There has been a lot of hubbub surrounding the recent announcement that Facebook is looking to raise equity through a deal with Goldman Sachs. If you haven’t heard, Goldman Sachs is helping Facebook raise $1.5 Billion in additional equity through the private markets. All of their equity is totally private, so you’d assume that most of the shareholders are employees and very wealthy individuals with ties to the company or a good wealth manager.

Quick Lesson: Equity and Debt are the two ways that a company can get capital (cash). Debt comes with terms like a set maturity time and interest rates… equity, on the other hand, allows people to simply invest in a company and in return own a portion of profits into the future! In general, debt is cheaper than equity, but carries a higher liability and adds risk to the balance sheet.

Many newswires are reporting stories that would lead you to believe that this move is indicative of an upcoming Initial Public Offering (IPO) — in other words, trading with a ticker symbol on the open stock market where anyone can buy/sell their equity. For some examples, see: “Is Facebook’s IPO coming sooner than expected?“; “Will Facebook Succumb To IPO Pressure?“; and ”The Facebook IPO Is Proof That Everything Is Being Reinvented“. To the contrary, I believe that this move is actually one in which Goldman Sachs is behaving as the white knight… bailing Facebook out of the need to go public with their numbers.

Why An IPO Ain’t Comin’!

For Facebook, the thought of being a publicly-traded company runs contrary to the “cool” factor that has made it such a success. The new age of tech startups is a lot different than the prior era where firms couldn’t wait to get themselves public with free access to capital on the open market. There are several disadvantages to being public nowadays, and Facebook is (supposedly) far from a mature company, so the general consensus is better private than public.

Unfortunately, once Facebook has 500 private shareholders, the SEC regulates that all of their financials must be made transparent. For Mark Zuckerberg, this spells trouble because private equity is one of the company’s most sought after forms of compensation. The beauty behind this deal is that Goldman will invest around $1.5 billion into the company… but won’t add more than one shareholder if all goes according to plan. Here’s how it works: 1) Goldman Sachs goes out to its clients and offers the chance to invest in Facebook; 2) Goldman Sachs pools all of the money that it has received interest for; 3) Goldman Sachs invests the collective sum on its investors behalf… but it is only technically counted as ONE investor! Pretty smooth, eh? It is almost like a syndicated loan — a “special purpose vehicle (SPV)” by definition.

To me, this move by Zuckerberg and Facebook is one that says “hey, we need cash… but we really don’t want to go public.” In no way to me does this say “giddy up, lets go public baby!”

So contrary to public belief, I see Goldman Sachs actually stepping in to save Facebook the need to “sell out” by becoming openly traded. There is already a bit of undeserved outrage from Facebook users in groups like “Keep your dirty hands off my FB“, but hey… we’ll see how it works out for the company. Only problem is: how long can Facebook feasibly wait until investor pressures to execute an IPO get the best of them?

Stay bullish.
-Jimvesting.com

Well ladies and gentlemen… every dog has his day, and I guess mine was today!

A bit earlier this evening, I received word that I had amassed a huge affiliate sum from my account at Aweber Communications (the folks that handle my email newsletter). Turns out, I am doing much better than I expected — thank heavens they decided to set up my preferences in order to alert me every time I get a payment in any form!

“Cheers” is right Tom Kulzer, I’m going to be buying all of the finest aged whiskey I can get my hands on with my shiny new thirty cents. Thank you everyone for your love and support. It’s been a great run! If you’d like to reach me, I’ll be in SkyMall buying a new G-6 jet.

-Jimvesting

Back in April of 2010, popular MMO blogger John Chow and myself got into a debate over where you should trade Apple (NYSE: AAPL) on the markets. This was the Monday following the initial release of the infamous Apple iPad, which reportedly sold a few hundred thousand units. I bet that the direction of Apple would actually be LOWER on Monday, despite a great headline number — John disagreed, citing a good response to the new product launch. The result? Apple traded higher on Monday, April 5th by 1.07%.

Why John Chow was the winner

As soon as the day closed, John and I got to talking:

Now, while the stock of Apple was up on the day, my verdict was that I was in fact the winner because they underperformed the market. Perhaps John and I come from two different schools of thought, but I really don’t care how awesome my stocks are doing if they are underperforming the market. On the day, Apple underperformed the technology benchmark slightly… so I took this as to say if there was zero news, Apple would have been up more. Why do I put more weight on relative performance versus nominal performance? Any investor can just dump their money in a large index fund and do fine… there is no point in owning Apple and trying to pick stocks if you are underperforming the broader basket of stocks.

Regardless, I read what I said… and because I didn’t mention relative performance I am writing this review as payment for a lost bet. As it happens, John was absolutely correct about Apple’s stock! Looking over the past few months, Apple has actually outperformed the S&P 500 Index by roughly 15% and has been one of the best performing companies in the markets. Was this due to strong iPad sales? That is too much for me to extrapolate — but the news now is that Apple valued higher than Microsoft!

Is Apple Overvalued Here? Was John Chow Just “Lucky?”

It remains my contention that John was the fortunate benefactor of random upward momentum in Apple’s stock. The reason that he expected the stock to trade up was that the iPad sold a lot of units. Despite how many units they sold (which was actually in-line with expectations), it is important to look at how the stock market actually works. Naturally, everyone and their grandmother knows that Apple is “sexy” and that people like their products. The problem here is that investors aren’t dumb — positive sentiment is already factored in.

Apple is a great growth company, but I absolutely hate putting cash to work in stocks that are positively viewed by the market. Why? Think about upside and downside. Assuming that market movements are relatively unpredictable, which I think most of us would agree to, stocks that are “good” will not move up on positive news (they are already assumed to be good) but will get slaughtered on bad news (nobody expects a company like Apple to issue a product recall). On the other hand, stocks that are frowned upon now will do awesome on any piece of good news, while bad news is largely ignored because the company is already seen as being of lower quality so they won’t do too bad.

Looking at the performance of Apple, it is common for stocks to trade up on the expectation and sell on the news — in fact, so popular it is an axiom. This is why Apple always gets killed the day after they release good earnings: they might have been good but everyone saw it coming. The market sees forward 6 months, so trying to profit off of news like the iPad is insane difficult. Did John Chow get lucky? I don’t think so — he knows a lot more about the tech space than me and probably has additional insight into Apple’s products. However, I would think that over the short term my track record would be better. John won this round.

A Smarter Investment Strategy That Makes Sense:
At the very least, I think that it is psychotic that Apple is valued higher than Microsoft… and would embark on a long-term “short Apple, long Microsoft” strategy for investing. This will capture any outperformance of Microsoft in a market-neutral way. My prediction is that growth in Apple will inevitably slow down, no matter how good you think they are. People are currently willing to pay more than 22 times the amount of Apple’s current earnings to own shares (what we call a “P/E ratio”), whereas Microsoft is getting less than 14 times. However, Microsoft generates cash like nobody’s business ($21B last year), and Apple isn’t even close to that good ($12B last year). Stock value is all about cash flow that the business is experiencing. Despite the fact that Apple might gain more cash flow per year over time, they would have to surpass Microsoft’s $21B number in around 6-7 years in order to end up more profitable into perpetuity. To this, I say “fat chance.” In fact, if both companies held their current cash generation rates, Microsoft is worth twice as much as Apple.

My Gift to John Chow

For John’s birthday, and for winning our little bet, I compiled a completely customized portfolio strategy report for him and sent him it in the mail, along with a copy of one of the best investing books out there — “One Up On Wall Street” by Peter Lynch, one of the greatest investors in history. I put some effort into developing this report, and it recommended a portfolio allocation to John based on two things: 1) his personal investment profile (as a technology lover); 2) the market conditions. I recommended weighting his stock portfolio in a certain manner that I feel will outperform the markets, and recommended stocks that I felt are underpriced and worth investing in. I don’t want to reveal the actual report, which was around 5 pages and professionally printed, but here is a screenshot:

The Proof Is In The Pudding

I issue an unofficial email newsletter to friends and family that want stock picks and pans when I see the opportunity. I run what I call “Jim’s Value-Growth Portfolio” privately through ThinkOrSwim.com (my broker). My portfolio to date is actually up a considerable amount — despite the fact that the market is down. I do not short stocks in it, so anyone can get invested and feel comfortable.

The last date I updated my performance was May 2th: My portfolio is up 9.31% and the S&P500 is down 2.64%, an outperformance of about 12%. Here is a chart of my investments versus the market:

To me, it’s all about timing the market and investing in the right industries when it is most prudent — this is why John Chow’s strategy of investing in companies that have a new product that he thinks is cool, is basically heresy to me. And hey, when John wrote “ Oh crap! That was wild market ride! I hoped you picked up some nice stock bargains! I did!” on May 6th, I recommended staying on the sidelines and the broad market is down over 6% since then.

Bottom Line: John Chow won this round of stock picking in the tech space, but I’d still give myself the edge on the broad market. At any rate, I figured this would be a chance to get a few good jabs in on the man. Congratulations John, you’ve proven your mettle in IT stocks.

-Jimvesting Dot Com

Jimvesting.com’s got a brand new feature just for you:
GET THE STANDOUT COMMENTS PLUGIN – FOR FREE!

Two weeks ago, we saw the launch of a brand new blogging tool from John Chow, Alex Shalman and Jeff Rose. Their product called “Standout Comments” is a WordPress plugin that integrates all of the useful features of a comment section into one — in order to help you drive traffic to your newsletters, RSS feeds and marketing lists.

What’s new about this product you ask? NOTHING! And that’s the beauty of it (?). For a limited time… you can own this fantastic repackaging of plugins that already exist for a lower price… for only $67!!!

RIDICULOUSLY AWESOME DEAL ALERT!
Not only is this a killer deal, a few bloggers have upped the ante!

• If you sign up through John Chow’s link you will have a 1-in-10,000 shot at winning an Apple iPad that he doesn’t want!
• If you sign up through ZK of Web Traffic ROI, you get a truckload of eBooks he says are worth a combined $447 on the open market!
• And if you hit up Dan Scocco of Daily Blog Tips you can get his obsolete domain advice eBook for FREE!

But I’ve got ‘em all beat — No… I am not going to provide an illegal download

How to Get “Standout Comments” by John Chow for Free

When I told John Chow that I thought $67 was way overpriced for everyone, he responded: “Then don’t buy it and all day searching for the 2 to 3 free plugins. For others, time is money.” What John didn’t factor in is that I’m not concerned about me not buying it… I’m concerned about people getting taken for a ride because they think they need it. You can get every single feature of Standout Comments for free, and you can do it in less than an hour. Better yet — you can do it in under 15 minutes because I am going to provide you every single component of Standout Comments in a package I call “Jimvesting’s Comment Miracle.”

If your time is worth $268/hour, please disregard this post and buy it.

The Features of Standout Comments

• Subscription Options
• Sharing Options
• Advertising Banner
• Admin Panel
• Aesthetics
• Tweetback URLs
• Money Back Guarantee

Subscription Options
The main component of Standout Comments is that it offers you a way to provide a link to your newsletter at the end of your comment entry section so that any time anyone posts a comment, you are offered a chance to subscribe to a newsletter as well. This can be perfectly replicated by a lot of premium plugins, including: Opt-In Comments ($57), Action Comments ($17) and WP Optin ($27).

I’ve found our free solution (after a LOT of digging, this thing was totally buried!) in “Aweber WordPress Plugin” by Guru Consulting Services. This plugin puts a checkmark in your comments (AND on user registration if you want) to automatically add anyone who comments to our Aweber opt-in list. Bravo! That’s the same thing Standout Comments does!

The second thing that Standout Comments accomplishes is that it adds a checkbox for users to be “subscribed” to the comments, so that whenever anything new is posted they get an email. There are literally dozens of these plugins available for free, my favorites are: 1) Subscribe to Comments and 2) Enroll Comments. Bingo bango… we’re done here!

Sharing Options
Sharing options is something that we discussed a week ago: Linking Your Blog to Your Social Profile. To recap, there are quite a few social plugins that will accomplish exactly what Standout Comments is doing, and my favorites (for the purposes of looking like Standout Comments) are: 1) SexyBookmarks; 2) Socialize This; 3) Sociable.

Advertising Banner
This is another easy one, as everyone and their grandma has thought of doing this. Personally, I’m not a fan of putting an advertising banner by the comment section. However, if you really want to, my favorites for this purpose are: 1) Banner Garden; Max Banner Ads; Ad Minister; Advertisement Management.

Admin Panel
All of our plugins can be edited in seconds through the WordPress admin panel.

Aesthetics
I was kind of surprised that they brought this up “plays nice with your theme, and integrates seamlessly.” Well, so does ours, as all we are doing is adding a few links, boxes and banners. Aesthetics couldn’t be sexier… check!

Tweetback URLs
Plenty of Twitter plugins to go around… I’ve searched for and found a few. For simplicity, I am using Tweetbacks by Yoast.com which allows all of the tweets that mention my posts to be listed as a new kind of trackback (a “tweetback”). Also, I’m going to combine this for maximum effect with the simple added form field for twitter usernames in my comment section with WP Twitip ID.

Money Back Guarantee
They offer a 100% money back guarantee for 30 days… I’ll offer you a 200% money back guarantee for 60 days! In all seriousness, pretty much every marketable product has a return policy, but don’t believe for a second that it means the product is priced effectively.

Introducing: Jimvesting’s Comment MIRACLE!

I’ve compiled my entire guide and all of the plugins in one place, and have made it available for you to download for free! I spent a few hours going through all this and testing to make sure it works… but yes indeed, it has every last feature of “Standout Comments” but you will save yourself the $67 price tag.

In case you didn’t pick up on it, this post is extremely sarcastic and I am only trying to poke fun at John Chow (a good friend of mine) & other bloggers who promoted it for him. While I am upset he didn’t gift me a free copy like those other lucky guys, Standout Comments is actually a damn good release. While I don’t agree with the price tag, it was the first plugin on the market to put everything in one spot for you — easy to install, use and implement. But yes, the Jimvesting Comment Miracle actually is 100% compatibility, real, free and devious!

Where’s the Proof!?
Below is a screenshot of the Jimvesting Comment Miracle plugin working on my test server, which you can access here. I’m not trying to hide anything, and every plugin that I have gathered is indeed 100% free and customizable… making MY package more flexible than Standout Comments if you know your way around.

Download Jimvesting’s Comment Miracle (JCM)
Like What You See? It is darn near identical to the actual plugin.

Download Jimvesting’s Comment Miracle
Jimvesting’s Comment Miracle (Version 1.0): DOWNLOAD HERE!

Promote The JCM Plugin Package
First of all, I’m not exactly sure why you WOULDN’T want to promote this! If you are in the blogging camp that believes these kinds of plugins should be free, than why not show your support by writing a blog article, tweeting about it, or trying to blow up Digg/SU/Facebook with spam for my new plugin. Anyone who helps me to promote this (use my banner if you’d like, link back to this blog post) can shoot me an email and get a free copy of my eBook “Thirty Day Blog.” Sweet!

I hope you enjoyed this feature (I know I did). I’ll be sure to update this post as improvements get added to the world of WordPress plugins (happens on a weekly basis). I’d use this myself if I hadn’t grabbed Optin Comments when it was free. Drop a comment if you use it and let me know what you think.

Stay Bullish on the Net!
-Jimvesting Dot Com

Normally, the tips we list here are examples of how you can improve your blog or marketing campaigns… new strategies, link optimization, business schemes and investment suggestions. However, every once and awhile we see people slip up, and it is important to point out mistakes.

How to Make Your Subscribers Mad, the BlogEngage Way

This afternoon, I got a virtual hazing email from my good buddy Brian, the owner of BlogEngage.com. Blog Engage is a semi-popular social media community that offers bloggers the ability to suggest their articles to a community of webmasters from around the world. It is an overdone idea that Brian so happen to execute very well, thus jumping Blog Engage to a decent position in the online market (though nowhere close to touching StumbleUpon, Digg, Reddit, Mixx, etc.).

But enough background, let’s get back to that email:

“I wrote a post today that expresses my frustration with the recent lack of involvement from our members. I encourage you all to read it as it is very important this message gets across. We must stick together and vote for each other. http://www.blogengage.com/blogger/are-you-a-valuable-member-of-our-community/. Please read it with care in mind that we need to work together to make a difference in the blogosphere. 

Thanks,
Brian”

Really!? If people aren’t actively involved on your website/blog/etc., should you really send out a massive email telling people how it is their fault? No. The proper way to handle any drop off of traffic… is to do a better job grabbing traffic and encouraging your readers to get more involved. Run a promotion, increase advertising, change your platform, do something productive! Writing a flame post about how your community is falling apart because people aren’t trying their hardest to make you money is rediculous.

I expected some kind of promotion or message of encouragement, and what I saw was an angry blog post. Brian is one of my blogging buddies, so I want to say that he typically does a great job, but it is unacceptible to end any message to your readers by saying:  ”stop being a lamer” (no, I’m not making this up).

A Point of Confusion — The Site is Fine!

It is one thing to get frustrated because things aren’t going your way in terms of internet traffic, but at Blogengage.com, they have actually been doing a great job growing traffic. Take a look at this long-term traffic chart sponsored by Alexa.com:

As you can clearly see, traffic is on a big uptick from 2009 levels. Taking this, I would never have accepted a mass text from the owner telling me that the level of activity from his community ain’t good enough.

Maybe the Problem Ain’t So Obvious

Perhaps Brian was just talking about spammers, but even so… this is a problem with the model of his community, not the community! If I can log into Blogengage, submit my content, and walk away with exactly the same end result as if I was an active user, then why the heck would I waste my time being active? This is like if Twitter were to say “okay, everyone gets 2000 followers, and only 2000 followers, forever” — who would continue to care? After all, you are going to reach the same amount of people regardless of what you do. I suggest you think about what you are doing wrong rather than blaming people for taking advantage of the obvious hole in the system.

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This kind of public service announcement is more likely to put a bigger hole in your traffic than improve it, so why bother making your readers mad?

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Bottom Line: If you run a blog or a popular website of any kind, never ever ever ever send a mass email to your community belittling them for not trying harder. As a webmaster, it is your responsibility to make your community want to stay active. Brian is a great guy, and BlogEngage.com is a site you should check out and work with if you are looking for more traffic, but this kind of example is a great one to demonstrate an improper marketing tactic and how to avoid it.

-Jimvesting Dot Com