I really don't get why FB is valued that much. If you look at their revenues, net income, quarter-to-quarter growth, the stock should be at $5.50.
Seriously, look at GOOG, compare it to FB. You must be insane to buy FB.
Seriously, look at GOOG, compare it to FB. You must be insane to buy FB.
Speculating is about what you think will happen.
Buying stocks in a business is about buying into something that has shown to be profitable, and stable. Enough to exchange your hard-earned money for it.
Read "The Intelligent Investor" by Benjamin Graham to gain a better picture of what investing really is.
Good investing is about buying into something you think is undervalued.
If a business has been "shown" to be profitable and stable, as you say, then its stock price will be high enough to reflect that, and it's probably not undervalued, unless you know something special about it. All you can expect it to receive a steady small stream of dividends, or sell the stock sometime in the future for roughly the same amount you paid for it originally. That's not really "investing", that's just swapping cash for stocks. Save yourself some risk and just put your money in an index fund instead.
If you want to argue what the most rational approach to investing is, sure, that's fine.
However, there are a lot of ways to skin the cat these days. You can high frequency trade; you can slap puts on stocks if you have a skill as a short; you can use calculated hedges and skim points; you can carry trades through currency variations; you can buy and flip based on market panic (or short temporarily based on irrational euphoria), with no intention for long term holdings or long term profit concerns.
I think more people (less skilled professionals) can invest in the Ben Graham model, over a long period of time, than any of the other approaches. But, a select few have turned out to be extraordinary at the other approaches, and have made great fortunes that way as well.
GOOG investors are speculating that there's less potential for that.
FB is really stuck, they have no fucking idea what to do with all the users. FB ads don't work.
The only way FB will survive is if they start selling shit directly on their pages, highly targeted, Amazon-level goods and prices.