Facebook Inc (NASDAQ:FB), believe it or not, is still dealing with the legal fallout of its IPO of 15 months ago, and the issues and problems that came to fruition on that fateful day. We only mention this because the case, where Facebook and NASDAQ were sued by investors for varying reasons surrounding the IPO, had slid into the molasses that is the legal system in the U.S. and has created a slowing of news from the courtroom. That, of course, could be seen as a boon for CEO Mark Zuckerberg, who is not only personally attached to the case legally as someone who is charged with feeding insider information to a select number of investors, but also for his tech startup, which has been slowly trying to rally back from its lows on the stock market to get back near the $38 IPO price.
Facebook Inc (NASDAQ:FB): Insider Trading Charges off the Table
In an odd action in the courtroom, Facebook (NASDAQ:FB) and NASDAQ combined were about to face 31 legal cases as a single class-action lawsuit before U.S. District Judge Robert Sweet, but Jan Wolfe of The Litigation Daily reported an interesting, if somewhat convoluted twist in the case. The lead attorney firms for the plaintiffs have decided to pursue the 29 claims of violation of the Securities Act of 1933 and not tackle the two claims of violation of the Securities Exchange Act of 1934 that deal with the disclosure of non-public information. Two smaller law firms who brought up the two Exchange Act claims petitioned the court for the opportunity to sever the consolidation and pursue their own class-action on the two claims that were being left out, but Judge Sweet ruled against the firms based on precedent, writing that lead cousel for the plaintiffs in a multi-district litigation case such as this has discretion in pursuing the case it sees fit.
Facebook May Make Us Sadder, Study Finds
Facebook Inc (NASDAQ:FB) is a very powerful tool in developing and enhancing social connections among 1 billion worldwide residents, but could it contribute to our well-being emotionally – as in, might it actually be a predictor of how we might be feeling in the future based on how much we use the network? That is one of the interesting questions a University of Michigan study tried to answer recently.
Diane Swanbrow wrote about the results of the study on Health Canal, based on an article written by Ethan Kross, a social psychologist at the University of Michigan in Ann Arbor. The study, which was conducted by eight UM researchers in collaboration with a researcher in Belgium, found that the more that the sample users accessed the social network, the worse they felt and/or the lonelier they felt. The study looked at 82 young adults and the researchers would send text messages to each of them five times a day for two weeks, and each text message provided a link to a survey which asked them five questions about their mood, well-being and if the subjects had any direct (face-to-face or phone) contact with anyone since the previous message.
In summarizing the study, Kross wrote, “Facebook provides an invaluable resource for fulfilling the basic human need for social connection. But rather than enhance well-being, we found that Facebook use predicts the opposite result—it undermines it.” The study revealed that those who used Facebook more over the two-week period tended to feel worse after the two-week trial, while those who had more direct contact with people tended to report feeling better about themselves over time.
Study co-author John Jonides, a cognitive neuroscientist at Michigan, said, “This is a result of critical importance because it goes to the very heart of the influence that social networks may have on people’s lives.”
Do you think fund gurus like Leon Cooperman or Bill Miller feel better about themselves with their stakes in Facebook Inc (NASDAQ:FB)? Well, if you think this study is somehow revolutionary, we ask you to watch the video below from 2012 that asked the question about Facebook and its power to promote happiness.
Warren Buffett never mentions this but he is one of the first hedge fund managers who unlocked the secrets of successful stock market investing. He launched his hedge fund in 1956 with $105,100 in seed capital. Back then they weren’t called hedge funds, they were called “partnerships”. Warren Buffett took 25% of all returns in excess of 6 percent.
For example S&P 500 Index returned 43.4% in 1958. If Warren Buffett’s hedge fund didn’t generate any outperformance (i.e. secretly invested like a closet index fund), Warren Buffett would have pocketed a quarter of the 37.4% excess return. That would have been 9.35% in hedge fund “fees”.
Actually Warren Buffett failed to beat the S&P 500 Index in 1958, returned only 40.9% and pocketed 8.7 percentage of it as “fees”. His investors didn’t mind that he underperformed the market in 1958 because he beat the market by a large margin in 1957. That year Buffett’s hedge fund returned 10.4% and Buffett took only 1.1 percentage points of that as “fees”. S&P 500 Index lost 10.8% in 1957, so Buffett’s investors actually thrilled to beat the market by 20.1 percentage points in 1957.
Between 1957 and 1966 Warren Buffett’s hedge fund returned 23.5% annually after deducting Warren Buffett’s 5.5 percentage point annual fees. S&P 500 Index generated an average annual compounded return of only 9.2% during the same 10-year period. An investor who invested $10,000 in Warren Buffett’s hedge fund at the beginning of 1957 saw his capital turn into $103,000 before fees and $64,100 after fees (this means Warren Buffett made more than $36,000 in fees from this investor).
As you can guess, Warren Buffett’s #1 wealth building strategy is to generate high returns in the 20% to 30% range.
We see several investors trying to strike it rich in options market by risking their entire savings. You can get rich by returning 20% per year and compounding that for several years. Warren Buffett has been investing and compounding for at least 65 years.
So, how did Warren Buffett manage to generate high returns and beat the market?
In a free sample issue of our monthly newsletter we analyzed Warren Buffett’s stock picks covering the 1999-2017 period and identified the best performing stocks in Warren Buffett’s portfolio. This is basically a recipe to generate better returns than Warren Buffett is achieving himself.
You can enter your email below to get our FREE report. In the same report you can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12-24 months. We initially share this idea in October 2018 and the stock already returned more than 150%. We still like this investment.
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Wall Street Legend Warns: “A Strange Day Is Coming to America”
“A massive and surprising new transition could determine the next group of millionaires,” says Chaikin, who predicted the 2020 market crash. “While leaving 99% of the public worse off than before.”
“If you own regular stocks, you’re in for a big surprise,” he adds.
“I grew up in a world where you could do extremely well by investing in ordinary companies,” Chaikin says. “It’s how I spent the majority of my 50-year career on Wall Street.
