Why Shouldn't Practitioners Of Muppetology Get Swallowed In A Facebook IPO Class Action Suit?
Reuters reports on Facebook:
"Morgan Stanley unexpectedly delivered some negative news to major clients: The bank's consumer Internet analyst, Scott Devitt, was reducing his revenue forecasts for the company. The sudden caution very close to the huge initial public offering, and while an investor roadshow was underway, was a big shock to some, said two investors who were advised of the revised forecast."
I query, exactly why shouldn't there be class action lawsuits? Seriously! I run a very small operation with a budget smaller than Morgan Stanley’s or Goldman's postage expense. Despite such I have been able to clearly and granularly articulate that Facebook was grossly overvalued a year ago while it was a private company being hawked by Goldman Sachs as a private placement - Facebook Registers The WHOLE WORLD! Or At Least They Would Have To In Order To Justify Goldman’s Pricing: Here’s What $2 Billion Or So Worth Of Goldman HNW Clients Probably Wish They Read This Time Last Week!
As the IPO approached and more specific info available, the overvaluation simply became stronger and more apparent; reference Shorting Federal Facebook Notes Are Not Allowed Today. So is that I and my team are really that smart (and handsome) or are there other factors at play? A little more than a year ago Bloomberg created a list of who they considered the top performing analysts and brokers from the sell side. I was literally offended by how bad the performance actually was, especially when compared to an independent investor/analyst, reference Did Reggie Middleton, a Blogger at BoomBustBlog, Best Wall Street’s Best of the Best?
Again, miraculously, Reggie Middleton and BoomBustBlog somehow managed to out run ALL of the big boys. As much as I would love to say I’m simply better than ALL of those big boys, the reality of the matter is that I’m simply significantly less conflicted. The big banks have the resources and intellectual capital to run circles around me if they really wanted to. The problem is that really don’t want to. It is much more profitable to take agency commissions and principal transaction profits (as ZH often identifies as front running) from your clients than it is to wisely counsel them in investments. This is particularly true if they will keep coming back to you after getting raped, again and again.
I have written extensively on this, forming a quasi-scientific discipline of study, colloquially known as Muppetology:-) See the links below for more on this new branch of psychology/social science as it applies to finance and investments...
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