The disappointing stocks of Facebook, Groupon, and Zynga shares are causing some investors to hesitate on funding internet start-ups. More in the WSJ. "The frothy bubble is over," says one VC quoted in the piece. Investors valuing profitability over hype? Such complicated crazy talk.

  • http://twitter.com/alanpeart Alan Peart

    Wow it’s just so amazingly surprising. Nothing like this has ever happened before that could have been learned from.

  • fuzzyfuzzyfungus

    Gosh, I sure am glad that a bunch of rational actors are at the wheel…

    All joking aside, this episodic bubbling(and so soon after the first .com bubble, no less), leads one either to the depressing conclusion that ‘the market’ is a damn moron, or that it consists largely of cynics who are in on the joke, and morons who provide a food supply for the cynics. Neither option seems terribly healthy.

  • acerplatanoides

    “The frothy bubble is over: – So… no Santorum 2016?

    • Gilbert Wham

      Damn you! Too slow again! *shakes fist*

      • acerplatanoides

         That’s one way to raise a bubble in the frothy mess.

  • brainflakes

    Zuckerberg (in the IPO documentation): I am retaining complete control of Facebook and will not bow to shareholder pressure for short term profits and will instead focus on long-term goals.

    Stupid Investors: He’s not bowing to our pressure for short term profits! We can’t make a quick buck on our stock so it’s worthless! He should be removed from the board!

    • fuzzyfuzzyfungus

      Is it really fair to expect investors to believe executives?

      • DataShade

        Executives, no.  Founders?  Yes.

  • Teresa Nielsen Hayden

    Why shouldn’t investors be making boneheaded judgements? They did it during the first Dot.com bubble. Remember Pets.com, Garden.com, Stamps.com? Remember Flooz? I do. I kept looking at the multi-million-dollar startups and thinking, “There’s no way that business plan is going to succeed.” 

    I’m sorry other startups are having trouble getting funding because FaceBook stocks have been a disappointment. I feel less sorry for the investors. They should have known better. There’s nothing mysterious about how FaceBook works.

  • Daemonworks

    But people being stupid is the backbone of our economy!!!

  • Teresa Nielsen Hayden

    Stupidity isn’t the backbone of our economy, but it is an essential component of the stock and bond markets. The shorthand phrase for this is “the fool in the market,” by analogy with poker theory’s “the fool in the game.” Some quotes:

    “If you can’t spot the fool, you probably are the fool.” — gamblers’ proverb

    “In any market, as in any poker game, there is a fool. The astute investor Warren Buffett is fond of saying that any player unaware of the fool in the market probably is the fool in the market.” – Michael Lewis, Liar’s Poker

    The role of the fool in the market is a component of the Greater Fool Theory or Bigger Fool Theory. (See Dan Solin on The Greater Fool Theory and Investing.)

    “On my honeymoon I traveled out west. When I visited the casino and saw all these smart well-dressed people participating in a game with the odds against them, it was then that I realized I won’t have a problem getting rich!” — Warren Buffett

    (Further insightful quotes from Warren Buffett.)

  • DataShade

    This is a non-issue.  People at financial journals only rate a stock highly if it goes up rapidly after the IPO.  However, if a stock price jumps rapidly after the IPO, that means *the initial listing was undervalued.*  It means that the people who bought early then flipped the stock made a lot of money, and that the company’s stock is now in the hands of impatient greedy assholes trying to sell as quickly as possible, and behind-the-curve greedy assholes who will dump the stock if it looks like they’re going to take even an ounce of loss.

    There was a time when people bought stocks for annual dividends, long-term investments, and for a voice in the company.  We ought to be glad that short-term gamblers and panicky nitwits get dissuaded from high-volume trading and big stock buys.