Facebook IPO – Pump And Dump

There’s a lot of hype surrounding the upcoming Facebook IPO.

I noticed an amusing fnord while listening to the radio news/propaganda. The announcer was saying “Buy shares in Facebook!” with the same tone of voice as “The Lotto jackpot is big! Buy a ticket!”

One of my coworkers at my first job was ripped off, via the PALM IPO. He bought shares the day of the IPO, after trading started. The price was $100/share. He placed a MARKET order and not a limit order. He bought for $150/share. In two days, he made a $20k donation to the bankster bonus pool.

I saw an amusing conspiracy theory regarding Facebook. Someone said “All of a sudden, the mainstream media started heavily hyping Facebook. That’s obviously a government psy-op.” What probably happened is “Facebook hired a PR firm.”

However, PR firm propaganda and State propaganda are the same. A corporation uses a PR firm and focus groups to market a new brand a cereal. A politician uses a PR firm and focus groups to try out his slogans. It is scientifically created propaganda. PR firms are a key component of State evil.

A lot of people make money promoting “hot IPOs” and the stock market.  There isn’t much money to be made giving honest advice.  Therefore, almost nobody in the mainstream media points out “Over the past 10-15 years, gold and silver were a better investment than almost every stock.”  A lot of people will make money off the Facebook IPO.  They’re all promoting it.  The others “journalists” are lazy and following the hype, or obeying orders and saying what they’re supposed to say.

It is almost certain that Facebook shares will underperform gold over the next 5-10 years. I thought that people were idiots for buying Facebook shares at a valuation of $25B-$50B. If they cash out with an IPO valuation of $100B, then maybe they weren’t so stupid. They found a greater fool.

There are rules regarding “qualified investors” for pre-IPO corporations. That shuts out the average slave. By the time everyone is allowed to invest via an IPO, it’s usually too late.

With an IPO, that’s usually the end of the Ponzi chain. As an individual, you will probably get ripped off.

In a corruption-based economy, good hype is more important than a good product. With a large user base, Facebook automatically has great hype. Every Facebook user is a potential victim, ready to be fleeced via the IPO. Most people aren’t fooled. If only a tiny % are fooled, that’s a huge bankster booty.

If Facebook shares do spike after the IPO, there will be heavy naked short selling. That further rips off individuals.

Google’s share price was $585 yesterday.  According to Yahoo Finance, Google closed at $100 on the first day of trading on August 19, 2004.  That’s a gain of 485%.  According to usagold, gold was at $406 on August 19, 2004, and was $1751 yesterday, a gain of 331%.  However, that’s only an annualized difference of 4%.  Even a ridiculously successful corporation like Google only outperformed gold by a little.  (APPL did even better in the same period, but Apple has a longer track record.  If you go back to 2000 or earlier, it’s less dramatic of a difference.)  If you look at almost any other corporation with a 10 year history, gold was a better investment by a wide margin.  (Also, there’s survivorship bias.  There’s no comparison for Enron or Bear Stearns or Lehman or MF Global.  With physical gold, you won’t suffer a 100% loss unless you are robbed literally, rather than robbed by financial tricks and fraud.)  Gold has a lower volatility and higher return than the stock market.  For example, for almost every recent 2-3 year period, the FRN-denominated value of a gold investment would have at least broken even.

Don’t buy the FaceBook IPO. Don’t invest in the stock market. Buy gold or silver or platinum and take physical delivery. Hide it someplace safe.

I found the radio “news” hilarious.  The reporter was talking about the Facebook IPO in the same tone of voice as the Lottery.  I’m noticing lots of evil fnords now that I didn’t see before.

16 Responses to Facebook IPO – Pump And Dump

  1. The rule of law is breaking down in the United Kingdom. A key principle is that everyone is EQUAL UNDER THE LAW. If you enforce the law you must enforce it for everybody.

    In the following Daily Mail article a woman is being prosecuted for claiming welfare benefits, but no declaring a man is living with her.

    http://www.dailymail.co.uk/news/article-2096155/Former-Miss-Great-Britain-hopeful-accused-claiming-22-000-benefits-fraud.html

    OK, so why wasn’t David Laws (ex-Chief secretary of the Treasury) prosecuted for claiming tens of thousands of pounds rent which he gave to his lover? He failed to declare their relationship.

    Why wasn’t Jack-Boots Jacquie (Labour MP and former Home Secretary) prosecuted for claiming her sister’s bedroom was her primary residence?

    THERE IS NO RULE OF LAW, UNLESS THE LAW IS APPLIED EQUALLY.

    THIS WOMAN SHOULD NOT BE PROSECUTED UNLESS DAVID LAWS AND ALL THE OTHER MPS ARE PROSECUTED FIRST.

  2. Good article. But I wanted to add a couple points. Might gold also be yet another pump and dump scheme? I don’t think gold is a useful substance. I want to call your attention to a guy named Mike Stathis at AVA Analytics. Read a few of his articles with an open mind and then re-consider your stance on gold. In short, he believes the dollar is tied to oil and commodities given the USD is the currency used worldwide or these trades. Oil and commodities have use as opposed to gold. Mike thinks gold is just another pump and dump ponzi scheme.

    Dismantling-John-Williams-Hyperinflation-Predictions.html

    I also encourage you to read Mikes thoughts on the Face Book pump and dump. He is a very informed finance expert and makes very interesting arguments. He goes so far as to say the whole social media sector is in a bubble and is in and of itself a pump and dump. There are five parts to his articles. I will just post the link to the section of his firm’s website that contains these articles. Take care and good post.

    http://www.avaresearch.com/avanew/articles/938/Wall-Street-The-Media-The-Cia-And-Facebook-Confluence-Of-Fraud-Deceit-And-Espionage-In-The-Decay-Of-Society-Part-1.html

    • Oh boy! Not this subject again!

      I strongly disagree with “There’s a gold bubble.” Actually, that’s the true inflation rate, 20%-30% per year.

      Here’s a good link. If you look at “gold divided by national debt”, there is definitely *NOT* a gold bubble.

      I believe that gold/silver/platinum will outperform almost all other investments over the next 10+ years. If you look back 10 years, gold has *CRUSHED* the stock market by nearly 1% per month. Even if you overpay by 20% for gold, you still should outperform over 10+ years.

      With stocks you get earnings and (maybe) a dividend. However, there’s all the fraud/waste/corruption associated with a large corporation. With stock, the CEO gives himself huge share grants, diluting your ownership. Unfortunately, the fraude/waste/corruption is greater than the value of the earnings, making the stock market a losing proposition. The only people who really benefit from owning a public corporation are the CEO and other insiders.

      The is more misinformation for gold and real money than almost every other subject. I’m offended when State shills like Warren Buffet trash gold and hype the stock market.

      • Thanks for your reply. I enjoyed your discussion of Facebook, which is why I am confused that you don’t find the same type of mechanism being used to pump up the sheep to buy more gold. I am not going to claim I am an expert financial advisor and know for certain gold is merely a bubble, but I will make a few points some of which are philosophical and some which are grounded in the status quo realm of thought or “reality”. But I do urge you to at least read the article by Mike Stathis (link below) which deals in the realm of “reality”. You can find part 1 and part 3 of the article if you search his site. I must say, I have read articles from many financial “experts”, but I am really impressed with what I have read from this guy thus far.

        http://avaresearch.com/avanew/articles/293/Fools-Gold-Part-2.html

        First, let me establish a small piece of credibility. I have worked for Fortune 500 companies for over a decade in finance (not the finance industry) and I have firsthand knowledge of the crap that goes on within companies to ensure executives get their nice bonus and stock options. I should know, I enjoyed those perks too. But now I am unemployed and have been so for quite some time. I look upon the whole financial and economic system in its current corrupt form as nothing more than a grand Ponzi scheme. For the record, I began to observe this when I was fully employed so it isn’t bitter feelings that have motivated my point of view, but bitter feelings are coming out in the form of blogging about what I believe in regards to the economic Ponzi scheme. Some of my rants are aimed at the status quo, and some of my points of view fly off to space in the realm of philosophy.

        Now, I assume you read Mike Stathis’s article above. He deals with reality, but I am going to go off on a philosophical path to make an argument against gold. Gold may have made some sense from an investment perspective when it was tied to currency. There is a limited amount of gold therefore if paper money is tied to this scarce item the idea of value could be constructed by simple supply and demand dynamics. This paper money tied to gold is useful in that one can buy necessities and nice things to have via transactions. But, as soon as man developed the idea that he could simply print more money regardless of the amount of gold on hand this concept was violated and thus man invented inflation and learned of its devastating impacts. And eventually, man simply abandoned the linking currency to gold all together. Therefore, gold is simply valued for being a precious medal.

        But from a philosophical level, what good is gold? What can it be used for? In of itself it can be molded and transformed into nice aesthetic things like chains, bracelets, and other forms of jewelry. It is nice to look at like as are other precious metals and stones, but what use does it really have? Can one drink or eat gold? No. And if we enter a crisis like many of the gold dealers push as a reason to buy gold, what do you think will be in demand? Well, the same things that the U.S. dollar is currently tied to and traded with in the world-wide market — oil and food commodities. You would be better off stocking up on oil, gas, water and food than you would gold.

        Now back to reality. Have you seen all those television ads promoting gold? You made fun of media ads pumping up Facebook (and I agree with you), but you must admit that gold ads are just as bad. When I watch those ads I tell myself the last thing I would do is buy gold. And, if you read Mike’s article you will realize that saying gold has quadrupled in value would be misleading as inflation isn’t part of the equation.

        I have put Mike on a pedestal and I am willing to listen to your arguments. I haven’t clicked on that link you provided but I am going to do so now.

        • OK, I read that link. I was not impressed. I’ve read a lot of blogs. I’m very good at judging an article just by a brief glance.

          He’s made a common pro-State troll fallacy, regarding gold. “All gold investors are idiots! 1980! HAHAHA!!” I’ve heard that lie so many times it’s disgusting.

          There are serious differences between now and 1980. In 1980, the Federal Reserve was serious about fighting inflation, jacking up interest rates. Now, the Federal Reserve is keeping interest rates at 0%, inflating like gangbusters and bailing out the banksters.

          In 1980, the world’s central banks owned most of the gold. After the spike in 1980, they adopted a policy of gradually selling gold to suppress the price. Anytime the price of gold rises, a central bank sells a huge chunk of gold. They have much less gold reserves now, making it harder to manipulate the price.

          In 1980, a CEO was somewhat serious about making returns for shareholders. Now, CEOs grab as much as they can via option grants and share grants. That’s why gold is much better than stock.

          He also said “If you time the market right, you can outperform a buy-and-hold investment!” That’s a lie. If you believe that, go ahead an gamble your savings away to banksters. “You can time the market!” makes as much sense as “If you make the right bets, you can win at roulette.” A buy-and-hold index fund investment is a ripoff, losing to inflation. The best gold investment is taking physical delivery and hiding it someplace safe.

          Groups like GATA claim there’s a conspiracy to keep the price of gold down. Zerohedge also has some good bits. They point out when futures exchanges raise/lower margin requirements, manipulating the price. (On zerohedge, not all articles are written by the same person. There’s some great stuff and a lot of nonsense.)

          I once performed a “historic volatility” calculation for gold. I expected that gold would have nearly the same actual volatility as silver. Gold had much lower actual historic volatility then silver. That is evidence that gold is manipulated. Bubbles tend to have high volatility, not low volatility.

          As the MF Global disaster indicated, the paper futures market can’t be trusted. If you trade futures, you’re risking that you’ll get Corzined out of your investment. The real price of gold and silver may be higher than the “official” paper price.

          Sometime in the next 5-15 years, there will be a default on one of the big PM funds (GLD, SLV, or another). That will cause a spike, when people switch from paper to physical. The conspiracy theory is that GLD and SLV are one big con. People are tricked into buying paper gold instead of physical. If you read the fine print of the GLD prospectus, they may lend out their gold to short sellers.

          If you buy physical, your inflation-adjusted return should be 0% minus transaction costs and storage costs. Unfortunately, that’s the best investment out there. In the stock market, you get robbed by crooked CEOs. In the bond market, you get robbed by inflation. With real estate, you get robbed by property taxes; via property taxes, you don’t actually own real estate. Physical gold/silver/platinum is the *ONLY* investment where you get full allodial title.

          The gold/silver ratio is around 50, close to the 20 year average. That is evidence for “no gold bubble”.

          Platinum used to be around 20% more than gold (per ounce). Now, gold is slightly higher than platinum. By that reasoning, gold is at most 20% overpriced. Even if you overpay 20% for gold, gold has been outperforming the stock market by nearly 1% per month! Even if you overpay by 20%, you’ll be even with other investments in 2 years.

          Also, if you look at a 10 year chart of gold/silver/copper/platinum, they track each other pretty closely.

          There’s another trick, to minimize your risk of exposure to bubbles. Dollar-cost-average. Buy an equal amount of gold every few months, rather than one big purchase all at once. That minimizes the risk that you will buy at a local maximum.

          Even though gold is the best long-term investment, it certainly is possible that gold could go down 20% or even 50%. I would view that as an opportunity to buy more at a discount, rather than proof that all gold investors are idiots.

          As another argument, if you look at prices 100+ years ago, quoted in gold, they are mostly unchanged. For example, a model T car cost about 20 ounces of gold. You can get a new car for less than 20 ounces of gold now. Gold preserves its purchasing power over time. For all good where there’s a reliable 100+ year old price, gold has preserved its purchasing power.

          The ads for Goldline *ARE* a ripoff. Most gold dealers that advertise on TV *REALLY ARE* con artists. They are selling “collectable”/numismatic coins, at high premiums to spot metal. That doesn’t automatically mean that all gold dealers are con artists. There are respectable dealers like APMEX and Kitco. You should never pay more than a couple percent premium to spot, for gold and silver.

          Here is another example, reconstructed M3. Reconstructed M3 is increasing by 20%-30% per year, which is very close to the rate of gain for gold. Also, “reconstructed M3″ probably understates true inflation.

          Gold isn’t a bubble. Gold/FRNs is going up by 20%-30% per year, BECAUSE INFLATION REALLY IS 20%-30% PER YEAR. It isn’t a gold bubble. It’s dollar hyperinflation.

          I don’t understand why you’re so eager to convince me. I’m pretty sure that gold is not in a bubble. Gold is an accurate measure of inflation. True inflation really is 20%-30%+ per year. In fact, I’m more likely to believe “Banksters conspire to keep the price of gold down!” than “Gold is in a bubble!”

          • Thanks for the thoughtful reply FSK. I liked your comment about CEO’s in the 80′s. My dad rose from dockworker to CEO for a Fortune 500 trucking company. He cared about the company, the people that worked there, and was a relatively good man compared to what you see today. And there are many stories he told us at dinner that taught me more about business than any educational program could ever accomplish.

            I am not trying to convince you that gold is a bad investment. I am just exploring different points of view. But you did mention that if you had 20 ounces of gold one-hundred years ago you could buy a Model-T Ford and with 20 ounces of gold today you could buy a new car. This example shows that gold is safe maintains its purchasing power, but it really doesn’t build wealth as an investment. You could buy a car with it 100 years ago and you can still buy a car with it today. So, if you are looking for a safe investment simply to maintain purchasing value perhaps that is a good argument. But, I wouldn’t look to gold for big gains. Gold would be nice to have if market and economy collapses and perhaps nice to have if you are rich and want to diversify your portfolio.

          • You prove that gold bugs are idiots. Thank you for showing the world. How is your gold doing? And what about that hyperinflation? lol

  3. First let me point out that I have no credibility whatsoever, except my finely tuned bull detector. I know these comments are a couple of months old, but really, Tincup, you can’t think of any uses for gold? Maybe you should use your computer with its non tarnishing gold connectors on its RAM and CPU pins to search google or wikipedia for uses. Gold-palladium automotive spark plugs, anyone? Gold fillings were once used as tooth fillings because of its unreactivity. Gold has more uses now than it ever did in antiquity. Google the other uses yourself.

    Just because its main industry use may be in ‘worthless’ jewelry doesn’t mean that you can discount the value of the industry. If it were up to logic, the jewelry industry would not exist because on the grand scale of things in the universe, jewelry is useless and illogical — other than the fact that it can get you laid. Regardless of actual practical use, something has worth because one says it does but this is not going to work unless someone else agrees. I refuse to believe that you are associated with a Fortune company and yet only know of gold as useless shiny adornment.

    Ever try Goldschlager? I hate it, but apparently you CAN drink gold. Also you can eat it. The Pharoahs ate gold in their food, I believe, probably so they can see that number 2 sparkle.

    Is gold is a bad investment because it may collapse someday? When i was in school 10-15 years ago gold was probably 500$ an ounce. Last year or so, it was 1000$ an ounce. It’s even higher now. Is it the gold that is now worth more or is our paper now worth less? Say hypothetically in the future the almighty dollar collapses and the US government crumbles(heresy!). You won’t be able to pay for food with your worthless paper. I’m sure you can find pictures on google of the wheelbarrows full of paper money people have to haul to the store to buy bread in some countries. But this will never, NEVER happen to us, right?

    I’m not saying you should be a total moron and dump all your money into gold, but some old folks I know have some small 1/10 oz. bullion packs hidden in a safe “just in case”, i.e. the SHTF. We live in times where people haven’t lived in the “bad old days” and believe we ALL should just trust whatever monetary system is dealt us, and to have a small inkling of doubt and preparation means you’re probably part of a small group of skeptical redneck inbred gun-wielding morons.

    Read about North Korea bankrupting all of its already poor people by devaluing all of its currency. They created a machine to destroy all the savings of their people literally overnight.

    If gold is just a “big pump and dump ponzi scheme”, it’s been going on for hundreds of years.(sarcasm)

    • Actually, shifting all your savings to physical gold and silver might be the smartest investment. I mean actual physical delivery, and not paper gold. However, I don’t have the balls to do this. I’m putting most of my new investments to GLD/SLV, but keeping my old ones. I’m going to start accumulating physical eventually.

      If the financial system really does collapse in the next 20 years, gold and silver might be the only thing that preserves most of its purchasing power.

      Even without complete collapse, gold and silver to well in times of high inflation and hyperinflation.

      The real return on a gold investment should be 0% minus transaction costs. The sad news is that may be the best investment. With other investments, you get robbed by inflation. With cash/money market/treasuries/bonds, you get robbed via inflation. The stock market does not outperform true inflation. In the stock market, the CEO can dilute your ownership via share/option grants, and waste the corporation’s assets. The waste/fraud/theft of a large corporation is larger than the dividends and earnings. With real estate, you can get robbed via property taxes. For example, in some areas of Detroit, homes are effectively worthless, because the annual property tax is greater than the market value.

      • I don’t say this to be confrontational, but why don’t you “have the balls” to follow your own advice, especially when you advocate for it so strongly in so many of your blog posts?

        It seems really weird to me that you would hold GLD/SLV given the fact that you think the funds are deliberately exposing themselves to default risk.

        • Due to my present living arrangements, I’m not allowed to buy physical. My parents said they don’t want me holding physical, due to the robbery risk. Until I get my own apartment, I’m stuck. (I moved back in with them when I got sick.)

          • hahahaha “My parents.” That explains everything now. Some kid who lives in his mom’s basement claiming that Mike Stathis doesn’t know what he is talking about. lol. This is the problem with the Internet. Never ever pay attention to what anyone says unless you know who they are and you are sure they are credible. There are too many self-proclaimed experts online who remain anonymous and live in their mom’s basement. lol

  4. It looks like some of you need to be updated on Mike Stathis’ gold articles.

    http://www.avaresearch.com/avanew/articles/1131/Gold-Charlatans-Strike-It-Rich-While-Their-Sheep-Get-Fleeced-Part-1.html

    This article contains links to other articles and several gold videos he has created to expose the charlatns like Peter Schiff (check at the bottom where it says related Articles for the videos).

    First, note that Stathis advised gold to his clients since 2001 and recommended it in his 2006 book America’s Financial Apocalypse, BUT recently has issued warnings in order to help neutralize all of the pumping by the Glenn Becks of the world. Stathis has the leading record in the world on the economic collapse and has backed this claim with a $100,000 guarantee. Anyone who does not listen to what he says is clearly a fool.

    “Never pay attention to those who are in the media. The media has a long history of airing fools who confuse you and provide misinformation and the guests will do anything to please the media in order to get invited back so they can pitch their snake oil. The media serves those who pay for advertisements. Ask yourself who advertises on the financial media…gold dealers, mutual fund companies, Wall St firms, banks, insurance companies. Get the point? Real experts who can help you are never in the media because the media’s purpose isnt to help you, but you exploit you for the benefit of its financial sponsors, or those who buy the advertisements.”

    • The reputable PM dealers like APMEX and Kitco don’t advertise in the mainstream media. Glenn Beck is selling overpriced collectible coins at ridiculous premiums to spot (Goldline).

      I don’t understand what point your making. Are you saying “Convert your worthless State paper to gold!” or are you saying “People who by gold are idiots.”?

      I don’t believe “There’s a gold bubble.” The increase in the FRN price of gold is merely the inflation rate, very high.

      There are a few decent arguments against gold.

      1. unfavorable tax treatment (That’s why I want a good agorist gold/silver/FRN barter network.)
      2. lack of a safe place to store it (Cleverly hiding it in your home only goes so far.)
      3. The State tracks all on-the-book PM transactions.
      4. poor liquidity and high bid/ask spreads

      However, there’s a risk of 100% loss in hyperinflation or Cyprus-style bank robbery or getting Corzined. You should own some gold and silver, taking physical delivery. Unfortunately, I haven’t followed my own advice.

      • Let us all know when you earn enough money to buy some gold. But don’t count on it making you enough money to move out of mommy’s basement because gold is headed much lower in coming years.

        • First, where I live has nothing to do with the value of the other points I made.

          Even though gold is down this year, it still is a good long-term investment. Even though I don’t have any physical, I did buy some ETFs. It is wrong to use a 1 year period to judge the merits of an investment. (and I bought some more than a year ago)

          Also, I work as a web developer. Unless you have a similar or better job, I probably earn more than you.

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