Thursday, May 19, 2011

The trade we probably would have taken and a few thoughts LNKD

We’re not sure how realistic it is to “imagine”  how we actually would have responded to the trade but we’re pretty consistent in how we trade so this is probably a good version of what would have happened.    At first we were very grateful for not having short shares available  (108-122 would have been very painful for at least a few trades) but then on reversal post 122 we were cursing not having shares available to short.   Would the profits from the post-reversal pay for the losses of the 108-122 run?  No idea.  This is just a fun exercise.
The run from 108-122 was incredible considering that it was not a short squeeze.   Lesson here: never underestimate people’s greed nor stupidity.

Click to see notes 1-4:

Glad the market closed and we don’t have to imagine pain/pleasure in it anymore (for today at least).  And for those young bulls who think that old-schoolers don’t understand the new paradigm of social media…. you’re wrong.  Earnings are still earnings.   We learned that lesson the hard way (via fiber optic stocks) back in the last tech bubble and now you’ll learn your lesson in the new social media bubble.     There will always be a few standouts (Amazon a great example) but our feeling is that this isn’t one of them.   Either way, short term, whoever bought the open won big time.  Kudos.

Further Reading:  nice short rational piece on LNDK run today by Paul Kedrosky here

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