The entire situation is sad.  Years after increasing anticipation about Facebook’s IPO, the stock fell flat and then started to roll down the hill.  California, caught between a fiscal rock and hard place, saw a glimmer of hope in this heavily anticipated IPO and now realizes this opportunity is gone.

If the loss of public confidence in government and our financial system was not bad enough, we now have the most publicized IPO in recent memory, if not in history, look as if it was set up by some shady Chicago mobsters from 60+ years ago.

Rather than Facebook being the goose that laid the golden egg, it looks as if Facebook is the goose that laid the rotten egg.  I suppose this could be chalked up as an example of why I like to tell people looking for investment advice to invest in companies like Pepsi and Phillip Morris…

Take it from me…About a year and half ago I invested in a social media company called QuePasa.  I did so because of the hype train around social media.  Since Facebook was still private, many investors looking to establish a position within the social media realm had to settle for 2^nd tier players that were attempting to carve out a small piece of the pie.  Unfortunately for me, I mistook the longevity and staying power behind the ‘hype’ and forewent 100% return on investment.  Now I’m negative.  Hindsight is 20/20…my plan differed from what actually came to be.

The fact is that the Facebook hype train has been chugging along down the road for 3+ years.  If the company would have debuted back then, investors would likely have seen some ‘astronomical’ growth, but the company’s valuation would have started lower to start with, too.

Facebook is well known and well understood by the investing community.  Based on its current business model, how can investors be irrationally exuberant?  How long will advertisers pile in money into a channel that doesn’t deliver?  Many people on mobile devices that use Facebook don’t even see ads, a good amount of people using a regular PC’s web browser have ad blockers that prevent ads from even being shown and the remaining majority of Facebook users ignore the ads.  It doesn’t matter how targeted a business might make an ad, value is lacking if the user ignores or never sees the ad.

Where else will Facebook turn for revenue?  The virtual good market?  Yes, that sounds like a model for success (sarcasm).  Innovation must take place and it must occur fast.  The competition is real and quarterly reports will cause investors to flock to or away from the company.

For Facebook to continue being a ‘revolutionary’ force, the company must continue to be a dynamic change agent.  Since its inception the company has been a location online for people to go and socialize, fulfill their voyeuristic desires, play a games and maybe click on an ad by accident.  This has been a platform widely successful in terms of attracting users, but how about turning users in to profitable customers?

Facebook must change if it to be a zenith of the stock market.  The social media hype train is loosing steam.  The thought of a reenactment of the late 90’s dot-com bubble isn’t in the works because people are no longer that irrationally exuberant when it comes online technology.

The average summertime correction in years when the market generally rallies is 11 percent and the average duration of the downturn is just under 3 months. Unless the economic data deteriorates further, I’m looking for a pullback of roughly average duration and severity this summer. Such a move would see the S&P 500 re-test the 1,270 to 1,280 support area and find a bottom at some point over the summer…READ MORE.

What you will find inside…

• Why it might not be a bad idea to establish a short-position to hedge your investment bets & how this can easily be done.  ETF investment idea provided.
• What emerging cultural shift is occurring in China and what this means in terms of investment opportunities.
• An updated portfolio performance table.
• Why the future value of your money matters and how you should consider this factor when making purchasing decisions.

Risk is a major issue when it comes to investing.  If you’ve ever consulted with an ‘investment professional’ you were most likely asked about your level of risk aversion.  What does risk really mean though when we’re talking about investing?  Obviously, you’d probably say, “The likelihood that I’m going to lose my investment money!” Right…Yet, how do you answer the question of how likely/unlikely you will be to lose your investment?

In a thorough, readable and example filled chapter, Mr. Dever illustrates that often times what depicted as ‘risk’ in the investment world is based on statistical assumptions.  Often times these assumptions are built upon historical analysis that attempts to identify correlations that can be leveraged for gain.  In the midst of this ‘rear-view-mirror’ investing method, an important factor is lost; what is the return driver behind the strategy and what could change to invalidate the assumptions made?

It’s a breath of fresh air to read Mr. Dever’s observations about the use of statistical analysis to define risk apart from fact based business sense. Within the realm of investing and outside of investing, the actual drivers that enable events, relationships and outcomes to occur are often not fully understood.  The lack of understanding is not so much from a lack of ability or information, but a lack desire and/or misplaced confidence.

I’ve heard more than once in conversation the point made that “If you’re an excellent statistician you can probably make a lot of money investing.”  Some truth does exist in that statement, but investing is not card counting.  Yes, exploitable patterns may exist that are historically seen as having a high probability of reoccurring.  The question that needs to be answered prior to buying into such relationship is “What’s the root cause?” Without understanding the investment and business-sense, the risk inherent within an investment/trading strategy cannot be properly understood.

I highly recommend Mr. Dever’s book, Jackass Investing – Don’t do it. Profit from it. New and seasoned investors will find many nuggets of knowledge to help ensure they don’t end up being a jackass with their investments.

It is available in Hardcover, PDF, Kindle and Nook format at JackassInvesting.com.

I am of the opinion that in the mid-latter part of our current decade we will experience a good deal of pension reform.  This reform will not be minor tweaks, but major changes.  As a result, many older and younger people are going to be VERY unhappy about what they told.  Changing ones expectations mid-game is not only bad because it undermines trust, but it also resets ones assumptions about the future.  When a person operates under certain assumptions about what they will/will not do in the future and then has these assumptions changed, the consequences can be significant.  Don’t think this process will be smooth either politically or economically.

Demographers for many years have assumed that the lengthening of lifespans would slow in developed countries. But with continual advances in medical technology, that has not happened as acutely as expected. In emerging economies, rising People worldwide are living three years longer than expected on average, pushing up the costs of aging by 50 percent, and governments and pension funds are ill prepared, the International Monetary Fund said…READ MORE.

Current spot prices for natural gas contacts are around/under $2 per million BTUs.  This trading range is as low as gas prices were in the late ’90s.  This is a far cry from $14 per mBTUs that occurred around 2005.  Natural gas prices have been trending downwards since 2008. If the market continues to demonstrate that supply will continue to overwhelm any shifts in demand, a greater number of manufactures, chemical producers and other energy intense industries will begin to adopt more natural gas energy sources in their business production.

FREEPORT, Texas—Dow Chemical Co. will build a multibillion-dollar plant to convert natural gas into the building blocks of plastic in this coastal city, becoming the latest chemical maker to capitalize on the abundant gas supplies that are helping spur a renaissance in U.S. manufacturing…READ MORE.

What you will find inside….

• Why Liquid Natural Gas (LNG) is an attractive investment given the large differences in natural gas prices throughout the world compared to the U.S.
• What IPO debuted in March that provides LNG transportation services throughout the world and what you should expect from the company when it anticipates paying dividends in the 4th quarter
• One area of the data collection revolution that is likely to not feel the criticism of privacy advocates and how one company is positioned to provide real economic value to companies who would benefit from more effective and less costly monitoring services
• An updated model portfolio performance table
• Cars, reoccurring costs and considering what you forgo when you make a purchase – Opportunity cost matters

Source: New York Times

I’m linking to a web page that provides a very good overview of the current rules and limitations that concern tax deductions and charitable donations.  Once you are armed with this knowledge, then when you see a cause that you might want to support, you can make a more informed decision regarding your ability to contribute.  Many people see non-profits asking for a donation as a losing proposition…at best it is seen as a way to get someone to stop bothering you.  This isn’t true.  If you have an actual interest in the non-profit or don’t like to see so much of your taxes go to the Federal government, then maybe you’re at the doorstep of a great opportunity.

Note: Adjusted Gross Income (AGI) is calculated as your gross income from taxable sources minus tax-expempt items like qualified medical expenses and retirment plan contributions.  You can find your AGI on page 1 of your Federal tax return.  You might also here AGI referred to as net income.

Check out: http://www.moneycrashers.com/charitable-contributions-tax-deductions/