Earlier, we reported that the analysts at Facebook’s IPO underwriters had cut their estimates for the company in the middle of the IPO roadshow, a highly unusual and negative event.<\/p>\n
What we didn’t know was why.<\/p>\n
Now we know.<\/p>\n
The analysts cut their estimates because a Facebook executive who knew the business was weak told them to.<\/p>\n
Put differently, the company basically pre-announced that its second quarter would fall short of analysts’ estimates. But it only told the underwriter analysts about this.<\/p>\n
The information about the estimate cut was then verbally conveyed to sophisticated institutional investors who were considering buying Facebook stock, but not to smaller investors.<\/p>\n
The estimate cut appears to have influenced the investment decisions of at least some institutional investors, dampening their appetite for Facebook stock, and crucially, affecting the price at which they were willing to buy Facebook stock.<\/p>\n
For the full, long, boring story, click here.<\/span><\/strong><\/p>\n If you feel you got done badly by your broker and Nasdaq’s screwups, maybe Morgan Stanley will give you a little more money?<\/p>\n As I’ve written, do not own stock in Facebook and do not buy stock in FB. One reader thinks it will fall to $15. That would only value the company at $41 billion, somewhat more reasonable.<\/p>\n Two must-read articles in the latest Atlantic.<\/strong><\/span><\/p>\n + How we got the crash wrong. <\/strong>Excerpt: …The problem on Wall Street has never been about the absolute amount of leverage, but rather about whether financiers have the right incentives to properly manage the risks they are taking. During Wall Street’s heyday, when these firms were private partnerships and each partner’s entire net worth was on the line every day, shared risk ensured a modicum of prudence even though leverage was often higher than 30-to-1. Not surprisingly, that prudence gave way to pure greed when, starting in 1970 and continuing through 2006, one Wall Street partnership after another became a public corporation-and the partnership culture gave way to a bonus culture, in which employees felt free to take huge risks with other people’s money in order to generate revenue and big bonuses.<\/p>\n People are pretty simple: they do what they are rewarded for doing. If they get multimillion-dollar bonuses by taking huge risks with other people’s money-as they still do-then they will continue to take those huge risks, and not give it another thought. To prevent another crisis, Wall Street’s top executives, bankers, and traders should once again have something close to their full net worth on the line every day-not just the portion represented by company stock or options-so that they will collectively take risk management more seriously. That’s a solution that has nothing to do with the amount of leverage on Wall Street’s balance sheets.<\/p>\n For the full article, click here.<\/strong><\/p>\n + The Perfected Self. <\/strong>The long history of losing weight. And how to do it. This piece is fascinating, especially as researchers have found that smartphone apps now can work big-time. If you’re overweight or know someone who is, you (or they) must<\/strong> read this piece. Excerpt:<\/p>\n …That Skinner’s theory could be successfully applied to obesity was no surprise. Decades earlier, when no one spoke of an obesity problem, Skinner had been writing about diet and exercise as an example of how behavior could be modified. In a 1957 paper in American Scientist, he cited a Harvard University study in which rats were conditioned to eat when they weren’t hungry, causing what Skinner called “behavioral obesity.” His followers did not have to reach far for the converse, speculating that an organism might be induced to willingly reduce food intake, were it rewarded for doing so.<\/p>\n They were eventually proved right by Weight Watchers, which launched its “behavior modification plan” in the mid-1970s. The program’s close adherence to Skinner’s basic principles has consistently garnered some of the best long-term weight-loss results of any mass-market program. The key characteristic of Weight Watchers and other Skinnerian weight-loss programs is the support and encouragement they provide to help participants stick with them. (Much the same is true of AA, which is strikingly similar to a behavior-modification program.) Weight Watchers and the other programs do not claim to magically burn fat, or make appetite disappear, or blast abs. They aim to gradually establish healthful eating and moderate exercise as comfortable, rewarding routines of daily life rather than punishing battles of willpower and deprivation.<\/p>\n The specifics may sound familiar: set modest goals (to encourage sustainable progress and frequent reinforcement); rigorously track food intake and weight (precise measurement is key to changing behavior, especially when it comes to eating, since a few bites a day can make the difference between weight loss and weight gain); obtain counseling or coaching (to diagnose what environmental factors are prompting or rewarding certain behaviors); turn to fellow participants for support (little is more reinforcing than encouragement from peers, who can also help with problem-solving); transition to less-calorie-dense foods (to avoid the powerful, immediate reinforcement provided by rich foods); and move your body more often, any way you like (to burn calories in a nonpunishing way).<\/p>\n Study after study proves the effectiveness of this rough Skinnerian formula, which is the basis of the great majority of well-regarded weight-loss programs. “Willpower doesn’t work,” says Jean Harvey-Berino, a University of Vermont behavioral scientist who researches weight-loss methods. “What works heavily relies on Skinner-shaping behavior over time by giving feedback, and setting up environments where people aren’t stimulated to eat the wrong foods.” As the evidence continues to pile up, it’s getting harder to find weight-loss researchers who disagree, says Jennifer Shapiro, a psychologist specializing in weight loss and the scientific director at Santech, a San Diego health-technology firm. “More and more studies demonstrate the effectiveness of behavioral approaches based on Skinnerian reinforcement.”<\/p>\n For the full article, click here.<\/a> Awesome video of an osprey in flight. <\/strong><\/span>These are great birds. I’m not a birder, yet. But all of my friends are. They all own camera equipment that strains their bank accounts. One friend employs a complete village of African pygmies to carry his camera stuff, including his strobe that will light\u00a0 birds 100 feet away.\u00a0 Just kidding about the pygmies. Here’s\u00a0 the Osprey video<\/a>.<\/strong><\/p>\n Lyme disease is exploding, again.<\/strong><\/span> My friends are getting Lyme and other horrid diseases from ticks in their gardens.\u00a0 I have enough hypochondria to sensibly avoid the great outdoors — especially in the charming, beautiful northeast.<\/p>\n The French Tennis Open starts at 10:00 AM on Sunday.<\/strong><\/span> It begins on The Tennis Channel. You can’t get Lyme disease on an indoor tennis court. So there.<\/p>\n How to save Greece:<\/strong><\/span><\/p>\n ATHENS (The Borowitz Report) – After struggling for months with an intractable financial crisis, Greece announced today that it would cease to exist as a sovereign nation and would instead reboot itself as a social network.<\/p>\n The new entity, FetaBook, is expected to raise much-needed billions in an upcoming IPO.<\/p>\n The social network formerly known as Greece announced that it would cancel its upcoming elections and instead install a CEO, a 24-year-old hacker from suburban Athens named Ciro Mavromatidis.<\/p>\n Speaking from the newly opened offices of FetaBook, Mr. Mavromatidis explained how the social network would be attractive to the investment community in ways that Greece was not.<\/p>\n “We’re keeping all the aspects of Greece that made it a cool brand – the ruins, the Olympics, the olives,” he said.\u00a0 “We’re just losing the things that were a drag on the Greek economy: namely, the Greeks.”<\/p>\n He said under the new plan, all Greeks would cease to be citizens of Greece and would instead become friends of FetaBook: “They won’t receive any government benefits anymore, but they’ll be able to grow all the imaginary food they want.”<\/p>\n Mr. Mavromatidis said that by converting from a nation to a social network, FetaBook will enjoy other cost savings as well.<\/p>\n “We Greeks waste billions of dollars a year smashing plates after meals,” he said.\u00a0 “Now that’s going to be done by an app.”\u00a0 Get a free subscription to the Borowitz Report here.<\/p>\n
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