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

Many financial research analysts make their predictions every year about what they think the economy will do. As a word of warning, it is nearly IMPOSSIBLE to nail these things, and any advice that you read here should be taken with a grain of salt. My portfolio has now outpaced the market (S&P 500 is my benchmark) by a considerable amount 3 years running, and I’d like to hope the success continues.

Jimvesting.com’s Year-Opening Trades

This year, I am betting on a solid market that favors late-cyclical companies… meaning stocks that benefit once a recovery is in place and businesses start outlaying capital with increased confidence. We’re talking certain industrials, materials and energy stocks for the most part.

My biggest bet so far is one of the biggest basic materials companies, specializing in aluminum and other metals. Naturally, I’m talking about the bellwether Alcoa (AA), which I purchased at $15.20 on December 31st, 2010. I love this company going forward as their product is heavily involved in late-cycle industries like construction and automotives, and management has just begun to turn bullish after having big negative numbers throughout the recession. They still trade very cheap at 15 times forward earnings, and I’m up almost 9% on the trade in a matter of two days.

My second trade was into an oil services company called Weatherford International (WFT). I think the oil services space is ready to roar in 2011 after being held back too long from the BHP oil spill many months ago. Weatherford is healthier than a Baker Hughes or a Schlumberger and have seen a lesser stock price appreciation over the past few months. I bought in also on December 31st at a price just north of $22/share… flat on the trade thus far but I am optimistic with oil expected to tear up toward $100 by year end.

Five Contrarian Market Predictions for 2011

A “contrarian” pick is one that the market isn’t expecting. This means if you happen to bet big, you win big… but if you are wrong, you probably won’t lose that much because nobody thought it’d happen anyway, eh? I like to bet against the market when I think that there is an opportunity to see reversion, and if I had to take a few shots… I’d go with the following:

1. The S&P 500 Index Will Climb More Than 15% on the Year
Businesses are flush with cash and ready to expand. Many of the economic indicators like ISM Manufacturing are headed in the right direction. Investors are (finally) hopping out of the bond market and the global environment is slowly stabilizing. Commodities are moving higher as the dollar stays suppressed which encourages exports. Finally, the Standard and Poor’s Price/Earnings (P/E) ratio is still on the lower end of historical averages and is well below recession-recovery levels we’ve learned to trust in the past. THERE ARE STILL HEADWINDS… but I think the positives are going ignored and investors nowadays love to be bearish. The average expectation right now is around 10% appreciation on the markets, and I love a better than expected result.

2. Chinese Inflation Stays Under Control
Yes, China has a booming economy and has had to raise interest rates two times over the past few months to fight it. Many investors assume that with commodity growth getting out of hand, and a housing oversupply potentially creating a bubble, they are doomed to see hyperinflation. I believe differently, and think that the decentralized command economy may actually be better suited to handle the rush of inflation than a capitalist regime. They are certainly being aggressive so far as they try to control drastic price movements, I think it could be just what the doctor ordered.

3. U.S. Federal Reserve Raises Rates Before Year End
Yep, I said it. I haven’t seen anyone talking about the United States Federal Reserve actually (*gasp*) RAISING the federal funds borrowing rate this year. If we learned anything from the post-IT bubble crash, it is that you simply have to take the punch bowl away when people are clamoring for cheaper borrowing rates. The makeup of the Federal Open Market Committee should change in favor of those more hawkish (a.k.a. aggressive against inflation) in January, and I believe this along with a good stock market will create an environment where we might see a rate hike later on this year.

4. Gold Ends the Year Flat
Gold, gold, gold… everybody wants to buy the stuff. I say the metal is finally at a point where it is fairly valued, and investors will start to shift out of the protective portfolio stance of owning gold once gains begin to be realized in the equity markets on lower volatility. I don’t think gold will close lower, but all the big managers are recommending to stock up on the good stuff and I think it’s gone too far. The GLD has been the best performing ETF for a long time running, but I say you need to own something with intrinsic value. Can gold really go 20% higher without rampant hyperinflation or another depression? There’s not much left in the tank in my mind.

5. Unemployment Breaks Back Above 10%
Sorry to say, but I think the problems in the municipal market will blow up in our faces in 2011. I do not think that this will come in the form of utter bankruptcy, rather… I see a soft landing as states are forced to drastically cut costs and end up surviving. However, you know what happens when we cut costs — layoffs. Government jobs were a big part of the recovery, and I think they lead us in the opposite direction in 2011.

So there we go, five out-of-favor predictions for the market in 2011. We will revisit this at the end of the year to see what hit and what missed. Please remember that nothing in this article should be thought of as investment advice, as I am not a licensed financial advisor. If you are looking to invest on your own and aren’t set up, I use ThinkOrSwim as my stock brokerage.

Stay bullish my friends.
-Jimvesting

Recently I made an upgrade to the header on my blog, and it was a BIG update at that! Not only did I enhance the looks of the most-viewed area of my blog, but I added a newsletter opt-in box which could potentially boost my subscribers tremendously.

But was my excitement premature!?

One of my readers, Rob from myTTOOS.com, pointed out the following:

Rob: “Really cool, but i bet it will be overseen a lot = bad conversion. Let us know if i am right.”

Jim: “Could be true… but then again I am not trying to spam people like typical marketers, haha”

Rob: “at least put the focus on the chalk board, put a few blinking stars around it or something lol”

Though it sounded silly at first, I started thinking about just how right he was! While I was all concerned with making the new opt-in newsletter box look at good as possible… I made it flow TOO WELL! Therefore, I needed a little something to get people to notice it (though I won’t be putting blinking stars on my header anytime soon, haha). So what did I do? I added a big ol’ floating arrow! Read the rest of this entry »

I’ve been working feverishly around the clock to develop a massive and all-inclusive guide to the best stock market picks of 2009, and tonight I have finally completed my work! You can play with internet marketing all that you want, but there is simply no asset pool that will ever match the potential gains of the stock market. Imagine throwing $1,000 into a stock one day, and walking away with twice that the next… this actually happens on a regular basis in the markets… and I feel the time is right.

Considering the insane gains available in the stock market, there is always going to be downside risk. This is NOT an eBook that I have developed myself, I have worked exclusively with 10 professionally-minded mutual fund managers that specialize in every area of the market imaginable to combine only the best ideas and get you started. This work is a compilation of many efforts, and holds true investing power in forecasting what the money makers will be for 2009.

Why The Heck Would I Want to Be In Stocks Now?

Now is the wrong time to be jumping ship, it is the right time to be getting back into stocks. Ask any professional, and they will tell you that investor mindset is always wrong: we want to invest more at the peaks, and abandon ship at the troughs. Human emotion plays a big part in this, and the only way to stay ahead and actually make money is to “be greedy when others are fearful” (Warren Buffett).

Are you interested in stocks? Do you invest in your spare time? Are you managing a portfolio of your own? This publication is for you!

I’ve gathered some of the most in-depth analysis together in a professionally-rendered eBook and put it up for an insane bargain-basement reduced cost. If you signed up for a premium stock service, you would get less information for $100s a month (if you are lucky). It’s fantastic that I can offer this to you guys, as stock ideas are always great to go through and learn from.

But you haven’t heard the best part…

… I’m Giving It Away for FREE!

I decided that rather than charge for this exclusive and professional content, I would let you guys have it for free. Sure, I’ve become a financial adviser of sorts over the past few years of operation. While I cannot give you recommendations, what I can do is offer suggestions and ideas to further your wealth. The market is tough right now, so if you don’t understand the stocks you are buying… you are doomed to fail. Regardless, things are cheap right now and investing at the bottom will make money 90% of the time over the long run.

There is no guarantee of positive return with these stock picks and recommendations, however I can almost assure you that all of the carefully selected picks that appear in this publication are well researched and the investment thesis is clear. At the very least, it can be very interesting to see what possibilities lie out there.

How to Gain Access to the EXCLUSIVE Report

I am releasing this information without financial charge, however I would like to reap the rewards of doing so, in various metrics increases.

On February 6th, 2008, I will put out a blog post with the link to download the publication. However, this post will be password protected.

To get the password, you’ll need to do one of three things:

1. Refer three friends to subscribe to Jimvesting via email, and tell them to comment on this post confirming. I will check.

2. If you have a blog post with more than 50 subscribers, write a post talking about Jimvesting and link to the homepage. If you have a blog with more than 100 subscribers, give this blog a paragraph plug in one of your posts, telling people why they should visit. And if you mention the report, extra brownie points to you!

3. Sign up to Jimvesting’s brand new newsletter, and refer two friends as well. You’ll get great information on how to make more money online, but never any spam… just premium content when you want it, where you want it. Use the form below to do this, and ask your referrals to do the same. Then, tell them to comment on this post to confirm… I will also check this.

Don’t forget to let me know below what you plan on doing, and follow up on it once you are done. Of course, participation isn’t necessary… but you won’t get that secret password until you do. Again, these should be new events… not directing me to an old blog post, or referring a member that has already subscribed to my email feed or newsletter. This is a great opportunity, with a HUGE reward in clear view.

This offer closes February 6th, 2009… so let’s get started!

-Jimvesting

Recently, I had a huge burst of traffic on tailwinds coming in from one website in particular. The website is called “Youngest Blogger,” and it is one of many ranking websites for the best bloggers on the internet. This one features a list of bloggers under the age of 18, so in general these bloggers are very much the overachiever type.

I’m not under the age of 18.

This is a disclaimer, haha, because what I decided to do was literally trick the system to see what would happen. The downside? Five seconds of my life lost, and I would probably be blocked from a list that I could never get on in the first place. The upside? My fifteen minutes of fame! Hmmm… well it doesn’t take a Quantitative Risk Analyst to understand that the upside FAR outweighs the downside risk.

What I Did to Exploit Huge Traffic

Okay, so I come across a website that is claiming to rank the “top bloggers under 18″… and it sounds like something I would be interested in. Naturally, because I am over the age of 18, this would be a website that I just passed by. However, there is in fact a manual submission system in place that allows you to enter your age and website on my own. (evil thoughts)

Hmm… so they are going to allow me to choose my own age, eh? Excellent. I think that I will be 15 years old today. This is exactly what I did after checking with the terms of service. While I am sure that Carl O’Cab (the owner) would have loved for me to only support accurate age information, the last time I checked, I am not legally bound to give away my birth date to strangers. At any rate, the worst that can happen is being banned from the website… which I could care less about if I have my link placed, right?

This system is actually still in place, and the owner Carl O’Cab obviously doesn’t check through submissions… because I submitted theNetFool.com as being my blog, run by a 15 year old. It got approved quickly, and stayed in the #1 slot for a few weeks… taking traffic and subscribers along with it. I got around 50 hits a day from this site alone (in its prime). I’m sure that the website isn’t doing as well as it was when it first came out… but traffic is traffic, and it took me 5 seconds to rake in hundreds of unique visitors.

What is Unethical, and What is Just Plain Smart?

So this entire experiment begs the question… was I being completely unethical to do something like this, or just a bit smarter than your average bear? This is debatable, but I like to think that I am a very ethical candidate. So, yes, I cheated the YoungestBlogger.com system and gained a #1 ranking despite the fact that I was nowhere near the age of 15 anytime recently. Some might applaud this, and some might frown upon it. At any rate, this is something that I knew would never hurt anyone… and at bare minimum would keep ol’ Carl on his toes so others don’t do this with malicious intent.

If I was REALLY smart, I would have done this with an affiliate blogging website to get traffic to that location fast and easy. Maybe you will go and do this after reading? But I encourage you to refrain from doing so. This was more of an experiment on my part to see whether or not a simple submission could benefit my website in a major way.

My conclusion? Always, and I mean always, shoot for the win in situations like these. If you come across a ranking system that allows for manual submissions… why not give it a shot? What’s the least that can happen. By maintaining the risk/reward understanding, you can run a much more successful blog. I’m interested to know where your stance is on the issue… was it unethical, or smart? You be the judge.

-Jimvesting

Disclaimer: This post was meant as an example case, and nothing against Carl O’Cab, who runs a terrific service which I encourage you to use ethically and legally