More on Twitter

I have pretty much beaten the proverbial dead horse with my comments on Twitter, but as I look back, they were nowhere near as much as when Facebook went public.  Below is another TV interview where I look particularly good. I can say that because they interviewed me over the phone!

http://video.foxbusiness.com/v/2816611949001/twitter-hype-overblown/

Twitter, the stock, is in an interesting spot right here. It looks like it wants to rally in the short-term, but because the line in the sand is so close, the risk is easily defined and not too severe for the more aggressive trader.

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Twitter & How to Play Hot IPOs

Last week, Twitter began trading in one of most highly anticipated IPOs in years, very similar to Facebook. You can view my very negative initial comments here. http://investfortomorrowblog.com/archives/826.

“Hot” IPOs like Twitter and Facebook are usually very emotional and as I have discussed over and over, emotion in investing can have a very detrimental impact on your portfolio! I went back and found similar IPOs to show you what transpired over the coming few months. The results should not be surprising.

Facebook had all kinds of problems right out of the gate and you are welcome to search the archives on the blog for my very opinionated view. As you can see, it was almost straight downhill for four months before THE bottom was hit.

fb

LinkedIN is next and similar to Facebook, there was immediate and significant weakness before a good low was seen.

lnkd

Just like with LinkedIN, Groupon experienced the ole buyer’s remorse right from the start with the first meaningful trough coming about a month later.

grpn

Yelp bucked the trend somewhat with only a shallow initial pullback, but the stock didn’t escape the carnage as you can over the first three months.

yelp

Zynga was just like the others with an immediate month long decline to a good trading low.

znga

Google is below and this is certainly not a social media company like the others. But at the time, it was an incredibly hot IPO. It was also during a very different investing climate back in 2005 with vastly different results. It does not belong in the group above, but I figured I would answer the question before it was asked.

goog

The moral of the story is that most times, investors are rewarded by having patience with hot IPOs. Personally, I would rather be late and pay up than be early and lose a lot of money.

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Big Day for the Stock Market… Twitter, ECB, GDP

The media and masses are all keenly focused on Twitter’s overblown IPO. Too bad you can’t trade it to the short side. Already, some knucklehead paid north of $50. Do people ever learn? While I do not think we will ever see the tech mania like the Dotcom bubble again in my lifetime, we are certainly seeing froth in the social media space and that’s not a good thing!

The real news of the day that is now only a footnote is the unexpected rate cut by the European Central Bank. Although, this is LONG overdue, the Europeans have been about jawboning and threatening the markets rather than action. With inflation in collapse and deflation creeping in, we are getting much closer to what I have spoken about since 2010, QE Europe. The ECB is trillions behind and better get their act together!

U.S. GDP growth came in much higher than expected for Q3, another piece of positive news this morning. So with Twitter, ECB and GDP, you would have expected another romp into new high territory. However, the bears look like they are finally making a meaningful stand. A lot can happen by 4pm, but at this point, it looks like stocks are in routine and healthy pullback mode of 2-6%.

Adding to the notion of some weakness are the recent sentiment surveys which show far too much bullishness among newsletter writers and the public.  With the employment report tomorrow morning and the poor showing this morning, a strong open on Friday could be a nice short-term selling opportunity.

As I discussed, http://www.investfortomorrow.com/newsletter/CurrentStreet$marts20131105.pdf and http://investfortomorrowblog.com/archives/789, I do not believe the bull market is over and we should still see higher highs after this pullback.

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