by Jack
I was one of the lucky ones who made money on Face Book today. No, not the millions that so many of the FB employees were making, but I made in the hundreds and that’s better than nothing I guess.
Yesterday I had predicted FB would probably go to $42 a share. It did, it hit $42.05 on open, then it started dropping like a rock. I knew this would happen. I figured the amateurs and day traders would start driving up the price of the stock in the pre-market, an hour or so before the opening of the actual market (they did). Then when the profit taking started it would become a run on the stock where the weak hands sold in droves (it did).
The share price quickly dropped back just under the IPO price of $38, a four point loss for some. However, there was a billion dollars sitting on sidelines by the Underwriters to prop up the stock if it started going much below its IPO price. I think it touched $37.95. This is where I decided to get in, although only as I speculator. I have no confidence in FB. In the minutes following it started back up and I continued to ride my purchase to over $40.00 when I sold at “market” and my settlement price was 39.60…that’s volatility for you! A few second represents a big change in share price. It eventually went higher, but I’m happy with my little profit. The first rule of the market is, set an acceptable profit and when you make it walk away and never look back. That’s just what I did.
FB was not a bargain stock at $38 by any means, but given the volatility from speculators it made the stock worth day trading. The IPO price is 100X earnings…that ain’t cheap unless you think the profits are going to double in the next 12 months. That’s about the only way you can justify the stock price at 100X earnings. Personally I think the stock is worth about $25 a share…but, time will tell won’t it? (Maybe in the next few days they will allow short trades…hmmm…I might have to get back in if they do. )
Yesterday I had it mind to short the stock at $42, but the market rules on this IPO said, no way – no shorting! Okay fine, it was a nice idea because had I been able to do it I would have made an easy 4 points and on a thousand shares that’s $4K, enough for a really good vacation! Oh well, least I got a little chunk of it.
Where do you think FB will close today? Any speculators out there?
Dang it, that’s pretty good, Jack.
Now how’d you learn how to do that growing almonds?
I’m going to call you Day Trader Jack.
And that’s a compliment because not a lot of people can make money day trading, much less on an IPO.
Now, if you can just day trade our city council.
Maybe you can short ’em and they’ll go away.
I’d like to sell short their grocery bag ban, their sewer tax increases, their phone increase, their sales tax increase, their new tax on alcohol they will try to push through and the list goes on and on.