I also thought it was going to be a fad. What is interesting is that everything people use Facebook for day-to-day existed back in 2005. We used email for sharing life updates, various tools for photo sharing, AOL Instant Messenger for chatting, mailing lists for groups, email and evite for organizing events, etc. The novelty of Facebook was profile browsing and poking each other. And if Facebook had just remained that it would have been a fad. What is impressive about Facebook, is how they managed to little-by-little get everyone on their network, and little-by-little beat out the tools people were using before Facebook.
Interesting, now, in 2015, Facebook is a worse tool for me than it was in 2009. Any tool that my boss is on, my aunt is on, my old high school classmates is on, etc, has lost any coherence to it. I now have to obey standard internet security: anything posted on the internet or on Facebook in my real name has to be treated like it is on my resume. Because, de facto, it is.
I solved that by being one of the few people who have never used the site or made a profile, even though I could have done so back when it required a .edu email address.
I have a different experience. I don't know a single person who used to send life updates with email, or engage in mailing lists. At least to this individual, it was very obvious why Facebook was going to be a success when it arrived, it had all the basic 'tools' you needed to communicate and stay in contact with family and friends.
I think this is a very good example of why Facebook succeeded. Everything Facebook does was done (oftentimes better) by a niche tool with a niche audience of early adopters before. Facebook managed to cross the chasm with all of them and unify them together into a single social networking experience. It brought all these tools that were in use by small populations to the mainstream audience.
The issue is that you need to find an idea for a product, wherein 1) the product has the potential to generate tens of millions of dollars of value 2) the first, valuable, version of the product can be built in a couple man years. That is really, really hard to do. There are tens of thousands of smart, competent people searching for such ideas, working on such ideas.
If you want to make millions of dollars, if you want to make much more money than the average smart engineer, you need some secret. You need some idea or skill that happens to be the right thing at the right time. Nobody can tell you what that secret is. If Sam could tell you, it would not be a secret.
So you are right. There is something critical missing. What is missing is the actual secret, the actual idea that you have a unique insight into. But nobody can tell you what that will be.
I don't think the secret is usually the idea. The secret is usually a method of execution that lets you get to the finish line, where everyone else was too slow and ran out of runway.
Which is to say, if you're the right person at the right time, you don't know the secret; you are the secret. Your skillset (or your team's skillset) is the secret.
The tech that just became possible to leverage that nobody else has noticed yet but you're familiar with from its prototype days is the secret. Being able to bring your experience solving problems with 40-year-old systems to analogous problems in modern spaces is the secret. The pitch is not the secret.
As you say, the secret likely is not often the idea per se, as truly original ideas (i.e. potential Nobel prize-worthy ideas) are truly rare, and often difficult to recognize as such. They are much more rare than successful startups.
So, banking on an idea alone as the route to money is not usually as smart move, unless... the idea is really innovative.
In the first cut of your analysis (without rebalancing) the portfolio actually goes negative (I'm looking at the first graph in the notebook). An equity portfolio cannot go negative unless you are using leverage. Then from late 2012 to 2015 the portfolio rises by 400%. Looking at the companies in the portfolio, I don't see how they could have generated that kind of return. Is this algorithm using leverage? If not, I don't see how you can get those results. If the algorithm is using leverage, then comparing to a simple investment in the S&P is not valid.
You are absolutely right that the first version of my algo is using tons of leverage. I didn't realize what leverage was when I did this the first time.
The second version of the algorithm factors in leverage and there it hovers around 1.
Say that the initial offering is for 10 million shares at $20 a share. Then the price pops to $30. That $30 share price is based on a much smaller net influx of investment. It does not follow that you could have sold 10 million of shares at that price. The $20 price is a discount that is needed to make the market clear a very large number of shares, all at once. Furthermore, the pop to $30 only happened because retail investors know that the institutions buying into the IPO are reputable, long-haul investors like Fidelity, who will not be dumping the stock immediately. So if you don't have Fidelity and other reputable investors putting in money at $20, you will never get the pop to $30. And because of their size and reputation and relationships, institutions like Fidelity will be able to command discounts, like any big buyer can. The IPO-ing company generally needs Fidelity much more Fidelity needs to buy the company's stock. Thus Fidelity can command the discount.
> ..retail investors know that the institutions buying into the IPO are reputable, long-haul investors like Fidelity, who will not be dumping the stock immediately.
From the article: "The first trade was 15% of all of the shares offered during the pricing."
Institutional investors "consistently flip a much larger
percentage of the shares allocated to them than do retail customers."[1]
Yeah, there were people screaming bloody murder in the news at the time, but to me it seemed like they were the rare ones who did it correctly. Unless your idea of "doing it correctly" is a wealth transfer to institutional investors.
In addition to the NASDAQ breaking the morning of the IPO, I think most of the disappointment lies with the stock falling by ~20% within a week of the IPO. Facebook both dramatically increased the number of shares available and the price at which their IPO shares were offered, and then fell completely flat out of the gate.
I definitely side with the companies more than investment banks in this scenario, and if you assume it was priced $5 too high, FB saw an extra $2.1B from setting the price 'too high'. Given that their price has doubled since then, I think most investors have forgiven them for their sins.
The company and investment banker make you sign a contract saying that you will not buy or sell any derivatives or options or any security based on the stock. Now they probably couldn't catch you, and I'm not exactly sure what happens if you refuse to sign the contract, but it is also not necessarily worth the legal risk to attempt your proposed strategy.
Funny you mention this, I have just started building a site to help with this exact problem. Seems like there is so much good content out there, but it is hard to find the good evergreen content once it leaves the front pages of social media sites. I am not starting with scientific subjects (I'm starting with history, sociology, and general life issues). The difficultly will be that there is a lot of content to get through, so I'm going to have to figure out a way to crowdsource the curation, somehow.
"heck, it's Valentines day, do something sappy and tell them how I feel"
I have never seen this actually work. I have failed doing it myself.
Sappiness is what girls want from the guys they are already head-over-heels attracted to. It does not work for converting a girl from neutral or slightly attracted into wanting to go with you.
The best thing to do is just to hang out with her casually, flirt, be playful, tease her, do active things, go for walks, have fun, and gradually escalate physically, escalate touching, escalate sexual innuendo in your conversation. If she reacts positively, escalate more, if not, then there is sometimes nothing you can do.
1. From reading their post, it seems like they made their own REST API for the key server. So it would be nice if they open sourced the service behind it, to alleviate fears of lock in.
TXT is much more available in DNS management interfaces than SRV, so there's a higher chance that you can install such a server on those shared hosting instances.
Interesting, now, in 2015, Facebook is a worse tool for me than it was in 2009. Any tool that my boss is on, my aunt is on, my old high school classmates is on, etc, has lost any coherence to it. I now have to obey standard internet security: anything posted on the internet or on Facebook in my real name has to be treated like it is on my resume. Because, de facto, it is.