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I have been under constant barrage of unsolicited phone calls recently. The phone calls typically begin with the same lie: "Mr. Shedlock you told a colleague of mine a few months ago to call you back when we have a really good investment opportunity".
Given that I never ask anyone to call back, they are known liars from the start. Depending on what kind of mood I am in, I may hang up immediately or listen long enough to hear what kind of nonsense they are peddling.
I asked one of the liars the name of his colleague that called. He answered George. I said "George who?".
The caller got exasperated and replied "Washington".
The predominant thing these guys are peddling is the opportunity to lose a lot of money fast, frequently in the oil or natural gas industry. But lately the charlatans have pestered me with real estate opportunities, shorting gold, and buying microcap stocks I have never heard of (most likely the classic pump-and-dump) variety.
This is the kind of thing that happens at market tops. Everyone wants in, and the fraudsters come out in force to take advantage.
Nonetheless, I offer my standard warning: Just because this activity happens at peaks, does not mean this is the peak.
Sentiment typically gets more extreme than anyone thinks possible.
Social Media Bubble
Facebook recently paid $19 billion for WhatsApp, a company with 55 employees and no revenue.
Supposedly this is a good deal because WhatsApp is growing fast. It is growing fast because it has a cute texting app that it gives away for free.
How many customers would it have if it starts charging? Enough for a $19 billion valuation? Not a chance.
Pater Tenebrarum has interesting discussion in his commentary "Social Media Bubble".
Flipping Yet Again
Meanwhile, this farcical ad popped up on my screen just today.
Want to know what "As seen on TV" means?"
Typically it is a sleazy phrase that means they ran an ad somewhere on TV, at least once.
Such ads usually run on an obscure channel at 3:00AM. But hey, it's "as seen on TV". They never said "in a show".
Please note the little asterisk that reads "results based on effort".
I have a simple question: didn't we try this before?
I have a few minor corrections.
I said "WhatsApp has no revenue". I should have said "WhatsApp has essentially no revenue." It did have $20 million in revenue. For that $20 million in revenue it got a $19 billion buyout - $950 for every $1 of revenue.
The revenue stems from the fact that WhatsApp charges a tiny fee for its service, but only after the first year of free service. That is my second correction. I should have said "essentially free".
Rest assured competition will drive price down to the break-even point or nearly so.
Finally, I never heard of "Than Merrill". The ad reads OK provided you know who "Than" is. Regardless, the ad is ridiculous hype..
Mike "Mish" Shedlock