Facebook Theme Song: Wake Me Up When September Ends
Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
“I don’t want the cheese, I just want to get out of the trap.” – Spanish Proverb
After reading the news that Dennis Gartman has exited stocks completely (a mere month after exalting that it was time to get into banks; I assume to rob them), I am seriously considering cashing in everything and purchasing thousands of Powerball tickets. It makes perfect sense, what with the pundits predicting the upcoming September swoon.
As an individual investor wandering the financial streets like Caine, sifting through endless piles of myopic market madness, everything from QE3 to seeking shelter in the Danish Krone, I have to remind myself how much I have weathered in the 12-plus years I have spent making my money work for me. Bubbles, crashes, recessions, and now the current situations swirling around our heads would certainly have most people considering a livelihood as a shepherd, far away from all this noise and nonsense.
Fiscal forecasting aside, most of the gaggling gurus paraded before us provide accuracy usually reserved for meteorologists and backup major league catchers, leaving the bulk of the responsibility in our laps. I am growing all too weary of the woes of Facebook (NASDAQ: FB), which has shed some $50 billion in market cap, leaving a financial drought in its wake. Rather than beat everyone over the head with previous posts attempting to point out the storm clouds well before the IPO (exactly how do we monetize 900 million users?), I had the fortunate misfortune to lose a few shekels on Chinese counterpart, Renren (NYSE: RENN), so I sort of knew what was in store. It actually surprised me to find out that flea-ridden Shar Pei is actually up almost 5%, year-to-date, bringing my rate of return up to negative 60%. Don’t tell the wife.
To capitalize on such a substantial user base which doesn’t pay a single cent in subscription costs would take a marketing wizard and Facebook CEO, Mark Zuckerberg hardly looks the part of Merlin (insert hoody joke here). Casting our tired eyes across the Board of Directors doesn’t exactly instill much in the way of confidence, either, especially with venture capitalist and board member, Peter Theil trimming his holdings with the company recently. I must state that I do have a great deal of respect for COO, Sheryl Sandberg (the anti-Sean Parker).
There has been a seething sector of resentment with that dastardly act, how dare someone have the nerve to book a profit after a company goes public and the early shareholder restrictions have expired. I find it mildly upsetting that so many market mavens take offense to this, especially since so many of us happen to embrace free market capitalism, and a few of us actually make a decent amount of money stock shopping. Basically if a gigantic pain in the posterior, individual investor such as yours truly knew well enough, getting a Facebook scalping is a “you” problem. I certainly wasn’t whining to anyone after my portfolio lost an unhealthy amount of weight when I plunged head-first into the shallow Renren pool. Mistake made, lesson learned, gather your resources and seek shelter elsewhere.
With the increasing uncertainty that has influence on the market one day and apparently none whatsoever the next, it’s time to evaluate what has been working and consider scaling out, enjoying your profits or putting them to work with your next find. The loud drum beating we are hearing with regards to consolidation, correction, even the fear and dread of next month, or Europe, or this election I keep hearing so much about, tells me it’s time for my own portfolio “corrections”.
There are very few things on this Earth that last forever, so it’s wise to take a look at the solid companies that somehow manage to maintain their existence, offer loyal shareholders a respectable dividend each quarter (some even increase those payouts from time to time), and seemingly ignore every decibel of white noise around them. As we get to the impending volatility that September is sure to bestow upon us (maybe), check your holdings and do some honest research with each of them. Avoid companies that “perform” like Research in Motion, try and filter the “news” that Netflix (NASDAQ: NFLX), recently amassed one million subscribers in the United Kingdom; they are probably losing close to that number here in the good old U.S. of A. Look for holdings that actually make sense and stand the test of time, companies that provide us with necessary goods and services no matter how bitter the economic climate is. If you’re looking for a mythical market unicorn with the likes of those mentioned here, I certainly hope your retirement isn’t depending on it.
Motley Fool blogger Kyle Metivier has a painful position with Renren, and has no shares of any other company mentioned. The Motley Fool owns shares of Facebook and Netflix. Motley Fool newsletter services recommend Facebook and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.