... (1)

Zero__Kelvin (151819) | more than 2 years ago | (#41280817)

Let me guess. The republican is the one who knew that Schmuckerberg made a regular practice of illegal underhanded business dealings and doesn't think he should be blamed for any of it, right?

Re:Refreshing comment... (0)

Anonymous Coward | more than 2 years ago | (#41281163)

The high-rollers know the reality better than everybody else. But they also believe they are entitled to profits even if they make the wrong call.

Duh (0)

Anonymous Coward | more than 2 years ago | (#41280245)

Buying stocks is a risk. That's the whole point. More risk means potentially more profit, but can also mean you lose everything.

If there was a way to make profit without risk, everyone would do it which would automatically remove the profit.

Trying to reduce the risk through lawsuits is just lame.

Before the IPO, there were tons of articles predicting the FB stocks would fail.

So if you're actually in the financial world, how the heck can you claim that you're naive and blame the FB CEO?

No paper shares (1)

phpsocialclub (575460) | more than 2 years ago | (#41280323)

The only reason I would have bought a share of FB was if I could get a paper certificate that I could frame and keep in my office.

When I found out I could not get one, I skipped it.

As a Poster it was worth $40,

And a great truth is revealed (2, Informative)

Anonymous Coward | more than 2 years ago | (#41280361)

When you sit at the trading terminal you look for the sucker. When you don't see one, it's you. In this case it was me.

And there is the great truth of the stock market, revealed by someone who knows how the system works.

Re:And a great truth is revealed (2)

sjames (1099) | more than 2 years ago | (#41280627)

Yep, a bunch of cons trying to out con each other. Such a fine and morally upstanding pursuit!

Re:And a great truth is revealed (0)

Anonymous Coward | more than 2 years ago | (#41282075)

Yet the US has major issues with online gambling.

Cynical view of the stock market (4, Interesting)

istartedi (132515) | more than 2 years ago | (#41280401)

His view of the stock market is cynical. The guy selling you stock might really be taking a vacation. He might be a 'boomer selling down his IRA to make ends meet.

Cuban sounds like yet another Internet mind-reader in this piece.

As for FB, I smelled trouble before it even went IPO. It boggled my mind to think anybody would have an interest in it. At 44 though, I forget that when I was new to investing I was avidly interested in Netscape.

Cuban should have been able to see this a mile away. It was held private for so long. A PE of 100 is fine if there's room for growth, but FB is already claiming a billion users in a world with single-digit billions. Any additional monetization degrades the experience and reduces that count, perhaps dramaticly. The site has some value, but HTF could I know? The only winning move is not to play.

Re:Cynical view of the stock market (1)

fermion (181285) | more than 2 years ago | (#41281131)

In either of those cases, the seller is the sucker. If the seller has to sell, then they cannot afford to wait for a good price and you get the deal. It is cynical, but also reality. one can say that both parties are recieving benifits, but that does not mean that one party is not getting greater benifits.

Re:Cynical view of the stock market (1, Insightful)

isparkes (2726069) | more than 2 years ago | (#41281699)

"For all intensive purposes" should be "For all intents and purposes". Ironic, given the context we find it in.

Re:Cynical view of the stock market (1)

YesIAmAScript (886271) | more than 2 years ago | (#41281761)

He says he was not buying the company on the firm foundations principle. He was buying it because he thought it would get a momentum pop and he could sell it off at a higher price.

And often, even with sketchy companies, getting in on an IPO affords you the opportunity to make money off the imbalance between supply and demand on day 1. It's been this way a long time, see the IPO craze of the 1970s.

The only big problem is sometimes this won't happen and you will lose money on your trades. That's what happened here and Cuban seems at ease with it.

So I don't see why you criticize him and call him an internet mind-reader. It kind of feels like you read the quote and not the article.

I do agree with your first paragraph, especially in the case of an IPO. Mark's sentence about no one selling a stock thinking it will go up is not strictly true. But it isn't really an important of the message delivered in the article, it's just the most quotable.

Re:Cynical view of the stock market (1)

istartedi (132515) | more than 2 years ago | (#41281839)

Your criticism of my off-the-cuff remarks based on speed-reading a summary has some merit. Cuban was speculating on a pop. Pop speculation isn't a totally ridiculous strategy, although it's been around so long that everybody is on to it and the market may finally be sorting it out. He is taking his medicine like a man. He does deserve some respect for that.

Re:Cynical view of the stock market (0)

Anonymous Coward | more than 2 years ago | (#41281867)

His view of the stock market is cynical. The guy selling you stock might really be taking a vacation. He might be a 'boomer selling down his IRA to make ends meet.

Exactly. If someone is selling FB they might think FB is going up 50%, but that they know of an even better place to put their money.

Re:Cynical view of the stock market (1)

dkleinsc (563838) | more than 2 years ago | (#41282081)

His view of the stock market is cynical.

So is almost anyone who knows anything about it.

Here's part of why: The guy selling you stock to finance his vacation, the 'boomer selling down his IRA, etc are not even close to the majority of the market. The very large institutional investors like Goldman Sachs and Bank of America basically set the prices on everything, for whatever reason they so choose.

Re:Cynical view of the stock market (1)

istartedi (132515) | more than 2 years ago | (#41282197)

If BofA and GS want to set prices arbitrarily, good! They almost certainly won't set them to fair market value. They almost certainly can't do so indefinitely, since the cost of maintaining disequilibrium across the broader market has to be astronomical. It's either a tremendous buying opportunity, or a tremendous shorting opportunity if you're patient.

This kind of talk is loudest in the precious metals community, and usually takes on a "glass half empty" kind of view wrt to "price suppression". For some reason, people ignore the fact that price suppression is good if you're accumulating. Based on their talk, you might conclude that the plaintiffs bought hoards of silver decades ago, and are upset that they can only unload their $4 silver at $30 when they think they should be getting $100. If the real value should be $100, accumulating is a fantastic deal; but that side of the argument seems to be silent.

I'm not saying that cartels don't exist. Heck, the Federal Reserve is a money cartel that operates right out in the open. It's bloody obvious that commodity prices are the collateral damage of openly operating money cartels, and yet Internet folks want to conjure up conspiracies. OK, I'm off on a tangent which isn't directed at you. End rant.

Facebook could charge $1 a month (1)

erp_consultant (2614861) | more than 2 years ago | (#41280501)

Think about that. All those facebook addicts out there. I bet that most of them would be willing to pay $1 a month to use it. That's about $800,000,000 a MONTH in revenue. Even if only half of them sign up that's still $400,000,000. If you pay the dollar you get an add free version and maybe a little more control on how your data is used and shared. People pay to use Dropbox why not facebook?

Re:Facebook could charge $1 a month (0, Interesting)

Anonymous Coward | more than 2 years ago | (#41280555)

People pay to use Dropbox why not facebook?

Because people get a useful service out of Dropbox.

*obvious answer rimshot*

Re:Facebook could charge $1 a month (5, Informative)

tstrunk (2562139) | more than 2 years ago | (#41280677)

Think about that. All those facebook addicts out there. I bet that most of them would be willing to pay $1 a month to use it. That's about $800,000,000 a MONTH in revenue. Even if only half of them sign up that's still $400,000,000. If you pay the dollar you get an add free version and maybe a little more control on how your data is used and shared. People pay to use Dropbox why not facebook?

Half of them won't sign up, i'd be surprised if 1% would sign up. Facebook needs critical mass. It they take a dollar to let you post stuff on your wall, there will be a huge outcry among all the users, even or especially the fans. Facebook will lose a lot of its fans and the mass will go to the next free social media platform: Google+

Re:Facebook could charge $1 a month (0)

Anonymous Coward | more than 2 years ago | (#41280707)

Think about that. All those facebook addicts out there. I bet that most of them would be willing to pay $1 a month to use it. That's about $800,000,000 a MONTH in revenue. Even if only half of them sign up that's still $400,000,000. If you pay the dollar you get an add free version and maybe a little more control on how your data is used and shared. People pay to use Dropbox why not facebook?

Let's use your math for a moment.

If Facebook could sell advertising for $1 per month per user, which is very cheap. Why is their revenue only 3.7 billion for last year ?

If you work out the math (3.7B / 800M users) it equals to generating about $4.63 per user yearly, it might be playing the slow and steady race here.

FB has potential, after all so many people are addicted to their online social network , it also has a large base of mobile users that it has yet to monetize.

Re:Facebook could charge $1 a month (2)

Colonel Korn (1258968) | more than 2 years ago | (#41280733)

Think about that. All those facebook addicts out there. I bet that most of them would be willing to pay $1 a month to use it. That's about $800,000,000 a MONTH in revenue. Even if only half of them sign up that's still $400,000,000. If you pay the dollar you get an add free version and maybe a little more control on how your data is used and shared. People pay to use Dropbox why not facebook?

Facebook already makes almost $4/month/user. An extra $1/month/user wouldn't significantly change their financials. To get in line with comparable stocks in terms of P/E, they'd need you to pay around $20/month. Would you do that?

Re:Facebook could charge $1 a month (1)

O('_')O_Bush (1162487) | more than 2 years ago | (#41280847)

Storage is something both costly and tangible. Social media is not. There is nothing nherent to Facebook that keeps users there. Popularity and convenience are the two draws, but like with Myspace, it is easy for a competitor to appear and fill the void with a free service. And the chances of people paying to have no ads is lower (due to noscript/adblock/etc) than it is with phone apps, which are already an order of magnitude less popular than free versions.

Lose your customer base or have the pay service revenue consumed by tech support/payment problems/fraud. If there was an easy way to monetize Facebook, they would have already done it before the IPO. They are the smartest guys in the room, not you.

Re:Facebook could charge $1 a month (5, Insightful)

notdotcom.com (1021409) | more than 2 years ago | (#41281055)

The problem is that the decay would be exponential. If 50% of the users signed up for the paid subscription to "try it out", they would quickly notice that (about) HALF of their friends are now gone. So when time comes to renew the next month, those who lost a significant amount of friends (making the service useless) would quit.

Then, the remaining 30% would have less friends subscribed and would cancel the next month. When you're down to 10% of the original user base, what incentive is there to stay? You can talk to about 1 of your 10 "friends" on the service. That would be pointless.

Re:Facebook could charge $1 a month (1)

fermion (181285) | more than 2 years ago | (#41281239)

the idea is that charging a fee for use would also incurr costs like increased customer expectations and service levels. realistically only about 1% would upgrade to a paid service, and that would be for active users. If one bills yearly, $10-$15, most of that would be used for adminstrative costs. web based serices on the order of FB charge on the order of $50-$75 dollars a year.

Re:Facebook could charge $1 a month (0)

Anonymous Coward | more than 2 years ago | (#41281295)

pay a dollar or switch to google+?

Re:Facebook could charge $1 a month (1)

s7uar7 (746699) | more than 2 years ago | (#41281493)

A more evil plan would be to charge $5 a month but give it away to a random 80% of the users. The other 20% would feel almost obliged to pay up or get left out of their friends' social circle

Re:Facebook could charge $1 a month (1)

SecurityGuy (217807) | more than 2 years ago | (#41281635)

Lots of unsubstantiated claims in there.

First off, if they charge, some percentage will stay. I don't know if it's 50% or not. It's not 100%. For those who DO stay, which? In my experience, there are creators and consumers on facebook. A small subset say interesting things. A large subset consume them. If the interesting people leave, the consumers will also leave. A fair amount of the producers don't necessarily say interesting things, they just repost things. If facebook charges money, Tumblr will get a massive influx of users. Either way, when the interesting people leave, the people who are only there to read what others post will also leave. I doubt FB will ever even take the risk of trying. Offering premium services? Perhaps.

Revenge of the Nerds (5, Insightful)

Glasswire (302197) | more than 2 years ago | (#41280639)

Throughout the recent history of the last couple of decades of tech IPOs, the story has been that Wall Street underwriters screw the founders, programmers and other stockholders of the company that's going public by forcing them to UNDERVALUE the stock tremendously so the underwriters can give a free but valuable gift to their best customers who get in at the cheap IPO price, and flip the stock for a quick painless gain when the undervalued stock pops on first day of public trading. This basically cheats the original shareholders by giving them less than they should have gotten if the stock was priced fairly.
This time, the tables were turned as the nerds managed to screw Wall Street, by hypnotizing the underwritersinto setting the IPO price way too high thereby screwing the favored investors instead of the tech company. It was so satisfying to see the 'gift'' that the underwriters gave their best buddies come back to bite those greedy weasels who got a price crash instead of the quick pop and sellout. Actually some of those let into the IPO (if they managed to get the broken Nasdaq to execute for them on that day) DID manage to flip FB and so a lot of the stupid investors were the second wave that mindlessly bought into the stock on the first day at close to the IPO price then watched it slide from there.
As others have noted, FB's PE is outrageously high and there's was and is no obvious reason why it's going to be become very profitable (Google, by comparison, certainly DID have a real revenue model when they IPO'd). The problem is that there is a lot more money sloshing around in in the pockets of the US wealthy than brains in their heads.

if only other financial types were as responsible (1)

circletimessquare (444983) | more than 2 years ago | (#41280643)

rather than dependent on the socialist corporate welfare supplied by our government

oh wait, i'm sorry, such condemnation only applies to poor people

In completely unrelated news (0)

Anonymous Coward | more than 2 years ago | (#41281061)

Today a man with 1,000,000,000 hats shrugged off the loss of a hat.

Remarkable candor (1, Interesting)

jcbarlow (166225) | more than 2 years ago | (#41281097)

"That is the way the stock market works. When you sit at the trading terminal you look for the sucker. "

So... someone who should know finally admits, in public, that stock trading (as opposed to real investing) is nothing more than a con game.

We have con-men running our banking system.

"business magnate"? (0)

Anonymous Coward | more than 2 years ago | (#41281221)

this guys billion dollar fortune essentially comes from selling "tv.com" or some retarded domain name to yahoo for a billion dollars during the dotcom bubble.

Stuff that matters...? (0)

rrkaiser (676130) | more than 2 years ago | (#41281329)

Why is this on /.? News for Nerds, stuff that matters... No sign of that here...

well that's nice (0)

Anonymous Coward | more than 2 years ago | (#41281471)

Except that it does say in the very beginning that he was buying it as a trade, not an investment so he completely makes sense in that regard. However, those that purchased shares expecting it to be a worthwhile investment into a large tech company do have a reason to be pissed off at the management and how badly they fumbled what could have been a great success.

It's the same at any public or even private company that has.. say.... a board of directors. If you screw up and lose the company a very large amount of money, or a possible large money revenue stream., I'm sure those board members who have large amounts at risk invested into the company will not be pleased in the least.

mark cuban is a jew (0)

Anonymous Coward | more than 2 years ago | (#41282351)

nuff said

The first rule of trading (0)

Anonymous Coward | more than 2 years ago | (#41282451)

Is to cut your losers. Don't know what price Cuban bought and sold at, but if he cut his losses before they grew too big, then it shouldn't have been a big deal to him.

The entire problem is lack of dividends (0)

Anonymous Coward | more than 2 years ago | (#41282513)

The problem with the stock market is that it is all rampant speculation instead of being based on anything real.

If, for example, the way that one made money from a stock was by the Company being profitable and issuing dividends, then you don't get the sort of nonsense that we see everyday in the stock market now.

The price of a share of stock has become completely divorced from any real world metric of how well the company in question is doing. Is it any wonder that the prices spike up and down with little to no reason - based solely on someone's marketing pitch?

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