Archive for the 'Quick News' Category

Time to Get Another Bubble Started?

On Thursday of last week we commented briefly on the announcement that Groupon has filed for an IPO.  It has not taken long for folks to start asking the bubble question.  We’re glad they are – between the first tech bubble, the housing bubble, the possible education bubble and other smaller bubbles in between (commodities, etc.) the US economy seems to be a little too bubble driven for our liking.

Chunka Mui over at Forbes.com sees Groupon Hysteria.  His argument is that the IPO only makes sense if you look at it the context of a bubble:

The simple rule about market bubbles is to get in and out before they pop, and by that standard the news that Groupon is moving towards an IPO makes all the sense in the world. The same is true for Facebook, Twitter, Zynga, and the other social media darlings of the moment, as well as for the lesser known companies that are talking to bankers at this moment in hopes of sharing in the frothy “comparable” price umbrella that is forming.

and, like all bubbles, this one is accompanied by the argument that the irrational pricing is, indeed, rational:

Fueling the rationalization for the current exuberance, as opposed to the last tech bubble’s irrational exuberance, is the argument that, this time, it is different. Investors are buying into real profits and sustainable business models, the argument goes, rather than investing in just eyeballs and greater share in markets with as-yet-to-be-defined revenue models. Microsoft’s $8.5 billion acquisition of Skype and, now, Groupon’s IPO filing should give pause to those who might accept this line of reasoning.

Anupreet Das and Geoffrey A. Fowler at the Wall Street Journal are no less concerned, reporting Groupon to Gauge Limits of IPO Mania:

Groupon’s filing comes on the heels of LinkedIn Corp.’s successful IPO, the latest sign of surging valuations for companies connected with hot Internet trends. The size of Groupon’s losses may add fuel to the arguments that investors’ appetite for high-profile tech offerings is becoming overheated, as it did before the first Internet stock-market bubble burst in 2000.
For more, Allison Linn at MSNBC explores various opinions of whether we’re in a bubble or not in Groupon IPO has some wondering about a bubble.

Groupon Hysteria | Forbes
Groupon to Gauge Limits of IPO Mania | Wall Street Journal
Groupon IPO has some wondering about a bubble | MSNBC

May 21 Dooms Day is good business

I personally, do not put much stock in these guy’s May 21st is the end of the world prediction.  But regardless of what you believe, it is hard to deny that doom saying has been good business for the folks over at Family Radio.  CNN Money has a very interest article on the topic: Doomsday church: Still open for business. They point out:

According to their most recent IRS filings, Family Radio is almost entirely funded by donations, and brought in $18 million in contributions in 2009 alone.

That’s big money, they also quote experts that value the company (church), at around $72 Million dollars – funded entirely by donations. This of course, is not the church’s first end of the world prediction.  CNN goes on to say:

Camping first inaccurately predicted the world would end in 1994. Even so, he has gathered even more followers — some who have given up their homes, entire life savings and their jobs because they believe the world is ending.

The article has a lot of other interesting points to read, including how most of the church’s employees don’t believe in the prediction and how the church’s own plans show they are at least hedging this prediction a little.

LendingClub May Promotion

Quick news from the peer-to-peer lending space.  LendingClub.com is offering a 1 to 3% bonus on all inbound money transfers.  This is similar deals that Prosper.com has offered in the past.  However, there is one key way: you can use it to fund any available loan, not just pre-selected “Featured Loans”.  We here at BYM are still new to LendingClub.com, but have recently invested some money there.  We plan on providing a full review, like we did with Prosper.com, once we have more real world experience with the site.

Lending Club promotion

  • Receive a 1% cash bonus on transfers of $5,000+
  • Receive a 2% cash bonus on transfers of $15,000+
  • Receive a 3% cash bonus on transfers of $50,000 or more

You must sign up for a Lending Club account and enroll in the promotion program first.  New funds must be credited to your Lending Club account by May 31st.  One point in the fine print that I found confusing was if you are allowed to ever withdrawal the bonus, the good news is you can.  I emailed LendingClub and got the following response:

“Once the bonus has been invested into notes you will be able to withdraw the funds as they come back in payments.”

Here is the fine print:

To receive your bonus, all funds must be (1) newly transferred between the date you enrolled in the program (but not earlier than May 2, 2011) and May 31, 2011, (2) continuously maintained in your Lending Club account and (3) fully invested on the Lending Club primary platform market by June 30, 2011 to receive your bonus. Existing account balances and transfers prior to your program enrollment date will not be counted towards satisfaction of the necessary load to earn this bonus. The transferred funds that qualify you for this bonus offering will be locked for investment purposes only and unavailable for withdrawal. You acknowledge and agree that Lending Club reserves the right to withdraw the full original value of the bonus amount delivered to you upon violation of any of these terms. Failure to fully invest the new funds by June 30, 2011 will result in your forfeiture of the bonus amount. Transactions in the secondary market (the trading platform operated in by FolioFN) do not count as “investing funds” or towards unlocking the bonus. This bonus payment is taxable so please consult with your personal tax adviser. You are responsible for any taxes related to this offer. Void where otherwise prohibited. This offer may not be combined with any other offer.

Limit: One bonus per tax ID and a maximum bonus of $7,500 per tax ID.

Another day, another new high – Gold hits $1563 an oz.

Gold is up another $7 today or 0.41%, while the US dollar is down 0.27%.  This means that in real terms, gold is up 0.5% today.   On Wednesday, the Federal Reserve reiterated its commitment to destroying the US dollar – it appears its working.

It is important to remember that all things are relative.  The DOW is “up” 0.4% today, relative to dollars it is up only 0.13%.  Priced in gold it is basically flat.

 

Gold hits new record high of $1524.3 an oz.

Today the FOMC (“The Fed”) announced that they will keep rates at near zero for “an extended period of time”.  This continues to tell the market that the dollar is trash and you should plan accordingly.  The result:

 Karl over at the Market Ticker provides colorful commentary.

The US Dollar Index is of course also hitting new lows (73.6 at last check).