Market Watch 5-20-12
We are just over half way through May and the stock market has been down most of the days.
Europe is still a big unknown. After a strong first quarter, profit taking got the upper hand. Add to the fact that it looks like the pace of job growth has been slowing. All contributors to a stock market can't seem to find the buyers. After reaching a level of over 13,000 on the Dow, the Dow is now trading at under 12,500.
Many thought that buyers would come out for the long anticipated, much talked about face book IPO.
On the surface, the facts regarding Facebook are compelling; hundreds of millions of users, excellent information to help target advertising, strong excitement and prospects for growth. Still with all of this information - is the price worth the hype? The stock was priced at about $38.00 per share. This valued the company close to 100 billion dollars… Larger than Amazon… About the same size as Pepsi. But with all the hype, investors wonder if the sales will justify this price. Initially the stock started heading higher, but after much ado, the stock actually closed quite close to where it opened. Where it goes from here only time will tell.
Linked-in, another recent internet IPO saw shares move higher. Same with Yelp. Groupon, Zygna, and Pandora. As of Friday these companies are trading below their IPO price.
My gut says the market will be more driven on Greece and uncertainty if their new government will go along with austerity to keep them in the Euro. What is the extent of Spain's banking woes. If you think 8% unemployment is bad here in the United States - try 20%. Regardless of the debt, the Euro and payback, how do you move ahead without growth. And how do you find growth without money to grow?
Serious issues… All being discussed as we speak. As I say, money never sleeps. I'm Ken Stern for Ken Stern & Associates and San Diego 6. That is my Stern word.