Regular readers of this missive might recall that almost exactly 2 years ago, we discussed the initial public offering (IPO) of what is today one of the largest companies in the world. To refresh your memory, one of us bought stock in the company, and the other did not.
This week, that company’s founder turns age 30 (right, t-h-i-r-t-y). As you’ll read in the attached, he is one of the world’s richest men. Not bad for a few years out of college! But there’s more going on now with him than perhaps ever before.
We think you’ll enjoy this week’s take on sudden wealth, sudden generosity, and what could be an even brighter future for him and his company.
Best always,
Lee and Jeremy
P.S. It was a very interesting week in the markets as well, and you’ll read about them in detail. L & J
This Week’s Quote:
“Serving more people, increasing your customer base and making them more deeply engaged is by itself good business.”
― Mark Zuckerberg
JL Davis Thoughts This Week:
When Mark Zuckerberg turns 30 this week, it will not only culminate an amazing 10 years, but it may well be the beginning of an even more remarkable decade.
Astute readers of the Weekly Update will recognize this week’s quote from almost exactly 2 years ago. That week, we took a look at Facebook’s initial public offering. In the IPO, shares were priced at $35.
In fact, you may remember that Jeremy acquired some of the stock at that time, while Lee did not. More on that in a moment.
Whether one thinks well or ill of Zuckerberg and Facebook, it cannot be denied that the financial results for both have been impressive. In the case of Facebook, the share price is up over 130% in the last 18 months according to Forbes. For Zuckerberg, his personal net worth has surged from near zero to over $25 billion in just over a decade. That’s not just impressive, it’s astounding.
Making money is one thing; giving it away is quite another. In that department, Zuckerberg is quickly catching up. In 2010, it was reported that he donated over $100 million to the Newark Public Schools. Later that year, he signed the Giving Pledge (established by Warren Buffett) in which he promised to donate to charity at least half of his wealth over time. More recently, last December, he announced a donation of 18 million Facebook shares to the Silicon Valley Community Foundation which was the largest charitable gift on public record for the year. At the time, the value was nearly $1 billion.
Yet remarkably, the next decade may be even bigger and brighter. Mr. Zuckerberg is quoted as saying (essentially) that he believes mobile technology will dominate the future, and in his comments as a keynote speaker at the recently concluded Mobile World Congress, it’s clear he intends Facebook to play a leading role. His comments about “monetizing” the sector were quite interesting to investors, who seem to be embracing Facebook more than ever.
So we at J. L. Davis would like to wish Mr. Zuckerberg a very happy birthday. America has an uncanny way of producing vast wealth through men and women of enormous vision and fortitude. Mr. Zuckerberg has displayed both. Equally important, he is currently displaying the same type of charitable proclivity that his forebears such as John Rockefeller, Andrew Carnegie, J. Paul Getty, Warren Buffett, and Bill Gates have. That’s pretty good company.
Oh yes, and that Facebook stock? While we prefer widely diversified portfolios for ourselves and our clients and do not generally recommend individual securities (nor are we recommending Facebook necessarily), as of Friday Jeremy notes that Facebook was selling for some $56 per share.**
Lee and Jeremy
http://www.forbes.com/profile/mark-zuckerberg/
http://en.wikipedia.org/wiki/Mark_Zuckerberg
http://topics.nytimes.com/top/reference/timestopics/people/z/mark_e_zuckerberg/index.html
Market Week: May 12, 2014
The Markets
A fresh closing high on the Dow on Friday finally enabled it to edge back into positive territory for the year, while the S&P 500 ended the week basically flat. However, after the prior week's respite from selling pressure, the Nasdaq and the small caps of the Russell 2000 returned to their recent losing ways.
Last Week's Headlines
• Growth in the U.S. services sector accelerated in April. The Institute for Supply Management's gauge rose 2.1% to 55.2%. It was the 51st straight month of growth.
• Greater demand overseas for U.S. exports of natural gas and oil as well as aircraft helped cut the U.S. trade deficit by 3.6% in March, according to the Commerce Department. Exports were up 2.2%, while imports also rose 1.7% to their highest level in two years.
• Federal Reserve Chair Janet Yellen told a congressional committee that the Fed sees a rebound in the economy from winter's weather-induced slump, but that low inflation and slack in the housing and labor markets will most likely continue to permit interest rates to remain near zero for some time.
• Yet another data point from the Federal Reserve confirmed winter's impact on the economy during Q1. Business productivity slumped at an annualized rate of 1.7%, a far cry from the previous quarter's 2.3% increase. However, productivity was 1.4% ahead of Q1 2013. Even though workers put in more hours during the quarter, reduced output helped push unit labor costs up 4.2% for the quarter.
• The European Central Bank once again left its key interest rate unchanged at 0.25% and said that ongoing low inflation might lead to stimulus measures next month, especially if the situation in Ukraine worsens.
Eye on the Week Ahead
With the bulk of Q1 earnings reports now in the rear-view mirror, investors will have to look to manufacturing and retail reports in both the United States and China for guidance. Inflation at both the consumer and wholesale levels is expected to remain subdued, while housing starts could show whether the housing market is emerging from its winter doldrums.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.
Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2014
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