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OK, so it has been awhile. I apologize, as I was gearing up for Level I of the CFA exam. Afterwards I was in New York visiting people and just got time to write a quick post… to say..

I WAS RIGHT

Back in February, I had estimated Facebook’s value to be about $25 a share. And I thought that was being generous. At the close on 14 June, the shares were at 28.29. I noticed a big drop occurred on the day that the options on Facebook started trading. While options prices derive from the price of the stock, I believe it also works the other way around.

If people start driving up the price of puts (the right to sell a stock at a certain price, think of it like an insurance premium you pay to get some value if your car gets in an accident or a tree lands on your house), then the value of the stock will go down. Likewise, if people crush the price of calls (the right to buy a stock at a certain price, or think of it like reverse insurance, like paying something so you can own a house at a reduced price if the cost soars for whatever reason), then the price of the stock will also go down.

There’s a reason why Warren Buffet doesn’t invest in technology stocks. And while Google and Apple may have crazy valuations. And while Google and Apple may seem sky high, at least they have some steady revenues and aren’t trading at 90x earnings.

Anyway, I mean to write some more posts, including one social media stock that I think is in more danger than Facebook and some global macro opinions. I also am thinking about writing a small opinion (treading carefully) on my CFA experience. I may write about my exam day experience and what I think about the level I material.

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Le Crackberry

Remember when you responded to 100 emails a day using this?

Remember when it seemed every banker, business person, politician, and anyone else that needed email on their cell phone all seemed to be on Blackberries? Those days are starting to go away. Research in Motion, the producers of said “Crackberries” posted earnings yesterday and they were dismal. So how did the great Crackberry go down?

First, RIM can blame Steve Jobs. Apple came out of nowhere and started the iPhone. A smartphone that was almost as good as Blackberry for the technical side but winning on the social side. I mean, the best Blackberry had for social was being able to connect for chatting and not to mention the Blackberry Messenger. BBM remains important, but it’s lost out to Apple’s iMessage in a way… though I think it would be better if iMessage was more separate than text messaging.

Second, and maybe part of number one, RIM can blame Google’s Android. Android came out as a respond to the iPhone, but with a lot more open programming. The tech geeks (whom I know plenty of) love Android because of the open source attitude they have. Don’t forget about the tech geeks. Maybe it’s the business users that drive the market in the short run, but its the geeks that drive innovation in the short and long run.

Third, they jumped into changing their game too late. Only now they are starting to dramatically change things. They acquired a company with a new OS, QMX, that has been going on since 2010. But Apple released the iPhone in 2007. That’s way too late, especially when things change all the time, especially in social media.

In the end, what does this mean? Right now, RIM’s book value is 19.00 per share or so and it’s trading at about 13. This is not a good thing. I’d be short RIM long term, which is sad in my opinion. I love the fact that their OS is very technical. The problem is there’s no market for it. MS-DOS got beat out by Windows. Windows is close to being beaten out by MacOS. It’s the circle of life. While I love the technical side of RIM and Blackberry OS, it just won’t stand. Phones are meant to be social and for business. Apple and Google got it. RIM only focused on the business, and that’s they’re downfall. While I still think they can compete, I mean I’d rather have a Blackberry for work than an iPhone (if only for the keyboard), Apple will win out. Or Google will, seeing as they have phones with keyboards.

If this were a chess game, I’d say, RIM, check (and your options are limited).

Fun links:
iPhone vs. Burrito – and the Burrito wins!

A lot of fuss came about when Google+ came to be over the summer. A lot of hype went into this platform, thinking it could rival Facebook. But right now, statistics show people are signing up but not using the service as much as intended. As as shown by this picture, it seems as though the only people using Google+ are Google employees.

Social Media Explained

The world of social media explained with donuts. Notice the last one.

In glancing at the above photo, you notice that there are different sort of “sectors” in social media. Facebook is a purely  social platform for people to connect with their friends. Foursquare, is one I really don’t understand to tell you the truth but it allows people to check in at places. Instagram and Pinterest are very similar in my opinion, with Instagram only serving on mobile devices and having filters to play with pictures. We all know YouTube by this point. LinkedIn is like a professional Facebook. Last FM is self-explanatory (though I would have put Spotify instead of that here).

After going through that, you may notice I skipped Twitter at the top. That’s because I worry about Google+ going the same way as their Buzz platform which was eerily similar to Twitter. In fact my first buzz posting which I put up without reading anything about it was that it looks a lot like twitter. To which I’m pretty sure I got a lot of people ripping on me for that. But the real reason I wrote that is because well, I had no clue what Buzz was supposed to be at that point.

I mention Buzz because it’s another venture that Google started and later shut down. While it wanted to be Twitter, it’s true mission was so that Google could get more information. And recently I read a WSJ article (The Mounting Minuses at Google+) that said that, “… the main financial goal of Google+ is to obtain personal data about users to better target ads to them across all of Google.”

That sounds a little scandalous, doesn’t it? Also in that article it shows a great picture that I will post here:

Average minutes per user on Social Networking sites for January (note: does not apply to mobile apps)

 Google+ even comes below Myspace in average minutes per visitor for the month of January. And everyone thought Myspace was dead! What’s more surprising is how Pinterest has grown, even more than Twitter and Linkedin. While not everyone may agree with Linkedin, it’s purpose is certainly different from Facebook. My dad and uncle would never consider joining Facebook (at least I think for my uncle), but they’re both on Linkedin as they both have professional post-graduate degree and operate in that sector.

Also, Twitter, Linkedin, Pinterest, and tumblr are able to connect directly with Facebook. These connections actually increase Facebook’s influence, even respective to their “competitors”. But Google+ is more of a direct competitor to Facebook.

Additionally (non Google employees), how many friends do you have on Facebook and how many connections do you have on Google+? I don’t want to disclose numbers but between Google+, Linkedin, Twitter, and Facebook, the lowest number of connections I have is on Google+. Twitter is hard to judge but on both Linkedin and Facebook, I know I can post and have almost 1000 people aware of my post.

This isn’t to say that Google+ is doomed. They just need a better strategy. As I stated before, Facebook can go down. And if they were, wouldn’t it be Google+ to take its place?