“it then dawned on me that all the improvements in the conditions of the working classes were the result of capitalism. social laws brought about the very opposite of what the legislation was intended to achieve”
Via Gordon T. Long of GordonTLong.com,
The ‘something for nothing’ mentality is now firmly in charge in the developed economies. As the G7 economies cascade lower under their past, present and future entitlement & politically connected reward policies, misery is now being spread widely! Misery being spread widely is the product of socialism, as real growth disappears and money printed out of thin air fills in for the lack of real income growth. All of this is paid for by the money you earn and store your wealth in, buying less and less, while your balance in the bank stays the same. The attacks on wealth and job creation are set to accelerate as politicians loot and plunder the private sectors to pay the unpayable promises and support those that don’t produce, by dis-incenting and enslaving those that do. Effectively, penalizing those who lead a prudent and productive lifestyle.
The cynical would argue that the goal is not to spur economic growth and job creation but instead is intended to formant economic collapse, grow government dependence, gather power as the man-made disaster unfolds, take freedoms and redistribute what wealth is left to the special interests in charge. This may very well be true but it could also be a matter of human nature and the generational re-learning of what role a government must be restricted to playing.
“A great civilization is not conquered from without, until it has destroyed itself from within. The essential causes of Rome’s decline lay in her people, her morals, her class struggle, her failing trade, her bureaucratic despotism, her stifling taxes, her consuming wars.” – Will Durant, The Story Of Civilization III, Epilogue, 1944
Recent Hurricane Sandy exposed once again the governments inability to execute even its most basic mandate – to serve the people. Grief stricken Americans heard plenty of platitudes by well meaning politicians, but the follow through was as usual found wanting by the destitute. The bureaucracy that the politicians supposedly run, with expanding central planning and control, simply couldn’t deliver on its most basic responsibilities. The politicians focused on political goals of power and the redistribution of wealth through taxation, regulation and crony capitalism only add to the growing frustrations with the incompetence, inefficiency and shear neglect of the government. The bureaucrats have consistently failed the people and with their failure so will the healthcare, energy industry and financial systems. They have failed with the post office, social security, the public schools, medicare, medicaid, energy policy and everything else they have taken charge of in a supposed attempt to serve the people!
Every generation learns these simple truths about governments and central planning, but always fall into the trap of expecting and relying on government versus themselves. The reality is people will sell their freedoms for what they perceive to be safety and security. Predictably and consistently they end up with neither safety not security.
Many have learned through experience that socialism is best defined as “Misery Spread Widely”.
Margaret Thatcher in the depths of pulling the UK out of its economic misery pointed out:
“Socialism is about spending other peoples money, until there is none left to spend”.
Slowing Credit, CAPEX and Corporate Industrial Production are only three of the ‘Canaries in the Coal Mine’ that point out that the current bull market in government regulations and uncertainty is stymieing growth, innovation and risk taking. By avoiding and effectively “papering over pain” with unsound money and a litany of transfer payments, it doesn’t allow nor force required societal change. It may ‘kick the can down the road’ by ‘extending and pretending’ but it only delays the inevitable. A degree of pain is needed to keep a society both healthy & vibrant. Without it you remove motivation and instill complacency, reduced risk taking and Misery Spread Widely.
The Mayan 2012 end of the world “prophecy” is scaring the pants off numerous children and suicidal teeangers. 1-in-10 people believe that the Mayans have prophesied the end of the world (and see this). A Google search for “Maya 2012″ currently brings up 700 million hits, almost as popular as the world's most popular searches.
In China, some people are buying Noah’s Ark type survival pods to weather the 2012 “apocalypse”:
We’ve extensively documented that the Mayans never said the world will end in 2012.
For a few days only, you can watch online – for free – the brand new video “Shift of the Ages”, in which the head Mayan elder directly explains the Mayan prophecy.
Click to watch:
In the past we have explored the life-cycle of a sovereign nation, and, perhaps more importantly when allocating capital to specific idiosyncratic investment ideas, we strongly believe, as Goldman notes below, that the competitive strengths of companies often stem from the advantages of the countries they reside in. These include a combination of resource availability (food, energy, mining and others), demographics, trade positioning, infrastructure quality and above all, the presence of strong, inclusive institutions that encourage innovation. So, what follows is Goldman’s attempt to map the various success drivers of the world’s countries. Of course, the components of each category aren’t exhaustive (and in some cases they are they overlapping), but we hope it is a good starting point from which to understand the fundamental advantages that some countries enjoy over others. Still think the U.S. is the greatest nation in the world? Try telling the Scandinavians…
We divide the drivers into four categories:
Patents per capita, R&D as a percentage of GDP, venture capital as a percentage of GDP and the birth rate of companies.
Confidence in national institutions, days aken to enforce a contract, the cost of starting a business and the GINI co-efficient that measures income inequality.
Net crude oil exports/(imports) as a percentage of consumption, per capita food surplus/(deficit), copper + iron ore + aluminum surplus/(deficit) and retirees as a percentage of population.
Transport (airports per capita, railways per sq km), electricity production per capita and internet penetration.
All percent-rank scores are shown at the back.
The overall scorecard…
The World…(click image for huge version)
and a close up on Europe… (click image for huge version)
Source: Goldman Sachs
Isn’t it amazing that you can get more notoriety for showing your ass and a pretty smile than you can get for outing the scam of the decade through intellectual analysis? More money was lost through the Facebook scam IPO at $38 than Bernie Madoff could ever have pulled off. Notice that Bernie went to jail for his relative pennies, while the bankers selling and snake oil in the form of overpriced Facebook shares got paid record bonuses on the back of taxpayer bailouts!!!Often times people can see a blatant fact, a seemingly undeniable truth, and totally ignore it as if it doesn’t exist. In the US, the Wall Street banks are masters of this marketing derived form of prestidigitation. Wall Street banks pay humongous bonuses (from your tax dollars) based on the dispensing of bogus advice, despite the fact that it can be proven beyond a shadow of a doubt that there are many other entities that have advised better, considerably more accurately and have done so consistently (Did Reggie Middleton, a Blogger at BoomBustBlog, Best Wall Streets Best of the Best?). Go figure…
Media celebrities are also adept at garnering significant mind share, although it’s a bit more understandable why this is so. Some are beautiful, some sound good, others act well on stage – basically, they are capable of doing more than simply muppetizing clients (Goldman Sachs Executive Director Corroborates Reggie Middleton’s Stance: Business Model Designed To Walk Over Clients). This article looks to counter that magic that allows those who consistently under perform to continuously be looked upon as masters of the universe, while those who have performed consistently are thought of as “alternative” or “fringe”, simply because they don’t garner the mindshare of the sexy celebrity or the “Masters of the Intellectual Universe Investment Bank”. Well, there’s a new sheriff in town! Here comes that new, “Intellectual Celebrity”. One should consider me the Kim Khardashian of global finance and investment. Instead of big ass and a pretty face, I offer a massively analytical perspective, a damn near offensive intellectual honesty and an unyielding penchant for spitting the facts that few want to hear. So, it’s not Jay-Z! It’s Reg-G!. Here we go…
There’s a new celebrity in town. He sports acute intellectual capacity instead of ass, is much more aggressive and aims to make the masses aware, despite who he may offend. Yes, I know… It may take some getting used to!
This article is segmented, and those who have followed me can skip my history with Facebook valuation vs the Wall Street banks and move forward to the Google+ Communities vs Facebook Groups comparison…
Facebook started its institutional investment life as a very popular, very well known company. Goldman took this story (private) stock and went bananas with it, as meticulously illustrated in the following blog posts:
I issued private research to my subscribers while publicly warning that Facebook at, or anywhere near, its IPO price was a blatant bald faced SCAM & RIPOFF!!!
As the actual IPO arrived, JP Morgan, Morgan Stanley, Goldman Sachs, etc. piled on the Bullshit, basically espousing how great an investment this was at $38, screaming that this was a once in a lifetime opportunity. Basically, they took the opposite stance of yours truly. And how did that worked out??? BoomBustBlog Challenges Face Ripping Facebook Share Peddlers That Left Muppets Faceless And Nearly 50% Poorer After IPO.
The stock debuted at $38, went up to about $44 that day, then hasn’t seen the high or IPO price since, dropping to $17 or so and now trading around $27 on additional analyst upgrades (because the Muppets didn’t get bent over hard enough the first time around).
All should still be aware of the primary factor in this “growth company” stock’s story….
These facts should not have been a surprise, and blog subscribers were made aware nearly a 2 years ago, as excerpted from our 2nd most recent forensic analysis.
I want to focus on the Google+ effect mentioned in the research page above. JC Kendall of SocialMedia Today posed the question “Google+ Communities: The Last Nail In The Facebook Coffin?”. Basically, he ponders whether or not the release of the Google’s recent answer to Facebook’s Groups product will drive Facebook the way of MySpace. I will excerpt the parts pertinent to this discussion, but I urge you to visit the full article and also keep in mind that Mr. Kendall is a socail media professional, hence may have a different perspective than that of the casual user. Here’s some very interesting highlights of what he had to say:
Google Hangout is a group video conferencing and video broadcast platform within Google+. It’s very handy for multi-media publishing and has no match anywhere near its price – of free!
Whew! That’s a lot of info to digest. I apologize for excerpting so much of JC’s content, but he had so much of relevance to contribute I had to. This is not all of it, by a long shot, so I again urge you to read the original SocialMedia Today article. The obvious question is, “Does he actually make a valid point?” BoomBustBloggers as well as FB and Google investors really need to know. Even though Facebook Does The Reverse Gravity Thing, Defies Logic, I still had to quip – Hey Muppets, Only Another 100% Climb In Share Price To Go Before You Break Even With MS/GS/FB Investment Advice. Let’s turn to my site’s stats to reveal some actual facts and stats.
As you can see from the chart above, the social network to beat for actual site referrals is Twitter. I believe that is due in large part to the nature of my site (financial analysis, which has a penchant towards real time information seekers). It is also due in part to a social media push that I have started, in which Twitter has the richest 3rd party publishing tools – something that I feel the other participants in the chart have erred in not directing significant resources. Time will tell if I’m correct.
Google search has always been a large contributor to site traffic, and when combined with Google Plus and Google.com referrals, is still number one despite the aggregate social media push. Google has integrated Google Plus into practically all of it properties, which makes the use of almost any Google product an indirect use of Google Plus. A wise move, one that (at least at this time) benefits the end user, and a move that significantly disadvantages its competitors – primarily Facebook! My Facebook account has been active for a couple of years, yet I just started a Facebook Company page last year, and it has been mostly inactive. I recently started adding content to it, along with a Google Plus page and LinkedIn Page (used to be active, then I stopped adding content and recently started again). Twitter has been active for about a year. At this point all of the major social media platforms get the same content posted simultaneously, and you can see the results. The content is formatted for Twitter, which may give Twitter an edge in this comparison.
What makes this comparison even more interesting is the fact that Google Plus is less than a year old while all of the other competitors are several years old. That makes Google Plus’s competitiveness and growth appear outstanding. It is a true, clear, and credible threat to Facebook (as well as the others, and that’s without considering the tech advancements) and I feel that FB investors are hardly giving this the attentition that it deserves. Google is out-Facebooking Facebook at an incredibly alarming rate!
The site stats mirror my description of the newness of my social media push. The new visits come mostly from my push onto new social media platforms. Of interest is the fact that Google Plus has a very high bounce rate, which denotes a lower quality of traffic, but the small amount of sample data being used is not conclusive. In addition, since the content is being formatted for Twitter’s short form input rules, it fails to take full advantage of Facebook’s and Google Plus’s rich media capabilities. I will experiment with this theory by hosting a Google Plus Hangout Group Video session on my Facebook and Google research and opinion to see if this materially changes the stats. I believe it will, for the interaction in the content that I’ve posted on Google Plus, when there is interaction, is much greater than the other platforms – Twitter included!
The pages per visit metric is another measure of the quality of traffic. Here you see the Google search properties reign supreme, primarily because that traffic is pushed onto my site (the people are actively looking for me) as opposed to being pulled onto the site (I’m pushing content to them to entice them to come in). By effectively combining search with social media (which Google is doing) Google can convert Plus into a push versus pull scenario. Now for the most important point: Google Plus has just been launched, and it is now just launching new aspects of the platform. All of these platform aspects from Google are absolutely free. If you factor in the cost of paid advertising on LinkedIn, Twitter, or Facebook and cost per page visit, Google Plus shoots way up to the top. WAAAAYYYYYYY UPPPP!!!! Try ti for yourself. Divide the cost of advertising on these platforms plus the cost of content creation and management by the net visitor or engagment session or purchase (or however you measure success) and you will find Google Plus to end up at the top of the list – and that is despite its highly nascent state! Imagine what happens once Google actually gets the ball rolling!!!
This is going to be a problem for all of those social media sites whose business models are predicated on ad revenue. How can you charge for something when your competitor gives the same thing away (arguably on a better platform) for free? This is the question of doom that proved to be the death of the classifieds industry, soon the news industry as we know it, and the smartphone OS industry (ask RIMM if I know what I’m taking about BoomBustBlog Research Performs a RIM Job!, or even Apple Deconstructing The Most Hated Trade Of The Decade, The w 375% BoomBustBlog Apple Call!! and Deconstructing The Most Accurate Apple Analysis Ever Made – Share Price, Market Share, Strategy and All).
Google is able to disintermediate these industries through a process known as cost shifting – basically offering a competitors cash cow product for free to the end user by shifting the cost of making and delivering said product to a natural producer who must incur said costs anyway, thereby totaly disrupting the business models and crushing the margins of the established status quo. With the newness of Facebook et. al., it may be hard for old timers to consider them status quo, but in Internet Time, Facebook is old school and faces disintermediation through cost shifting if they don’t figure something out, and figure it out fast!
Here I break down Google Cost Shifting on the Max Keiser (who, after being broadcast on China TV, may very well be the most seen independent newscaster in the world) Show
Well, I’ve Told You Before, And I’ll Tell You Again – Goldman Sachs Investment Advice Sucks!!! I thought everyone would be asking the question Is It Now Common Knowledge ThatGoldman’s Investment Advice Sucks?, but since they aren’t I’m here to fan the flames. The reason why you don’t here this from those banks is because their business model is predicated upon your ignorance. Independent investors and analysts (say BoomBustBlog) are to the extant, big Wall Street bank as Google Plus is to Facebook, a source of pending disintermediation and margin compression. As excerpted from BoomBustBlog Challenges Face Ripping Facebook Share Peddlers That Left Muppets Faceless And Nearly 50% Poorer After IPO:
I made it clear that those who lost roughly half of their capital at or near the IPO price simply forfeited those funds from not reading BoomBustBlog, and this situation was virtually guaranteed. I felt so strongly about it that I made much of my opinion available for free this time.
I made it clear that those who lost roughly half of their capital at or near the IPO price simply forfeited those funds from not readign BoomBustBlog, and this sitaution was virtually guaranteed. I felt so strongly about it that I made much of my opinion available for free this time.
Here’s where I broke it down on Capital Account
I also happened to do the same on the Max Kesier show…
Subscribers who haven’t refreshed their viewing of our Facebook research should do so now – (subscription only) FaceBook IPO & Valuation Note Update. Pro and instititional subscribers are welcome to peruse the downloadable Facebook Valuation Model, allowing you to input your own assumptions in the very unlikely event you may not agree 180% with me 🙂
And from the archives…
I discussed Facebook on the Peter Schiff radio show, the Facebook excerpt is below…
From my previous Facebook analysis public excerpt:
Yeah, I was on a roll last year, wasn’t I? That’s not the gist of it either, as we reminisce even more…
Here is an excerpt for those who do subscribe to our research and services, YET!
with the fund taking 45%+ losses and the LP (limited partners, ex.
Goldman’s clients) losing every last single dime, Goldman easily pulls a
33% return. God forbid Facebook share actually do well, Goldman’s
numbers look… Well… Damn near illegal! Almost as if they can pump up
a price without any fundamental justification or public disclosure of
financials and still sell it retail to the public. Of course, such a
thing could and would never occur – not with the every vigilant SEC to
take our backs. Excuse me while a cough a up a lung from laughter…
see, this is the dirty little secret of private equity funds. They are
not in the business of investing money for client’s maximum risk
adjusted return. They are in the business of collecting fees. Those poor
innocent (or not so, particularly when they are investing their clients
monies, hence are in the same business) souls that actually believe as
the commenter above quoted “Wow!!! If Goldman is putting their money in
this, it must be serious!”simply the lamb being led to the private
equity/IPO slaughterhouse. You see, there is no loss to GS – no matter
how high they bid up the valuation nor how hard it comes crashing down.
This gives them the incentive to shoot for the sky with the private
equity deal, because when the IPO breaks, its bonuses bigger than nearly
any have ever seen. Facebook makes and excellent marketing story as
well. Boy Wunderkind CEO, a product nearly everyone uses and loves, and a
mysterious dearth of business model to give it a mystical effect.
Don’t forget the involvement of the “cream of the crop” of Wall Street
banks, whose bankers, traders and analysts are all so much smarter than
us guys from Brooklyn. Add this up, and you get “Wow!!! If Goldman is
putting their money in this, it must be serious!”.
Additional Facebook analysis, valuationa and commentary.
On Max Keiser, go to the 13:55 marker for more on Facebook…
Double your money by shorting the Street’s advice! Once Again!
Here is a full year of free blog posts and paid research material warning that ANYBODY following the lead of Goldman, Morgan Stanley and JP Morgan on the Facebook offering would get their Face(book)s RIPPED!!! Could you imagine me on a reality TV show based on this stuff??? Well, it’s coming…
It would seem that Facebook Finally Faces The Fact Of BoomBustBlog Analysis. Professional and institutional BoomBustBlog subscribers have access to a simplified unlocked version of the valuation model used for this report, available for immediate download – Facebook Valuation Model 08Feb2012. I just nominally input some very generous numbers and the best case scenario chart (see the chart tab after your own individual inputs) is quite revealing, indeed! The full forensic opinion is available to all subscribers here FaceBook IPO & Valuation Note Update, and the latest iteration can be found here FB IPO Analysis & Valuation Note – update with per share valuation 05/21/2012. It is recommended that subscribers (click here to subscribe) also review the original analyses (FB note final 01/11/2011).
Google still exhibits the likelihood that they will control mobile computing for the balance of the decade.
Google Final Report 10/08/2010
A couple of bits from our archives…
The table of contents outlines how we have broken Google down into distinct businesses and identified both the individual business models and the potential revenue streams, as well as valuation for each business line.
Page 57 of the analysis shows a sensitivity table which outlines the various scenarios that can come into play and how it will change our outlook and valuation opinion.
Professional/institutional subscribers can actually access a subset of the model that we used to create the sensitivity analysis above to plug in their own assumptions in case they somehow disagree with our assumptions or view points. Click here for the model: Google Valuation Model (pro and institutional). Click here to subscribe or upgrade.