We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
I think so. I got an article which crossed my desk this morning:
King Digital Entertainment (makers of the Candy Crush Saga mobile game) is planning to launch an IPO valuing $7.56 billion, which is worth more than 15 percent of S&P 500 companies. Each of King's 22.2 million shares would be priced between $21 and $24, and is expected to debut the trading on March 26. Fox Business reports King would command a market value worth more than other major tech companies like AOL, Lions Gate Entertainment and even 2.8 times more than struggling J.C. Penny. Last month, King revealed that its fourth quarter revenue hit $602 million, and $159 million in profits.
It's cheap at the price - roughly a one to one price to (annualized) earnings ratio. However, this is a gaming company, and gaming companies are notorious for their price fluctuations. Very few companies which make standard XBox or Playstation games have remained at reasonable price levels, the competition is fierce and consumer tastes are fickle. Less standard gaming companies, such as Zynga (based almost entirely on Facebook registrations) have suffered mightily after going public.
King Digital has been very profitable, but I've had experience with firms like this. Typically, when they are privately held, they are fast, nimble, and aggressive. When they cash out, they become bloated, lazy and unresponsive. Can they break the mold? Since it's my view the market is artificially overpriced, my guess is this is a stock that will jump quickly and far early in its trading life, and then slip back down as reality hits home.
I can't blame the stakeholders for wanting to cash out, and perhaps this is the best time for them to take what they can get.
many game companies (and IT companies in general, probably in other fields too) go public to attract venture capitalists, after which the owners siphon off the billions to foreign bank accounts and deliberately work the company into the ground to mask the fact of their fraud.
Yes, we are in another bubble. Anyone with a mutual fund account or an IRA should be able to figure that one out. You don't see these kinds of exponential returns lasting indefinitely, and you will certainly see a correction soon. Who is buying stocks? Where is the money coming from to support these over-inflated company values for companies with very little profit and crummy sales? Also, I saw today that a 7th person committed suicide who works for an investment firm. I think they see the storm on the horizon brewing...a terrible storm.
There was also a story about China's 'shadow banking' having basically slowed to a halt. I don't know exactly what shadow banking is, but it seemed to indicate that this was the first sign of a big global slowdown/crash.
New Zealand raised its interest rates.
Signs are there.
I am okay with it, though. I am years from retirement. When the crash happens, I just continue to fund my retirement accounts and get the advantage of buying shares very cheaply. Eventually, the market swings back up, and I make some money! For anyone close to retirement, I would make sure you start shifting some investments into less risky holdings!
Shadow Banking is primarily hedge funds. However, other institutions are involved. They exist outside the bounds of banking regulations, and this is a good thing because they can operate more efficiently and take high risk positions.
It has its downside, of course. It's high risk. Not for the faint of heart or short of change. Yet politicians see shadow banking as 'dangerous' and seek to pull it under their control.
Yet in 2008, shadow banks were the healthy ones - they avoided all the risky positions and in fact were responsible for keeping the economy afloat (you think TARP did that? think again).
We need shadow banking, and we should loosen controls on banking in general. I have no issues with Glass/Steagall - I know my Libertarian brethren would sigh at me, but I have a deep understanding of why it existed and what its usefulness is. But there also needs to be a place for renegades and risk takers in banking...
Here in SF you can almost feel that we're on the tipping point of something. The push me - pull you that is going on between the tech influx and those who consider themselves local (not me; only been here for 7 years) is reaching a fever pitch. When 500 sq. ft. studios are going for $1500/month IN THE TENDERLOIN you know things have topped out.
What I find interesting is the blind spot that tech has in this town. A cock-eyed optimism that says my app/game/company won't fail. We've figured it out unlike those others that did fail. Zynga has been limping along since its IPO; 5 years ago they were the darling of the business section of the paper and now....I'm figuratively holding my breath. The pop is coming real soon. Wonder if it will have the impact of the first one in 2000-01.