On the markets and the Facebook IPO
Where the heck did the trading day go? It’s already the contra hour and I’ve been pedal to the metal all day but this is the first time I’ve sat at the computer all day. The markets are flattish to down. Greece sovereign debt crisis is dominating the headlines. Shocker, I know. Let’s talk market then Facebook.
I asked last week who was more scared, the bulls or the bears and the answer was this — very low response rate throughout all my channels but the response was overwhelming that it’s the bears who are more scared right now. To review, the answer to the “who’s more scared” question is a contrarian indicator, meaning that if the answer is that it’s the bears who are more scared right now then it’s a bearish sign. That said, I think there’s also direction indication in the fact that hardly anybody bothered to respond to the question. Nobody’s bullish, even though the bulls are seemingly very complacent. I’m thinking the markets are going to rip higher after we get through Greece/EU in the next couple weeks. Feet to fire, there’s likely to be a market sell off before we take off, but it’s time to start scaling into more net long exposure in coming days.
Facebook — nobody knows what valuation it’s coming public at. When Google was about to come public a few years ago, Mario Baritoromo asked me on CNBC if I’d be a buyer of Google. I said probably not, but then when the finally did come public, the stock was valued at much less than I’d expected and I changed my mind, wrote about it, went on TV and mea culpa’d and owned the stock from $90 til nearly $600 when I sold and closed my hedge fund to become a TV anchor. The point being, I’m also inclined to tell you that, at the this point, I’m less than bullish on Facebook if it comes public with a valuation of $120 billion or more and I’ll be outright bearish on Facebook if the it comes public with a valuation north of $150 billion, which is a number I’ve heard bandied about. If it comes public with a valuation of $80 billion or less, I’d be a buyer for a short- to mid-term trade, measured in days or months. Longer-term, I could see Facebook bounce around with a $50 to $200 billion valuation with lots of volatility along the way for years after it does come public. It’d be a buy on crashes and a sell on spikes.
No trades for me today. Rock n roll.
