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Understanding the psychology of Secondary Markets!

October 2, 2010

Facebook is hot. Zuckerberg thinks big, like the Google guys did a few years back. FB is going ape IPO in 2012, the year parapsychology says the social fabric of civilization changes. Facebook with 3 billion confused friends will fetch a cool 100 billion! Today, poor FB employees get shares, bonds, options and futures by the company as part of their salaries. Young people can’t wait to become millionaires, they want the money now! They start trading their pre-IPO shares in a burgeoning Secondary Market. Zuckerberg smells legal troubles, and at his young age he already has more than his share of the Harvard Crimson stress. Smart Mark, he knows the Security and Exchange Commission is strict about inside trading, especially without disclosure to buyers by sellers of the financial state of the company shares they are purchasing. My readers, here is your homework:

Primary Markets: Producers sell their products to the public, e.g., a farmer sell his produce in a Farmer’s Market. In investing, the stocks, bonds, Futures and Options sold by government or a corporation to the public (usually available only to “Fat Cats”).

Secondary Markets: Retailers buy products from producers and sell to the public, e.g., a farmer sells his produce to a grocery store that sells it to the public. In investing, investors (the public) trade stocks, bonds, Futures or Options in public companies with other investors. What is happening in Facebook, because the company is hot a burgeoning secondary pre-IPO market started. Say you buy a 100 pre-IPO shares of Facebook from an ex-employee for $3,000 (if it is legal to do), you can probably sell the shares for $10,000 when Facebook goes public. After that the sky is the limit. Google started its IPO at $85 per share and got to $800 before it went down to $500 today.

Hey dude, this stuff is easy to learn to do right only if you understand your personality and the psychology of the market – and a little math. It doesn’t take brains to do it right, but most people will lose money because their mind will interfere with their knowledge and judgment. Stay seriously tune to my blogs until you free yourself of mental debris (blocks) about investing right!

2 Comments leave one →
  1. October 3, 2010 2:59 pm

    Good day!This was a really superb post!
    I come from endland, I was fortunate to look for your Topics in baidu
    Also I get a lot in your website really thanks very much i will come again

    • October 4, 2010 6:24 am

      Are you in China? Isn’t Baidu in Chinese only? How do I access myself on Baidu? Thanks for the compliment. I will post something you are interested in. Any particular issue?

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