Wednesday, February 29, 2012
The price of gold has fallen by 5%, to below $1690 an ounce. Those investing in gold will not like this news, but it could be an economic indicator that precedes a rebound in the overall economy. A fall is the gold price is desireable for those who invested in an exchange traded fund which invests in the inverse of the gold price (DZZ). That fund was up an impressive 11.83% earlier today. The daily volume for that investment was double its normal amount, with 3.2 million shares trading hands. I think that DZZ will be a good investment to track, as the Dow climbs, the price of gold will fall. Barron's magazine predicts that Dow 15,000 may not be that far away. But, of course there are always different opinions out there. One asset manager predicts that gold may top $6000 per ounce, more than triple what it is now. For that article, here is the link:
Tuesday, February 21, 2012
Today the Dow Jones Industrial Average hit the 13,000 mark for the first time since May of 2008. Unemployment numbers are down, housing sales are up, so the Dow responded to positive economic signs. If things are cleared up in Europe concerning their financial woes, the Dow could go above its all time high of 14,164, and keep climbing. That all time high happened in 2007, before the housing/banking crisis crippled the economy. All of this is more proof that the market is resilient, but it just takes time to gain back what was lost. Most Americans have lost a good portion of their retirement accounts due to the blue chips' tumble the past few years, but things are headed in the right direction.
* Some information from CBS News.
Monday, February 6, 2012
You have probably heard about the social media juggernaut Facebook "going public" and having an upcoming IPO or initial public offering. Is it worth it to invest in this company? Some will say yes, some will say no, but there are various factors to consider. We'll have to see how much the price per share is. A part of me thinks that Facebook's most significant growth is in the past. So, why invest in a stock if you think that growth has already happened? Good question. Past growth is great, but future growth is the main factor when evaluating stocks. Buying a stock is an investment in the future, not the past. If it has a dividend, that could entice investors, but many tech stocks do not offer dividends. Facebook is no doubt constantly thinking about how to re-invent the service to keep it fresh and to avoid becoming the next My Space.
Founded in 2004, Facebook has 845 million active users as of the end of 2011. 3200 people are employed by Facebook and it is available in over 70 languages. If Facebook would have started issuing stock in 2004 or even a couple years later, then investors could have witnessed meteoric growth. When it started, Facebook was not used by the public, it was only used by college students at select universities. At the end of 2004, they hit one million users. Growth from 1 million users to 845 million users in less than ten years is staggering.
Considering the amount of information that people put on Facebook, it's a dream site for companies seeking to target consumers. From a marketing standpoint, it is an amazing warehouse of information where people share their preferences when it comes to movies, music, TV shows, politics, current events and even what brands they like. Of course, the downside to having a site that is so popular is that it has become a frequent focus for hackers and identity thieves.
We'd all like to be part of the next Google (GOOG) type of IPO, where we buy a stock at $100 per share in 2004 and it rises to over $700 per share in three years, but every IPO is not like Google. Groupon (GRPN) had an IPO late last year and has ranged between $15 and $26 per share. Zynga (ZNGA), the company behind online games such as Facebook's Farmville has ranged between $8 and $13 per share. Facebook is hoping to launch under the symbol FB sometime in May. If it's less than $100 per share, it might be worth it to buy a few shares and see what happens, but I'm not going to bet the farm on it. Many Facebook employees will become instant millionaires since they have been acquiring shares at a low price. Founder Mark Zuckerberg owns nearly 534 million shares. The Facebook IPO will be the biggest internet IPO in history, raising $5 billion, surpassing Google by $3.1 billion. It might be a good short term investment, we'll have to gauge the volatility. But, then again, I have been wrong before. After all, I bought Toyota (TM) stock a few years ago when it was above $100 per share, and I am patiently waiting for it to rebound. It's been a long wait.
***Some information from http://newsroom.fb.com/default.aspx, www.google.com/finance and http://money.msn.com/business-news/article.aspx?feed=AP&date=20120201&id=14751191