LInkedin IPO presents an interesting scenario.

I have to admit; I didn't invest during the dot-com bubble, although I would have bought some of my favorite stocks during this time, had I had the money.. The reason for not investing during this boom and bust time is a simple one; I was young, broke, and fresh out of school.  Now as I see the new bubbles forming, the hope of getting in early on a huge climb can lead many to invest in high risk companies like Linkedin..  Now notice I didn't say bad company or anything negative about the company itself.  The risk is in it's valuation not in the company..

One of my favorite Benjamin Graham quotes is "People forget to ask how much"  Lets just say you didn't know what either one of these companies did..

Think about these hypothetical questions..
"You have a company that has a product that has been around for generations, just about every restaurant in the country, if not "every" restaurant has, and makes billions.. This company is known to just about everyone in the planet.. How much would you pay for said company?  Would you pay up to 12 x earnings or would you pay 20 x earnings."

Now imagine you have a company that produces a technology that gets people together.. It only make 8 million dollars a year.. Technology changes all the time and people go with the flow.. It may be the thing in a few years or it may not, all depends on what happens with competition.. Would you pay 12 x earnings or 1000 x earnings for such a company??

Maybe you guessed it, the top company is Coca Cola now trading at 12 x earnings..  The company is massive in reach and impossible no to see all around..  The second company is Linkedin a new and up in coming company selling for over 1000 x earnings..  Would you pay for something that sells for 1000 times more than what it is worth or would you pay for company that is renowned around the world for 12 times its earnings.. Truly amazing when you ask how much..

Interestingly enough I have a Linkedin account.  I don't really use my account, although I accept certain invitations here and there.  I wouldn't buy the stock (unless it was cheap)but I don't mind using the free service..  Don't forget to ask how much folks!  You wouldn't buy a car for 1000 times its worth and it doesn't make sense to buy a company (stock) in the same manner.

Looking for an investment idea?
Buy KO, MCD, BRK.B, V, GS, YUM, L, XOM.. These companies make money and at the end of the day when the dust settles, that's what matters!!

Sell in may and Go Away will it continue its trend??

Well what are your chances of losing in may if the trend continues or if you are a trend follower? 80% chance the market will fall if you use the last 10 years as the market has been up 2 years and down 8.  This to me is pretty significant and shouldn't be ignored specially if you have a weak stomach for losses.. Here is a chart on the returns..http://www.chartingstocks.net/2010/05/sell-in-may-and-go-away-2010/  The only thing I really notice is that the two times the market appreciated were after having horrendous months prior to May and thus it was in the mends... This year has been good so it may be one of th 8 years where it goes down.. Good luck and good investing..


Here is my last year's article..http://www.insomniacinvestors.com/2010/05/has-sell-and-may-and-go-away-begun.html  May ended significantly down in 2010 and continued the trend for May.


and here is an article on the total returns for the market during all months.. The trend doesn't lie but doesn't predict the future also..
http://www.investmentpostcards.com/2009/04/29/sell-in-may-and-go-away-fact-or-fallacy/