Good Morning New York! I have lots of things to blab about today. Some are professional, others are personal, and most are just random ramblings. Hopefully something useful will come out of this blog.
I'll start with current news.
First I would like to talk about Facebook Ink. Five years ago, Mark Zuckerberg, a feisty Harvard undergraduate student decided to start a networking website among the undergraduate population of Harvard. The site was first aimed to be only a, as the term suggest, face book, where undergraduate members of The Facebook website could look each other up. That was only six years ago. In less than 5 years, the website outgrew Myspace Ink and is now worth close to $10 Billion Dollars! All that Mr. Zuckerberg wanted was something to do so he could forget about his ex-girlfriend, but with a little networking, motivation, and expertise, he managed to grow the largest networking website, now valued at $10 billion dollars. The reason I am talking about Facebook is because they just received a $200 million dollar investment from a Russian company called Digital Sky Technologies. Why is that so important? Well, Mark stated not too long ago that the company was in perfect shape and didn't necessarily need any more outside investments, but wouldn't refuse them either. Now that they got this investment, my question is what else could Facebook possibly do? How else could they expand? And most importantly, how can one individual like me, invest in this company? If major corporations are willing to invest millions of dollars in this trendy website, specially in times like these, I want to invest as well; but enough with FaceBook.
On a more bankrupt-ish mood, I want to talk about GM. If you didn't know GM, the largest automaker company in america, is about to go into chapter 11; bankruptcy. There is no doubt in my mind that GM will not escape bankruptcy especially with the Obama administration being so strong and tough to large corporations. Today was the deadline for investors, specifically bondholders to reevaluate and accept the CEO's new equity distribution proposal. I'll explain. Fritz Henderson wanted bondholders (shareholders) to give up part of their bonds and in return accept a certain amount of shares from the company. If this company had any prospects of future growth, this deal would be a no brainer. The issue here is that the company is doomed to go into bankruptcy. This is key to this deal. In fact, financial speculators are key to this deal. If the company indeed goes into bankruptcy, bondholders, due to contractual obligation, have the right to be paid off first, and common stock holders receive whatever is left over after the company has paid off all it's debt obligation. Most of the times that means stock holders get zero dollars out of the deal. Essentially, Mr. Henderson was proposing that bondholders take the risk in believing GM wouldn't go into bankruptcy and would grow instead, and accept the deal to exchange bonds for stocks. They needed 90% of bondholders to accept the deal in order to be less financially screwed. Bondholders own $27 Billion dollars worth of the company. My question here is what will happen to the company after it goes into bankruptcy? Will it be owned by the government? Will it still be around even though it doesn't have any money? If GM does survive, can I buy 225 stocks for $1000? All I can say is that if I knew GM's future I would invest in it as fast as I could. GM stocks are going on sale, and as with any other american good, whenever it goes on sale we buy a lot of it and potentially sell when the price goes up.
All of these current news kind of tie into a major event that happened to me last week. In one of my blogs I talked about a trip I took in the beginning of May to visit Jerry Hacker at his camp in Saranac Lake. Well, it turns out that Jerry could have changed our lives completely! It was one of those moments where the opportunity of a lifetime was right in front of our noses but we failed to recognize it. We also failed to act as true entrepreneurs and take risks, utilize our resources, so that we could reap great future or long term returns. Unlike Mark Zuckerberg, we never took the chance, we didn't believe in our potential. Now, we are just left with the possibility of maybe regaining the opportunity. We should have recognized that like GM, some business fail and like Facebook, others prosper, but if you don't take the chance you will never know.
If I learned anything this summer so far is that whenever an opportunity presents itself, I will grab it by the horns.
Well I am done blabbing for now!
Stay Classy New York, and remember an apple a day keeps the dentist away.
Arches National Park (Delicate Arch)
