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Public Markets For Predicting Google's Market Cap 169

Posted by timothy
from the put-your-non-money-where-your-mouth-is dept.
k2enemy writes "The Iowa Electronic Markets have created two markets where traders may buy and sell contracts based on beliefs of Google's market cap at the end of the first day of public trading. The first market, GOOGLE_LIN, trades contracts with liquidation values linearly dependent on the market cap. The second, GOOGLE_WTA, trades six unique and exhaustive contracts in a winner-takes-all market. The markets are currently suggesting a market cap around $30-35 billion. The IEM is also popular for its political markets, which have been very successful (more accurate than polls) at predicting political elections."
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Public Markets For Predicting Google's Market Cap

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  • FUD (Score:5, Interesting)

    by swordboy (472941) on Wednesday August 11, 2004 @07:15AM (#9938382) Journal
    Anyone else notice the amount of FUD [thestreet.com] concerning the IPO? Google is the first to step in and help the little investor and, all of a sudden, the rich people are funding FUD campaigns so they can get in on the deal.
    • Re:not working (Score:2, Insightful)

      by Anonymous Coward
      Its not working though.

      Google hasnt really budged on its position, and they still are not worried about the fatcats' FUD. Im not google, nor am I employed there, but I think they want their popularity, usability, and value speak for themselves.
    • Re:FUD (Score:2, Interesting)

      by HMA2000 (728266)
      Are you high? Google is not helping the small investor. If they wanted to help the small investor they would not make you buy a minimum of 500 shares at 100+ a pop through their auction method. If anything they are trying to keep the small investor AWAY from the IPO (which may actually be helping them.)

      There's lots of reasons for the FUD, mostly because when you're dealing with billions of dollars that may or may not be spent there is a lot of fear, uncertianty and doubt. I'm sorry if this clashes with
      • Re:FUD (Score:5, Informative)

        by Gigahertz (768208) * on Wednesday August 11, 2004 @07:32AM (#9938460)
        The minimum shares is 5, not 500, so a small investor with a little more than $500 can get in on the IPO.
        • Very Risky (Score:4, Informative)

          by clone22 (252516) on Wednesday August 11, 2004 @08:11AM (#9938691)
          Not that they should. Nothing is known about the direction the stock will take post-IPO. It could easily drop 25-50% in the first few days. The market for technical issues is negative right now.

          There are different approaches to timing entry into a stock. Technical analysis [stockcharts.com] assumes that all information about a stock is factored into the price. Indicators based on prior price history are used to determine trend. Proponents of the method say the price movement is a manifestation of crowd behavior.

          Fundamental analysts [thestreet.com] study the companies financials, such as trends in earnings, price to sales ratio, profit margin, return on equity, etc.

          Another approach [thetechinvestor.com] is to find companies that are likely to profit from long term major trends in technology and/or society.

          As for the Google IPO, there is no stock history on which to base a technical analysis. One might argue whether the fundamentals make the investment worthwhile, and the third approach takes a very long term view, so there is no good reason to jump on board immediately.

          Lastly, if you are considering buying this IPO in speculation of it going up significantly in the next few days, have the mental fortitude to set a stop loss below your entry point and get the hell out if it drops to that point, or you stand to lose a lot of money, fast. This is no market for amateurs.

          • by SmallFurryCreature (593017) on Wednesday August 11, 2004 @08:35AM (#9938849) Journal
            If you are worried about the price in the first few days after the ipo then you are a speculator (read filth) not an investor.

            Someone buying 5 shares is not a speculator. That person would be an investor. Investors are intrested in the long term. Hoping that by lending a company a sum of money now that company can use that money to increase its business thereby increase profits and in the future repay the loan with a nice little interest (dividends). True investment is more like a loan that doesn't have to be paid back unless you make a profit.

            Speculation is just hoping that someone else will want to buy your shares for more then you have bought them. It has no intrest in the future of the company.

            • The number of shares one buys has nothing to do with whether one is a speculator or investor. There are people who open forex acounts with $50, believe it or not. But you're right that investors are interested in the long term and speculators are generally interested in short term profits.

              However, I'll disagree on your characterization of stock ownership as a loan to the company. You are, in fact, buying a part of the company (a share) when you purchase the stock. The company may or may not choose to distr
            • That's fine - since I'm a non-filthy investor, I'm going to pass up on this IPO, wait until the price crashes to price more justifiable, at a more realistic ratio, and then buy.

              If you were to take my recommendation (which you have no reason to), you wouldn't buy GOOG.

              My 2 cents.
            • by Kevin Stevens (227724) <kevstev AT gmail DOT com> on Wednesday August 11, 2004 @10:07AM (#9939649)
              If you are worried about the price in the first few days after the ipo then you are a speculator (read filth) not an investor.

              I disagree. If you are not worried about the share price a few days after, you are foolish. If you know there is an 80% chance that the stock price is going to be significantly lower three days after you plan to buy it, you buy it three days later at the lower price.

              Also, your definitions of investing and shares is far off the mark. A share is a piece of the company. You own that company. There is no loaning involved, you don't sell it back to the company, you sell it to another investor. You invest in a company, hoping that the company increases in value, thus raising the share price, or alternatively remains profitable and stable, thus releasing dividends. Share price appreciation is much more common now as most managers choose to reinvest profits in the business, which makes the company grow, and benefits the managers resumes as they get to lord over a larger empire. Also, most managers primarily have options on stock shares and do not own actual shares, so they again just look to get the quick buck from exercising the option and selling it. It used to be more common that something like a tire company would be content with doing well in the tire business, making nice profits and handing out dividends, mostly due to the fact that there were more family businesses and the managers were family members that held large numbers of shares (for a current example MS w/ Gates and Allen share many characteristics). Now the trend is that the company would instead start expanding into making other rubber widgets or if they are feeling really adventurous just buy or venture into some completely unrelated business. Its not a clear argument as to which method is better, as the shareholders should win with each strategy, though companies with dividends have historically produced higher total returns.

      • Re:FUD (Score:3, Informative)

        by MulluskO (305219)
        The minimum is 5, ass-hat.

        That said, it still isn't for the small investor, IPOs seldom are.

        Link to info [fidelity.com]
      • f they wanted to help the small investor they would not make you buy a minimum of 500 shares at 100+ a pop through their auction method.
        They are not making anyone buy at a paticular price. If the bulk of the bids in the auction are at $50 then the opening price will be $50.
        Google's announcement is quite clear that investors can bid above or below their suggested price range.
      • Re:FUD (Score:3, Informative)

        by swordboy (472941)
        If they wanted to help the small investor they would not make you buy a minimum of 500 shares at 100+ a pop through their auction method.

        They would go belly up if they didn't do this. This is standard procedure when it comes to an IPO. This is the very reason that Disney stopped allowing tourists to buy a single share of Disney stock while visiting one of the parks. The overhead involved in dealing with this trivial investor was more than it was worth to the investor.

        What I am getting at is that the u
      • If anything they are trying to keep the small investor AWAY from the IPO (which may actually be helping them.)

        You mean, hehe, if it tanks? Indeed, in that case, the small time investors may have been helped by having been kept out ;-)

        Seriously, by having a more accurate assessment of value, rather than artificially undervaluing their stock (as would be the case in a classical IPO), they are indeed limiting the probability of a "stellar" IPO, and this is a very real concern.

        The Dutch auction format doesn

    • Google's IPO doesn't help individual investors any more than going the traditional route via distribution through an underwriter. It helps them (Google) get more for the IPO and the bankers less.
    • by PrvtBurrito (557287) on Wednesday August 11, 2004 @08:04AM (#9938638)
      Where on earth are getting "help the little investor"? Google isn't helping the little investor anymore than anyone else is. What you pay for those 5 minimum shares is the market price. That is the same damn price you will pay on etrade the next day. (where you can buy 1 share if you like). And the fact that lots of people share your belief only suggests to me that the price will be inflated because they think they will be "getting a deal." If they wanted to help the little guy (and not themselves) they would offer the shares at the price wall street would've normally paid for them to the investor with a maximum number of shares that can be purchased (like 50). But that is not what they are doing, they are helping themselves, but pocketing the profits wall street usually gets on the road from the IPO price to the market price (which is often, but not always, higher).
      • Where on earth are getting "help the little investor"?

        They're only cutting the underwriters in on 3 percent of the company, rather than the accepted 6-10 percent. This eliminates the "underwriter overhang" that typically follows an IPO.

        Have you ever followed an IPO before? Have you ever participated in on one (the actual initial offering, not buying on day 1)?
      • is the market price."

        Wrong! What you pay for those 5 minimum shares is what the underwriters decide to offer them for. They can take a hint from the "pre auction" but can price it at whatever they want to.

        "That is the same damn price you will pay on etrade the next day." This is the time you can buy at "market price" (at that given time & quanity). If anyone KNEW (market price) we wouldn't need a market! My guess is we see it tank upon close.

        • Sure, they can set the price to whatever they want, but no one is obligated to buy them at any price above what they bid. They'd have no reason to set the price to something that isn't reasonably close to what they expect the market price to be, and the auction process is a good way of helping to determine that. The bidding and pricing process is pretty clear, I don't see how they can deviate from it - and even in the cases where they only say "we expect to ...", they'd need to show a good reason for doin

    • Why is this FUD? Is any of this incorrect? Should we just be looking at the glowing articles how at $33 billion Google is underpriced?

      Its just an analysis of an stock IPO. Articles are written trashing stocks everyday.
    • What are you on about? Everything I've read points to big investors being cool on Google's IPO. They know that Google won't be able to sustain a price above $100 for very long so they'd rather wait until the stock price settles so they know what they're getting. Why buy now for $135 when in a week you can buy for $30? The only people going gaga over this are stupid people without any money who think this is their big chance to win the lottery.
  • It seems like everybody will try to make a buck of Google. I just hope that Google won't bomb like so many other companies.
    • The question is what happens if it does? Does google the company die but the organization(search engine et all) stay? does it all go away? does it get ruined by shady practices like paid placement?
    • I really like google, however I would never invest in a company that gains over 90% of its revenue from advertising and a user base that is very unpredictable. If a better search company comes around then users will switch, just like they switched to goole. However what google is trying to do is expand into many more online markets so people come to them for every online service with their powerfull search leading the way. They have great services and are a great company but I can't invest so readily in
  • Ironic... (Score:3, Interesting)

    by xIcemanx (741672) on Wednesday August 11, 2004 @07:18AM (#9938396)
    that these people are pretty much "gambling" on the stock market, something that is pretty much gambling in and of itself.

    It's like gambling on someone else playing the slot machine. o.O O.o What's the point?
    • This gives people a chance to think they are stock market players but without having to bet their houses on it.

    • Re:Ironic... (Score:5, Interesting)

      by maan (21073) * on Wednesday August 11, 2004 @07:24AM (#9938427)
      There's a subtle but interesting difference here, though. Whether the stock market is or isn't gambling is obviously a question in and of itself. But, by "adding a level of indirection", as you might say, you're "gambling" on people's reaction to how the stock will perform.

      Same with the slot machine. Indeed, a slot machine is supposed to be (nearly) completely random in its outcome. But how a player behaves at a slot machine is anything but random! So you're not betting on the same thing... It becomes very very interesting ;)

      Maan
      • Hmmm..interesting, it'd be more like gambling on someone playing blackjack then.
      • Re:Ironic... (Score:3, Interesting)

        by NickFitz (5849)

        I don't know what the law in the States is like, but in the UK, these people [fairplay-campaign.co.uk] make out a good case for slot machines being rigged. In brief, they use an emulator [pipex.com] which will run fruit machine code [pipex.com], allowing you to play until you get a gamble, lose, go back to the saved machine state before the gamble, choose the alternative option and... lose again!

        • Re:Ironic... (Score:5, Informative)

          by Sancho (17056) on Wednesday August 11, 2004 @08:07AM (#9938665) Homepage
          They're not rigged, they just don't work like everyone thinks they do.

          Originally, slot machines had spinning reels with pictures painted on the outside. A winner was determined by whether or not the pictures on the reels lined up (obviously there were internal mechanics to all of it, but that's how they were designed). Pulls were random based upon when the lever was released after the pull. As such, the player had some amount of influence over where the reels stopped, but there was clearly no way to control this influence and so the game was purely luck--no skill involved. The odds were determined by how the reels stop and where.

          Later, as electronic slots were developed, things changed. Rather than the player having any influence whatsoever on the slots, a computer chip determined whether the next pull would be a winner before the money was even put into the machine. The reels were then controlled by the computer chip inside the machine, so they showed matching symbols when the machine decided it was a winner, rather than the winner being determined by where the reels stopped. It's a subtle but distinct difference. So now the chip determines randomly whether there's a win. You could emulate this system to an extent, but I'm not sure anyone ever bothered.

          Move on to completely computerized machines. Even the reels now are just pictures on a screen, and you can emulate the entire system rather easily. The chip determines whether or not you win (again, before you even put your money in) and then it displays pictures showing you an outcome that matches the predetermined outcome. Statistically, this is no different than the original reels. Logistically, the odds can be changed by the owner, but many places where there is legal gambling require a certain payoff, so it's unlikely that the odds would be lower than the minimum. But a side effect of all of this is precisely what you linked to--in emulation when you can reset the computer to a previous state and pick a different input, the computer necessarily must adjust the displayed output to match the predetermined outcome. It's still random, it's almost certainly legit (with regards to the posted odds), but it LOOKS like cheating if you don't know how the internals work. If the people who had written that webpage had bothered to find the "you will win the next pull" variable, they probably would have found that saving state then, then going back and choosing a different option still would have led to a win.
          • going quite OT here but I'm curious if you know where the randomness comes from in casino machines?

            A PRNG without getting some external noise could be easily predicted if you knew the algorithm. Do the machines have a noise source (eg microphone, diode noise circuit, radio receiver) or is it wired to the machine from somewhere?

            Or does it come from measuring button timing? If that were the case then it's interesting that the user still has influence on the outcome in much the same way as an old-fashioned m
            • Actually, I've often wondered myself where the randomness comes from. A PRNG based on the millisecond of the day would be sufficiently random to prevent the player from being able to abuse the system. Even if the initial seed were run for hours at a time, you'd have to watch the machine and count the number of plays..and then the person playing the machine would have to stop playing a short time before the winning number came up for you to make a profit--the payout would have to be greater than the number
      • But, by "adding a level of indirection", as you might say, you're "gambling" on people's reaction to how the stock will perform.

        Gambling on the random roll of a die or on the semi-predictable reaction of people is still gambling. As long as there is a random element, it's gambling. Take boxing, in which years of preparation of a very accessible human precede the fight, which is far less random than racing horses for example. Yet, nobody is likely to argue that betting on the outcome of a boxing match i
    • What's the price of one of these shares? How much does a share in Google cost?

      These are much, much cheaper to get. That would be a fair point.
    • Re:Ironic... (Score:5, Interesting)

      by TheClarkey (546286) on Wednesday August 11, 2004 @07:29AM (#9938445)
      The point is quite simple.

      Your guess and my guess will probably be different due to different influences.

      The theory goes, if you take a large enough sample of opinions from a mixture of sources, tech experts, financial experts, normal people the market prediction (i.e. the average of all the guesses) will be a closer guess than any one single expert.

      It isn't like gambling on a slot machine as a slot machine is pretty much a game of chance and odds.

      I'd suggest that you might find The Wisdom of Crowds [randomhouse.com] by James Surowiecki useful, if your really interested in how these kind of decision markets work.
    • A lot of markets are not based on random data that you assert. Take Commodities such as Wheat. There the price can be based on such things as the amount of sunshine expected. There are some Commodities' Traders who have live weather feeds to price options.

      It's like gambling on someone else playing the slot machine. o.O O.o What's the point?

      So to use your example against you, it's like knowing that a slot machine has a higher payoff if the Casino Air Conditioning temperature falls below a certain point, a

    • Re:Ironic... (Score:4, Insightful)

      by mclearn (86140) on Wednesday August 11, 2004 @07:44AM (#9938528) Homepage
      The stock market is not gambling. This is a myth perpetuated by those who do not understand the stock market, capitalism, or gambling. The fundamental aspect of gambling is that it is a zero sum game. You win, someone else had to lose. You lose, someone else takes your money.

      The stock market on the other hand, has two things going for it: products (or services) are generated as a direct result of investors buying stock, and more importantly, it is not a zero sum game. If you "win" (ie. make money), it does not necessarily mean that someone else "lost" (lost money). Case in point: person X sells 100 shares of a company at P for a profit. Person Y bought the shares from them (simplified) at P+e (e = commission and/or bid/ask spread, etc.). Down the road, person Y sells their shares for Q>(P+e) and in so doing ALSO makes a profit. No one was on the losing side of this situation.

      Of course, there are situations in the market that can result in gambling: people who hold equal, but opposite positions on an instrument (short & long). If the stock goes up, the shorts lose money and the longs win money. If the stock goes down, the longs lose money and the shorts win money. This is one example; others abound, but the case above, still holds.

      Repeat after me: the stock market is *not* gambling.

      • Re:Ironic... (Score:2, Informative)

        by tehcyder (746570)
        The popular use of the word "gamble" is that you take a risk with your own money in the hope of winning some more. So a normal person would say that investing in the stock market is a gamble, as your investment can go down in value, unlike putting the money in a bank.

        Whether there is a technical definition that gambling has to be a zero-sum game or not, the ordinary usage is still valid.

        • Re:Ironic... (Score:3, Interesting)

          by Erwos (553607)
          Going a touch OT here, but "unlike putting the money in a bank" is simply not true.

          For all the faults our country has, our banking system is wonderfully reliable, regulated pretty intelligently, and is one of the few things that should be that way.

          Yet banks _do fail_. That's why they have to be insured by the FDIC. However, you're probably saying "but wait! I've never heard of them failing in the US".

          The simple answer is, when your bank goes bankrupt (or is on the way), instead of having the FDIC bail th
      • (...) No one was on the losing side of this situation.

        I wonder why that many people keep claiming that "nobody loses money" when they get something of value without paying for it. In the example above, person Y obviously took benefit in the trades for little to no effort. And the final buyer obviously lost money since he/she could have bought the same from X, for less.

        Same when you take the train without buying a ticket. You can pretend it didn't cost anyone anything since the train would have been th

      • First of all investors buying stock does not result in products or services generated. It is only if the company is able to sell additional stock and then put it to a good use you might see that happen.
        Second, although stock market is not a true "zero sum" game, it's much closer to that then what you've described. In your example the person who bought the shares last payed for the entire game (up to that point), and if the stock tanks he'll be in the loosing position.
        Finally, I think the post was drawing
      • Holding shares (bonds) is not a zero-sum game. Trading shares, on the other hand, is zero-sum. Everything that you gain by buying a stock, the seller loses. Ergo, the stock market is gambling.
        • There's a response attached to the parent that describes a situation I forgot to include: dividends pay out regardless of whether you sell.
      • And how is that NOT a zero sum game? The 3rd person, who purchased the stocks at Q is, in your example, the looser. If you ignore the long term players - the people looking to gain (or lose) actual stockholder voting power, and/or hoping to collect on dividend payouts, the rest of the market is both zero sum, and gambling.
      • > Repeat after me: the stock market is *not* gambling.

        You made your point but why do have to repeat something after you!?
      • by zogger (617870) on Wednesday August 11, 2004 @08:58AM (#9939015) Homepage Journal
        Simple math, it doesn't take a professional. You seemed to have forgottej to mention that your "winner" person Y had to have someone brand new enter new REAL cash into the market in order for Y to "cash out". That real cash did not come from the market as it stood a second before the cashout, it had to come from outside the market and be introduced into it for the cashout to take place (very broadly speaking but it's true). You forgot that in your details. It's pyramidal, real cash has to be constantly pumped in to it above and beyond the tangible accumulated wealth produced by the goods represented by the actual corporations Service money is a dilution of wealth in the aggregate, hence the name "service". Wealth is a function of ownership of the land, what can be grown or extracted in some manner or form from the land, or what can be manufactured from any combination of the last two. Everything else is a dilution and constitutes wealth production re-arrangement, not wealth production.. If the market wasn't pyramidal, theoretically you could freeze the market one day, at whatever bid price was current,and everyone could do this "cashout" thing, and that's not possible, is it? In fact it might be *at best* a few pennies on the buck in reality, isn't it, right now?

        If what you said was true, the crash of 29-34 would have resulted in "all winners", there wouldn't have been a crash at all, we would have had a perpetual boom cycle. We didn't,did we?

        Here's the proof. When I was a kid, you could literally go into the five and dime (a lot of people have never even seen such a store, I think they are rare now) and buy a nice bundle of real old great depression era stocks as a novelty for one dime, less than a penny apiece. Very pretty, all curleycue scrolled edges, very impressive looking. They probably represented quite a lot of lost money for a lot of investors. They actually did gamble and lose, millions of them, there were only a few big winners.

        No, I won't repeat what you said,because it's not true, I'll say it's an elaborate ponzi scheme that only exists by inducing new suckers into it every friday afternoon. It's not much different from a huge MLM where you have to get people "under you" to actually support you so you don't have to actually produce any true wealth, with the difference being there are much less real products involved than most MLMs which are scussy enough as they are. Theoretical paper contracts as in the article are not much in the way of a real tangible product, they do nothing to help the over all economy, all they do is re-arrange what wealth exists, they produce *nothing*, and the only what it is possible is by shilling newsuckers into it all the time.

        Originally how it was set up it was much closer to being a real "investment", with more at least semi honest quantifiable risk data to use for your assessment if you should invest or not. It is not that way now, or are you forgetting the recent dot bomb phenomenon?

        • had to have someone brand new enter new REAL cash into the market in order for Y to "cash out"

          Ever heard of dividends, Mr. "simple math"? Companies do make profits, and distribute them to shareholders in the form of cold, hard cash.

          This makes the stock market far from the pyramid scheme you describe. In the example above, person Y might buy the security for less than the price that X paid, and X might still be perfectly happy, because X earned a tidy dividend stream while owning the stock over the years.

      • I humbly beg to disagree :

        products (or services) are generated as a direct result of investors buying stock

        This is only true at the IPO or when any newly created stock is issued on the market. After the stock is issued, the company doesn't see a dime on transactions between investors. I'm too lazy to search for it but it once read that the money actually raised on stock market represented a tiny fraction of the transactions volume (far less than 1%). In other words, when 1 billion is exchanged on the
        • First - all slot machines are rigged.

          Second - trading is like playing a slot machine. Buying is really investing in a company. Not dissimilar to buying corporate bonds, although without a fixed return rate. In fact, you can even vote for company directors, etc with your stock and potentially improve its governance.
      • It also is obviously not random, but instead based on group psychology. If a company exceeds expectations for a quarter, prices will go up. If a company doesn't meet expectations, prices go down. The more good press they get, the more prices go up. The more bad press they get (in general), prices go down (though if it falls enough that the stock is considered a 'bargin' people will jump on it again, driving the price up [similarly if it becomes obvious that the company will still turn a profit after the 'ba
      • Repeat after me: the stock market is *not* gambling.

        I see what you're saying, but I'm sorry, to most people it is gambling. The vast majority of personal investors don't know the first thing about how to evaluate a company and therefore determine if the stock price is high/low and likely to fall/rise. These people listen to the "experts" on the news and/or their friends and simply buy what "looks good" to them, on the hopes that the stock price will rise.

        This is effectively gambling. They throw $1000

      • If you "win" (ie. make money), it does not necessarily mean that someone else "lost" (lost money).

        In order for both people to profit in a transaction, money must be created somehow. Either money flowed into the country from some other country (in which case, the other country got poorer), or the government created more money (which will eventually just lead to a devaluation of the dollar anyway).

        In a closed economic system where the government is not synthesizing money out of thin air, what you're talk

    • that these people are pretty much "gambling" on the stock market, something that is pretty much gambling in and of itself.

      This is entirely incorrect. They are creating a futures market for Google before the underlying (Google stock) can be bought or sold. This is extremely useful to investors who want to pin down a price for Google's IPO. For example, let's pretend that I'm a medium sized speculator. From looking at all sorts of data and building my own model, I think that Google's IPO is going to be
    • While I think Google is a great company, if you are thinking of investing you should really look very carefully at what is happening to your money. Please read my earlier [slashdot.org] posts [slashdot.org] on this.

      For each $100 you invest in Google stock, only $5 to $10 directly benefits the actual company Google itself (from your point of view, looking at your percentage of ownership in the company). The rest is in effect a commission that goes to the officers and directors. In effect 90% of your money goes to them! The (no

      • Other than a commission to the underwriters of what, around 3% I think I read, 55% of the money raised will go to Google, the others will go to current stockholders who are selling their own shares.

        All the other stock that already exists won't change a thing. Those people won't get any of the money. The stock they own is already worth whatever the price is going to be, by definition. Only if the stock price shoots up after the IPO will the company be getting less money than it "should" have, and that's

    • It's like gambling on someone else playing the slot machine. o.O O.o What's the point?

      I wish it was like that. If you could gamble on someone else playing slots, all you'd have to do is bet against them, and you'd win most of the time.

    • Re:Ironic... (Score:3, Insightful)

      by goldmeer (65554)
      There is a term that perfectly describes the stock market that for some reason has fallen from common use.

      The current word, folks like to use when describing the purchase of stock is "invest [reference.com]" as in "I am investing in the stock market"

      The term that should be used is "speculate [reference.com]" as in "I am speculating in the stock market"

      You see, if you "invest" in something, you expect to see a profit. If you "speculate" you acknowledge that there is risk involved, but you hope for a profit. I concede that it is a ver

  • Interesting Idea (Score:4, Interesting)

    by lachlan76 (770870) on Wednesday August 11, 2004 @07:23AM (#9938422)
    It's an interesting idea of how to make predictions, because after all, like in real life, a lot of people will vote for someone/not at all because they think everyone else has.

    Kind of like one of those equations in Neural nets. I can't remember it exactly, I think it was something like 1/(e^(-t)*log(t)) that causes more change when the votes are close, and less when it's near the extremes, since with a very high/low buying price, you change people's confidence in that decision.

    I always thought it would be interesting to try it on /., with an uncapped mod limit, but there is a big change around the 2-3 area, but when you get to -1/5, each moderation becomes less of a change. Not really practical though. Wouldn't want to hurt /. servers.
  • by shoppa (464619) on Wednesday August 11, 2004 @07:28AM (#9938439)
    Remember DARPA's terrorism futures? [wired.com]. This can get controversial sometimes. Actually, it's probably good when it's controversial... putting things into dollars gets around all the policitical hyperbole.

    Disclaimers: My PhD advisor was a member of JASON and one of my girlfriends in college was there at the very beginning of the Iowa Electronic Market.

  • Stranded in IEM (Score:2, Informative)

    by grunt107 (739510)
    In early June, Bush enjoyed a commanding lead over Kerry. Since then, Bush's shares have dipped 7 percent, from 55 cents to 51 cents on Tuesday afternoon. Over the same period, Kerry's shares have appreciated 7 percent, from 45.5 cents to 49 cents.

    So who has the controlling shares for each candidate?
  • There are some other electronic markets My favorite are tradesports.com and intrade.com, both of which trade a variety of political and econonomic futures contracts.

    I'm currently wagering that the google IPO will not reach $105.
    • Only problem I have with tradesports is nonexistent liquidity. Combine that with an obscene bid/ask spread (at least on baseball) and I'd say you're better off playing Pinnacle's 8-cent line with high limits and guaranteed liquidity.

      Example: St. Louis @ Florida tonight... Florida to win is 52/51 (bid/ask). That translates to (before commissions) a line of FLA -108/STL +104.

      At the moment, Pinny has FLA -107/STL -101, but you don't need to have anyone fill your order (or more properly, as soon as you fi

      • The difference is that Tradesports is a futures exchange, not a bookmaker. There is good liquidity, it just costs a lot... :)

        I've been following tradesports for almost a year now, and it's continued to grow and the markets are becoming deeper. Over time, more people will "make markets" (aka sell liquidity) and the more who do that the cheaper liquidity will become.
  • $30 BILLION?! (Score:5, Insightful)

    by EmagGeek (574360) <<gterich> <at> <aol.com>> on Wednesday August 11, 2004 @07:48AM (#9938550) Journal
    Hello people... this is not 1999. We're talking about a company whose only product is online advertising - subtle online advertising at that. You're talking about an Internet search engine having a larger market cap than a lot of Dow30 components who actually have shipping product. What makes google so valuable? What is google going to do for money (besides take it from investors) the next time the Internet advertising market evaporates? What dependencies has google created that will keep revenue flowing? How has google diversified to guard against volatility in the Internet markets?

    It's time to start thinknig RATIONALLY about google. Everyone has become so enamored with google that they are overlooking the somewhat minor point that they have zero fundamentals.
    • My prediction on the final and correct market cap for Google?

      ONNNNEEEEE MILLLLLLIIOOOOOOON DOLLLLLLAAARRRRSSSSSS [austinpowers.com]

    • Re:$30 BILLION?! (Score:1, Interesting)

      by Anonymous Coward
      If you get a chance, stop by yahoo.com and see what powers their search engine. Google does other things besides hanging out at google.com. They license their search technology to other companies. Hence.. A PRODUCT is shipped.
      • Right, and the revenue that pays for that licensing technology comes from where? Internet advertising... and the other things that yahoo might do that generate revenue - all of which depend on the survival of the internet market. You bring up a point that makes the picture doubly worse - if the Internet markets go bust again, not only does google lose revenue, but googles customers also lose revenue and may not be able or willing to continue to pay google. The whole point of diversification is to get into o
    • Google has for many the only respected advertising model on the internet. In my entire life i have only ever clicked on google ads. They're pretty noticable too especially when you start talkin crazy ass hoe y'all in some gmail and the suggested ad comes up as poof daddy. Google is also the most visited site in the world - thats gotta be worth something? Did i mention they sell page ranks? Also gmail is gonna take off in a big way, people are going to get sick of hotmail, its slow, clunky, and has a poor in
    • Actually advertising is not Google's only product. Google also sells services based on its search technology [google.com] to companies.

      On their website you can find a some of their customers [google.com] and there are pretty big players in that list.

      • Re:$30 BILLION?! (Score:1, Interesting)

        by Anonymous Coward
        But the point isn't how many services they offer that make money.

        A companies value is based at least partially on how many real-world assets they posses (ie server farms), and how much profit potential they have.

        Compare and contrast assets and profits and "company value" on fortune 500 companies.

        Then do the same thing on dotcoms from 5 years back, and then on google.

        Irrational Exuberance is the term Alan Greenspan used.
    • You mention real companies. But real companies are settled. The margins are becoming so tiny as to be almost non-existent. Supermarkets make fractions of a cent on certain products. The most striking is that there is more profit margin on the packing material of harddisks then on the platters.

      Shipping, storage, handling, packaging all costs heaps and heaps of money and there really are no more ways to save. But what if you don't need any of that? Google doesn't have to deal with dockworkers strikes, faulty

    • Considering Google probably gets a billion hits a day, easily, that's 365 billion hits a year. If you guess that each ad impression nets Google one cent, that's $3.65 billion a year just in advertising revenue.

      Not to mention the value of the technology and know-how of the top people working on the Google search engine. How much is that worth? Well, in a free market, it's worth what people are willing to pay for it. In this case, we're looking at around $30 billion for the entire company.

      I assert that if

    • "zero fundamentals"? Is Google playing for the NBA now? :-)

      Google doesn't sell physical products. That doesn't mean they have "zero fundamentals". That doesn't make them inherently inferior to firms in the Dow 30 index. Otherwise, someone will have to argue that any information commodity Google can bring to the market will eventually have no value to consumers.

      Has the Internet advertising market picked up THAT MUCH since the crash that we're in danger of another crash?

      --Michael Spencer
    • Define rational please....

      For instance, is it rational to buy a share of google for $300, if there is a 90% chance that it will be going for $400 tomorrow? I'd say yes, regardless of their fundamentals.
    • Actually Google makes money hand-over-fist on their search servers they sell to other companies.
  • Here [slashdot.org] a similar program is considered something that would never work.
    Yet the messages on this topic consider it system for accuratly predicting how things will go.
    • You make a very valid point, the two ideas are in fact one in the same.

      I really thought DARPA's PAM project was a novel and perhaps useful tool. However, I think the acceptance of this idea, yet the rejection of PAM comes down to a few key points:
      • In this case, we're using a market to predict the behavior of investors in a different market (ultimately attempting to predict how the *parent* market behaves, if you'll permit such bastardized terminology.) This idea does not seem terribly radical to most pe
  • by Anonymous Coward on Wednesday August 11, 2004 @08:37AM (#9938857)
    MIT Technology Review's futures trading marketplace, Innovation Futures [innovationfutures.com], has a comparable Google IPO Watch [innovationfutures.com], predicting when Google will go public [innovationfutures.com], what its market cap will be [innovationfutures.com], and how that will compare to Yahoo!'s market cap [innovationfutures.com]. Traders on Innovation Futures are also predicting a cap of $30-35B, but it is by no means a majority. A significant number are still holding on to $25-30B. The site also has a number of other markets dealing with VC and IPOs, Economy and Growth [innovationfutures.com], and trends in technology
  • They are trying to sell a non-controlling 10% of their business for 3B$ while they have given away the same amount, AND 'FORGOT' THAT THEY DID.

    Playing fast and loose with other peoples money is a recipe for disaster. Anyone buying GOOG shares should know that his money goes directly into unclean hands.

    I'm wondering how many will get burned on this scam.

    How much you may appreciate Google's search service now, this is a different ball game and as an outsider you have no idea how it's played. Stay away. My
  • So when someone places a large bet on the next terrorist attack (or terror alert level rising) is a background check required?

    A market liket that sounds like a good idea, but insider trading could become a widespread problem ;)

  • by e-gold (36755) <jray@martMENCKENincam.com minus author> on Wednesday August 11, 2004 @09:17AM (#9939154) Homepage Journal
    Ladbroke's sportsbook [ladbrokes.com]. (I always hit this one and ignore the Gallup/Roper bullcrap!)
    JMR
  • The price will go up, insiders will dump their stock; the price will go down. Then in about six months there will be a half-dozen more ex-dot-com'ers on World Poker Tour. Six months after that, three new B&B's will be opened up in the New England area by some more ex-Google employees. Oh and Aerosmith will play at one of their birthday parties. A year from now, nobody will care and the stock will be at $11.
  • The first market, GOOGLE_LIN, trades contracts with liquidation values linearly dependent on the market cap. The second, GOOGLE_WTA, trades six unique and exhaustive contracts in a winner-takes-all market.

    My cat's breath smells like cat-food.

There is no royal road to geometry. -- Euclid

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