Nervous about Facebook

[Nika]

It has been going up and up, and everyone expects stellar results from last quarter. They are reporting after hours. I wonder if these expectations are too high and unrealistic, but maybe these people have good reasons for such optimism?

Holding several FB calls and can't decide if I should take the profits or hold for what could be a rare opportunity.

[lrodptl]

What kind of investor are you? How much of your portfolio is leveraged towards FB? I also own a small amount of FB. It's got 4 straight quarters of accelerating earnings and revenue and outperforming 99% of the market. Technically there is no reason to sell today. It's up on higher volume today and looks very good on a chart. Noone ever goes broke taking profits!

[Nika]

I was not talking about FB stock. I don't have much of it - just 100 shares. I was talking about option calls, and it is always a huge gamble to hold options past the earnings call - you never know how it will work out and surprises can be in store.

Luckily, they did very well this quarter, though that did not result in a big additional stock surge, as most of the surge was pre-announcement.

I'm not sure if I should buy more shares, or is it a bit overvalued. Or, if I should hold one of the options and just exercise them a year or 1.5 years later?

I know that time value component will erode by than, but will the lessening of the risk compensate for that?

[kv968]

I'm not sure if I should buy more shares, or is it a bit overvalued. Or, if I should hold one of the options and just exercise them a year or 1.5 years later?

I know that time value component will erode by than, but will the lessening of the risk compensate for that?

Lookin' real good after earnings.

What strike price and expiration date did you buy and how much did you pay for them?

[Nika]

What strike price and expiration date did you buy and how much did you pay for them?

I chickened out and sold one pre-announcement. Too bad. I have left:

3 FB Jan 16 65.00 call paid 1,300 each
1 FB Jan 15 65.00 call paid 1,000

Nothing major (I'm too chicken and afraid to lose too much), but I want to maximize what I can, as I doubt this stock rally can go on like that for too much longer.

As of yesterday, the gain is modest (the Jan 15 option was bought on the high), but FB seems to be really up in the pre-market right now.

[bigdaddybus]

My 12 yr old daughter bought 20 shares of FB for $25.75 5/23/13 and then sold 10 shares 2/24/14 for $70.74 in her ROTH IRA (I made her keep half as a long term investment.)

She has been hilarious to work with. She expects her next stock to triple like FB.

She is now 13 getting ready to start high school and wants to become a fund manager (she doesnt know the title, but if you ask her what she wants to do she says I want to work from home managing money for me and others)

BTW, my daughter affectionately refers to her ROTH IRA as her "Old People Account"

Last week she opened a position in Dollar General and is expecting massive gains.....oh if it was only that easy!

[Nika]

My 12 yr old daughter bought 20 shares of FB for $25.75 5/23/13 and then sold 10 shares 2/24/14 for $70.74 in her ROTH IRA (I made her keep half as a long term investment.)

She has been hilarious to work with. She expects her next stock to triple like FB.

She is now 13 getting ready to start high school and wants to become a fund manager (she doesnt know the title, but if you ask her what she wants to do she says I want to work from home managing money for me and others)

BTW, my daughter affectionately refers to her ROTH IRA as her "Old People Account"

Last week she opened a position in Dollar General and is expecting massive gains.....oh if it was only that easy!

How does she get earned income to have a ROTH? I'd like to open one for my 3 year old, but since he is not a child actor, I can't see a way to do it.

[bigdaddybus]

How does she get earned income to have a ROTH? I'd like to open one for my 3 year old, but since he is not a child actor, I can't see a way to do it.

My daughters income is from babysitting and petsitting.

My son is currently 12 and is mowing several lawns and bringing in around $200 a month. We will open him up a ROTH IRA this year. (my local Scottrade branch requires a $500 minimum)

We have always required our kids to save 50% of any money they get (gifts or earned). Honestly, I wish my parents would have done the same as both my older kids (we have a 3 and 4 yr olds as well) have much more savings than I had at age 18.

My younger 2 kids are adopted out of foster care. We receive $784 a month from the state of IL for them until the age of 18. I put that money into college savings for the kids. I would like to fund Roths with it, but I am sure thats not allowed.

[fruitbowlk]

You lost me so I had to google it.

Definition of 'Call Option'


An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period.

It may help you to remember that a call option gives you the right to "call in" (buy) an asset. You profit on a call when the underlying asset increases in price.

[BuckyBadger]

My daughters income is from babysitting and petsitting.

My son is currently 12 and is mowing several lawns and bringing in around $200 a month. We will open him up a ROTH IRA this year. (my local Scottrade branch requires a $500 minimum)

We have always required our kids to save 50% of any money they get (gifts or earned). Honestly, I wish my parents would have done the same as both my older kids (we have a 3 and 4 yr olds as well) have much more savings than I had at age 18.

My younger 2 kids are adopted out of foster care. We receive $784 a month from the state of IL for them until the age of 18. I put that money into college savings for the kids. I would like to fund Roths with it, but I am sure thats not allowed.

I'm pretty sure it has to be W2 income... Do they get W2s for baby sitting, pet sitting, and lawn mowing? You can be self employed, but I believe that you have to be "officially" self employed - i.e. do the paperwork and pay the taxes.

Hmm... I just saw this, but I'm not sure I'd risk it...

Not from an official IRS source:

The important thing to remember is that your child must have earned income during the year for which a contribution is made. Money from allowance or investing income does not count as earned income and, therefore, cannot be used towards contributions. Ideally, your child will receive a W-2 for work performed; otherwise, it is a good idea to keep excellent records from jobs that don’t provide a W-2: babysitting, yard work, mothers’ helpers, entrepreneurial endeavors, etc. Your records should include:


Type of work

When the work was done

For whom the work was done

How much your child was paid

You may be able to pay your child for work done around the house provided it is legitimate and the pay is at the going market rate (you probably won’t get away with paying your son $150 an hour to mow the lawn, for example). If your family has a business, you can put your child to work doing age-appropriate tasks for reasonable pay. Your business minimizes its tax liability and your child earns income that will qualify him or her to make an IRA contribution.

Allowances definitely don't count.

[Tabs]

I'm not sure if I should buy more shares, or is it a bit overvalued. Or, if I should hold one of the options and just exercise them a year or 1.5 years later?

This is just my personal opinion, but FB is extremely overvalued from a fundamental standpoint. Essentially, all the "new kids" have already gone off somewhere else because they see Facebook as a place where everybody is, including the "old people" like mom and dad. Eww!

That is not to say that FB still does not have a commanding share of the current social media market. Rather, I would say it's over-saturated and the media space is ripe for the next transition.

And where the youngsters moving to, you say? Video. Google channels are huge. Huge. PewDiePie is probably the biggest example of this, but I have friend's children as young as 8 years old who already have their own YouTube channels and are sharing videos online. (I had to turn off my notifications because... sorry girls, but omg I am sooo totally not wanting the latest updates on your toy puppies and their choo choo ride to Rainbowland every night).

This surprised me and others at first, but when you stop and think about it, it actually makes sense. Text is "boring", slow, and more importantly, typing is a skill that involves a bit of learning curve at first. Instead, it's much more interesting, and in many cases EASIER, to just record a video with your cellphone, upload it to your YouTube channel, and share your thoughts with your friends that way. In fact, the process is now so easy that literally 8 year olds can do it. Amazing.

That said, I have absolutely no idea where to put your investment dollars for the next gen social media. Any of the existing players can end up picking up the user base, or maybe a new entity with (some semblence of youth relevance and exclusivity) could spring up and take over. Whatever it is, the only thing I am fairly certain about is that, while text isn't going away anytime soon, video is the next social media phenomenon.

[corn18]

It's all gambling. No one can tell you if FB is going up or down anymore than they can tell you if the next roll of the dice is a 7 or 11. People think they know and there are many talking heads that will give you their expert opinion, but in the end, it is just gambling when you play in many of these types of individual stocks. Good luck.

Tom

[rennigade]

Id rather start a fire with a wad of cash than invest in FB. I ditched my facebook account approx 6 years ago. I still cant wrap my head around everyone using that crap. Im not sure whats worse...twitter or facebook?

I cant wait for both of those bust services to fade out so something even more lame can catch on. The future looks bright my peeps.

[bigdaddybus]

I'm pretty sure it has to be W2 income... Do they get W2s for baby sitting, pet sitting, and lawn mowing? You can be self employed, but I believe that you have to be "officially" self employed - i.e. do the paperwork and pay the taxes.

Hmm... I just saw this, but I'm not sure I'd risk it...

Not from an official IRS source:



Allowances definitely don't count.

In checking with an investment advisor, I was told the following.
1. Track your kids income for working (babysitting, lawn mowing, etc).
2. As long as you stay under the Roth IRA restrictions, that is the max you can contribute to their Roth IRA.

I am basically matching the money my kids earn. My daughter earns $500 she puts it in her Roth and I give her $500 to spend/save.

Her Roth is rocking too. I just sold DG this morning for an 17.5% gain. I'll work with her this month to figure out her next purchase.