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The highly-hyped stock of Facebook is trading down today (May 21) in its second day of trading. The first day, it was flat, surprising some analysts, who expected it to leap -- typical for hot new issues of stock, particularly in tech. Facebook may have gone public at 3 times realistic value, and some think this may indicate a frothy top in the overall stock market, but the experience in San Diego in the late 1990s and 2000 suggests that it could be much worse.

Those were the days when initial public offerings (IPOs) would routinely triple the first day. Wireless Facilities went public Nov. 5, 1999 at $15; the first trade was at $37.50 and the stock closed that day at $62. It has now changed its focus to defense under the name Kratos, and this morning is trading at $5.22. Enzyme maker Diversa went public Feb. 14 of 2000 at $24. The first trade was $54.50 and the first-day closing price $75. It has gone through permutations, once moved to Massachusetts, returned to San Diego, and is now trading at $3.27 under the name Verenium. MP3.com went public in mid-1999 at $28 and the first trade was at $92. It was later sold for $5 a share. Websense went public in 2000 at $18, the first trade was $34.50 and it closed at $47.75 that day. It's now at $18.69, but at least has survived and done well. A winner of sorts was biotech Illumina, which went public in 2000 at $16, closing the first day at $39.17. The stock then plunged, but is now back up to $43.44, and is a successful company.

U.S. stocks and bonds are both overvalued because of the madcap creation of money by the Federal Reserve and other central banks around the world. But things aren't as crazy as they were in the late 1990s and 2000. (On the other hand, back then, Europe was not on the brink of falling apart, as it is today.)

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Burwell May 21, 2012 @ 6:22 p.m.

Facebook will be selling for $25 a share by Friday. A frenzy of panic selling is about to ensue as stunned investors realize the company has no business model for generating revenue.


Don Bauder May 21, 2012 @ 7:40 p.m.

You may well be right, Burwell. The stock lost 11% today. It was artificially supported by underwriters on the first day of trading. When they aren't backing it up, there could be a paucity of buyers. Best, Don Bauder


SurfPuppy619 May 21, 2012 @ 9:49 p.m.

I am thinkng B is 100% on the money....


Don Bauder May 21, 2012 @ 10:28 p.m.

Burwell is often 100% right. He could be right on this one. Best, Don Bauder


Burwell May 21, 2012 @ 6:56 p.m.

Goldman Sachs is the driving force behind Facebook. Early this year, before the IPO, Goldman Sachs purchased 69,544,363 shares of stock for only $1.45 billion. Goldman Sachs has already unloaded 38 million shares at $37.58 per share. Do the math. Goldman Sachs' recovered its entire investment in the stock on the first day of trading and the company has no investment in its remaining shares and nothing at risk in the company.Read Matt Taibbi's expose on Goldman Sachs, and how Goldman Sachs made billions off the last technology bubble while small investors lost their shirts. If you own Facebook, unload this piece of sh#@ while there's still time.


Don Bauder May 21, 2012 @ 7:47 p.m.

Generally, small investors don't read the prospectus and understand that insiders and VCs may have gotten their shares for 2 cents each. They can't lose. Second and third round early investors have bought in low and often can't lose. And they are the ones responsible for the hype; they feed the b.s. to a hungry and naive business press. I have been inveighing against IPOs for decades-- back when I was at Business Week, 1964-73. The editors of BW initially pooh-poohed my rants, but in the giddiness of the early 1970s began to see the light. You can imagine how popular I was at the U-T in the late 1990s and early 2000. Local tech honchos who were making multi-millions off of IPOs that soon turned into garbage would scream to the editors that I was anti-business, etc. Those editors didn't understand the scam, either. Best, Don Bauder


SurfPuppy619 May 22, 2012 @ 9:07 a.m.

Matt Taibbi's from ROLLING STONE MAGAZINE and the top financial investigative reporter in America IMO.


Don Bauder May 22, 2012 @ 11:29 a.m.

Agreed: Taibbi is the top financial investigative reporter in the U.S. Best, Don Bauder


nan shartel May 22, 2012 @ 5:24 p.m.

it was a definite Wall Street non event....no fireworks 4 Facebook


Don Bauder May 23, 2012 @ 6:47 a.m.

One thing you can say, though: Facebook actually RAISED money in the offering. Yes, the stock was priced far too high, but the proceeds went to the company for use in advancing the business. In many other IPOs, the price is set so the stock can soar the first day; the amount of money the company raises is a secondary or tertiary consideration. The insiders just want to get instantly rich. Best, Don Bauder


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