Out of sync.

Facebook announces a possible  date for going public (Wednesday), a valuation in the $100 billion range, and lights a fire under many social networking recent IPOs (they will be good shorts soon) and expected lead underwriters MS and GS. Neither of these makes much sense to me, for IPO’s of this size, MS and GS will take a big cut in underwriting fees, there is no way the 7% rule will apply. Let us do a back-of-the-envelope calculation. At 2%, that is $100 million each for MS and GS. Their annual revenues are about $30 billion. That is a 0.33% increase in revenue, the stocks popped 2-3% today. Does that make sense or is that out-of-sync?

I am out of sync too, with my eagerness to get on the short side.  If you want a positive spin on the bleakish macro news, it is that lower interest rates make the PV of discounted cash flows more valuable (so you can buy stocks). Volatile tech (see Chinese internet stocks)  jumps after having been quiet for a while on news that BIDU’;s earnings will be up 80%. I kept wanting to jump in on the long side, but the stock has been going down each time I looked and I figured somebody knew something.  Apparently not, clearly I didn’t do my homework. Just as clearly, the mood is quite bullish. Today’s action suggest that people are moving away from the mega-caps to the more speculative stuff. The Dow dropped while IWM and tech actually rose.

Thankfully I am not aggressively short.  Still bearish on BA and adjusted stops. They cut 2012 estimates by 20% from $5.30 to $4.20, Dreamliner rollout is slowing, defence revenues are flat. Read / listen to the conference call.  I did sell the rest of my GLD after a 3-day run of nearly $90. Still holding the VIX calls, I did go out to March, but am close to bailing out. The Amylin news helped a bit, I will let some go soon. Trading means taking and/or protecting profits as you have them and limiting losses when you don’t. I am just being opportunistic, maybe I should be  two-sided a little bit longer.

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