Thursday, May 17, 2012

HEY! Facebook!

Welcome to 1995. Haters are gonna hate. I'm gonna buy Facebook.

1 -- Investor risk preferences. With interest rates at 0 forever, prices will escalate. Stocks are super cheap (14x multiple?). It follows that speculative money will flow to stocks.  And not just any stocks, growth stocks! There aren’t many exciting companies left in the US, and Facebook is one of the few. So sector allocation will be heavily weighted to growth/Facebook. Or just Facebook. On a related note: long QQQ.

2 -- Exponential growth. Let the good times keep on rolling. To clarify:

3 -- People love social media for some reason. And Facebook is one of the few companies in the social media group with a long term profitable business model. Facebook's prospects are much more attractive than other recent IPOs such as LNKD, P, ZNGA, etc.

4 -- Inflation is a thing. That may or may not happen. And GDP targeting? Good for prices.

5 -- I love the short case. If you are going short (there sure are a lot of you!), please sell Facebook as soon as possible. Give me that sweet discount.  

People talking about valuation, get ready to lose your lunch. Sure the valuation is ridiculous, but it will get more ridiculous. If you are still thinking "little upside, and a lot of downside," refer back to my chart.

blah blah blah blah

Isn't this fun? Long Facebook.


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