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Archive for May, 2011

Are you LinkedIN?

Thursday, May 19th, 2011

-Tim Dyer

Equity markets are adding another name to their network today with the IPO of  internet sensation LinkedIN (ticker: LNKD).  The deal was originally priced at $32 – $35, by lead banker Morgan Stanley, but quickly jumped to $45.  This raised approximately $353 million from investors for the company.   On this first day of trading the shares opened at $83 and are now trading well over $100 a share.  Investors burned in the past internet bubble seemed to have dismissed the valuation concerns as the IPO values LKND at a whopping $4.25 billion. Not bad for a company with only $243 million in revenues and net profits of $3.4 million in 2010.  I guess you can’t discount the company’s 100 million subscribers, far less than Facebook’s 500 million but noteworthy none the less.  Todays public offering has the feeling of euphoria that Google (GOOG) had on its IPO in Aug 2004. Google originally priced at $85 and soared to over $711 in 3 years. The shares are currently trading in the $530 area for an almost 400% gain since the IPO. We will never know if shares of LNKD will be as successful as GOOG but for those that believe in the power of social media it may be time to get ….LinkedIN.

Where is the silver lining?

Tuesday, May 17th, 2011

-By Tim Dyer

One year ago today, the popular commodity Silver (as measured by the index fund: SLV) was exchanging hands at $18.50 a share. Fast forward to today and you will see those same shares of SLV trading at a little over $33.  That is a pretty healthy gain of 78% vs the 20% return of domestic stocks over the same period.  What is even more eye popping is not only where SLV sits currently but where it has been. The current price is down 30% from the recent high of  $48 that was achieved on April 28th. The move from $18.50 to $48 was a move of over 150% in less that a year!  Volume on this index traded over 180 million shares at the high as the Federal Reserve issued a statement that interest rates were destined to stay low in the near term. Is that a lot you ask? YES! The most widely traded index is the SPY (S&P500) which had volume of 120 million. SLV had traded 60 million more shares that the SPY index traded for the day! 60 million times $48 a shares is a LOT of money to change hands.

Silver has had a historic run, the chart has gone parabolic ( Wall Street jargon for “looks like a hockey stick curve”).  It is not surprising that investors have been scratching their heads wondering if this is a pullback or the start of a new downtrend.  The risk level is now elevated and investors should use caution if they want to allocate money to this asset.

The silver lining here: “The trend is your friend, till the bend at the end.” The move from here, up or down,  is not for the faint of hearted and protecting profits may result in lost opportunity cost but not loss of capital.