Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

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invst65
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Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by invst65 » Mon Mar 19, 2018 5:29 pm

https://www.cnbc.com/2018/03/19/faceboo ... e-day.html

Geesh! Headlines like this really get my goat for dishonest reporting.

Are you telling me that Mark Zuckerberg sold all of his stock in Facebook when the stock price went down and thus locked in a 6.06 billion dollar loss to his portfolio?

jehovasfitness
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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by jehovasfitness » Mon Mar 19, 2018 5:31 pm

More importantly it's a loss for most of our portfolios

wolf359
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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by wolf359 » Mon Mar 19, 2018 5:33 pm

Eh, lose a billion here, a billion there. Eventually we'll be talking about some real money.

The fun of attention grabbing headlines. Tune out the noise.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by flyingaway » Mon Mar 19, 2018 7:49 pm

I bet that he did not sell any shares today. So he did not lose anything.

alter
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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by alter » Mon Mar 19, 2018 7:55 pm

Facebook is way overvalued, and users are leaving in droves. Expect that it drops more.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by Helo80 » Mon Mar 19, 2018 8:02 pm

flyingaway wrote:
Mon Mar 19, 2018 7:49 pm
I bet that he did not sell any shares today. So he did not lose anything.
He was selling last week before the news hit.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by MotoTrojan » Mon Mar 19, 2018 8:03 pm

Do you also scoff at headlines discussing Bezos taking over Gates as wealthiest person? Neither could feasibly liquidate $XXB without crashing their businesses.

With the risk of single stocks I don’t discount this being a real loss.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by triceratop » Mon Mar 19, 2018 8:46 pm

MotoTrojan wrote:
Mon Mar 19, 2018 8:03 pm
Do you also scoff at headlines discussing Bezos taking over Gates as wealthiest person? Neither could feasibly liquidate $XXB without crashing their businesses.

With the risk of single stocks I don’t discount this being a real loss.
Of course they could liquidate that without crashing their business. Berkshire for one does real business in the real economy. I suspect their book value would not change at all. Of course Buffett himself might take a haircut in market price becoming depressed because of market impact. That’s different than the value of the business though.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by Geno » Mon Mar 19, 2018 9:00 pm

It couldn't happen to a nicer guy.
If you are successful, you will win some false friends and some true enemies; Succeed anyway.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by sketchy9 » Mon Mar 19, 2018 11:19 pm

Great TLH opportunity! 8-)

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by Nicolas » Mon Mar 19, 2018 11:46 pm

He didn't need the money. By the way, so glad I never joined FB.
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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by mega317 » Tue Mar 20, 2018 4:09 am

There is no such thing as paper losses, at least as a separate entity from real losses. At any time you can exchange from stocks to cash or back. Plus the price may never recover before you do need to sell.

How about a personal example. Let's say you are completely new to investing and don't know a darn thing, so you act on some bad advice and put it all on Cisco and JDS Uniphase. In 2000. I'm sure glad I didn't lose anything.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by rob65 » Tue Mar 20, 2018 6:24 am

I’m not sure this is just noise for FB; I think there is a real existential threat from rising privacy concerns. I don’t think FB has yet diversified it’s business in the same way that Amazon and Google have; FB seems much more dependent on it’s core product. It’s also very easy for online platforms to be replaced by new platforms - AOL keywords: MySpace, Yahoo
Last edited by rob65 on Tue Mar 20, 2018 3:19 pm, edited 1 time in total.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by Whakamole » Tue Mar 20, 2018 9:39 am

Who cares?

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by UpperNwGuy » Tue Mar 20, 2018 9:52 am

Whakamole wrote:
Tue Mar 20, 2018 9:39 am
Who cares?
I care. The primary component of my portfolio is the Vanguard Total Stock Market Index Fund, and 1.5% of that fund is Facebook. If Mark Zuckerberg loses, I lose, too.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by lostdog » Tue Mar 20, 2018 9:54 am

alter wrote:
Mon Mar 19, 2018 7:55 pm
Facebook is way overvalued, and users are leaving in droves. Expect that it drops more.
If they're leaving, where are they going for social media?
Financial independence is the best revenge.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by jrbdmb » Tue Mar 20, 2018 10:00 am

lostdog wrote:
Tue Mar 20, 2018 9:54 am
alter wrote:
Mon Mar 19, 2018 7:55 pm
Facebook is way overvalued, and users are leaving in droves. Expect that it drops more.
If they're leaving, where are they going for social media?
They don't necessarily have to go anywhere.

I've found that the days I use social media like Facebook are not appreciably better than the days i don't use social media. Others may also find that social media is not required to function in the world.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by Whakamole » Tue Mar 20, 2018 10:22 am

UpperNwGuy wrote:
Tue Mar 20, 2018 9:52 am
Whakamole wrote:
Tue Mar 20, 2018 9:39 am
Who cares?
I care. The primary component of my portfolio is the Vanguard Total Stock Market Index Fund, and 1.5% of that fund is Facebook. If Mark Zuckerberg loses, I lose, too.
Then you care about Facebook's slide. I'm not sure how much I care about one company in a broad index. Lots of companies in the top 10 holdings of VTSAX have tumbled at various points. I think GE was there at one point. Wonderful thing about investing in the broad market, we are diversified and if there is a challenger to Facebook, we will be owning that too.

But Zuckerberg - I'd say again, who cares if he lost money? I'd say the same about Bezos, Buffett, Gates, etc. Not my concern.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by MotoTrojan » Tue Mar 20, 2018 11:02 am

triceratop wrote:
Mon Mar 19, 2018 8:46 pm
MotoTrojan wrote:
Mon Mar 19, 2018 8:03 pm
Do you also scoff at headlines discussing Bezos taking over Gates as wealthiest person? Neither could feasibly liquidate $XXB without crashing their businesses.

With the risk of single stocks I don’t discount this being a real loss.
Of course they could liquidate that without crashing their business. Berkshire for one does real business in the real economy. I suspect their book value would not change at all. Of course Buffett himself might take a haircut in market price becoming depressed because of market impact. That’s different than the value of the business though.
Their market cap, my apologies. Which long term for high growth companies will impact the business as capital is harder/more expensive to raise.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by willthrill81 » Tue Mar 20, 2018 11:04 am

mega317 wrote:
Tue Mar 20, 2018 4:09 am
There is no such thing as paper losses, at least as a separate entity from real losses. At any time you can exchange from stocks to cash or back. Plus the price may never recover before you do need to sell.

How about a personal example. Let's say you are completely new to investing and don't know a darn thing, so you act on some bad advice and put it all on Cisco and JDS Uniphase. In 2000. I'm sure glad I didn't lose anything.
:thumbsup

If we say that paper losses aren't real, does that mean that those who still have Enron stock certificates that they didn't sell haven't lost anything? :wink:
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by UpperNwGuy » Tue Mar 20, 2018 12:04 pm

Whakamole wrote:
Tue Mar 20, 2018 10:22 am
UpperNwGuy wrote:
Tue Mar 20, 2018 9:52 am
Whakamole wrote:
Tue Mar 20, 2018 9:39 am
Who cares?
I care. The primary component of my portfolio is the Vanguard Total Stock Market Index Fund, and 1.5% of that fund is Facebook. If Mark Zuckerberg loses, I lose, too.
Then you care about Facebook's slide. I'm not sure how much I care about one company in a broad index. Lots of companies in the top 10 holdings of VTSAX have tumbled at various points. I think GE was there at one point. Wonderful thing about investing in the broad market, we are diversified and if there is a challenger to Facebook, we will be owning that too.

But Zuckerberg - I'd say again, who cares if he lost money? I'd say the same about Bezos, Buffett, Gates, etc. Not my concern.
Not your concern, but it is my concern, so I care.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by TareNeko » Tue Mar 20, 2018 12:08 pm

Well, he deserves worse.. Greed of this company is pushing moral values.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by Hyperborea » Tue Mar 20, 2018 12:31 pm

lostdog wrote:
Tue Mar 20, 2018 9:54 am
alter wrote:
Mon Mar 19, 2018 7:55 pm
Facebook is way overvalued, and users are leaving in droves. Expect that it drops more.
If they're leaving, where are they going for social media?
Facebook isn't cool anymore for young people because Grandma is on there to see their drunk party pics. They are leaving for sites like Snapchat.
"Plans are worthless, but planning is everything." - Dwight D. Eisenhower

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by willthrill81 » Tue Mar 20, 2018 12:34 pm

Hyperborea wrote:
Tue Mar 20, 2018 12:31 pm
lostdog wrote:
Tue Mar 20, 2018 9:54 am
alter wrote:
Mon Mar 19, 2018 7:55 pm
Facebook is way overvalued, and users are leaving in droves. Expect that it drops more.
If they're leaving, where are they going for social media?
Facebook isn't cool anymore for young people because Grandma is on there to see their drunk party pics. They are leaving for sites like Snapchat.
I heard someone make that prediction back around 2011. Obviously, that prediction was early, but I think that that is beginning to come true. FB is losing ground to its hipper competitors.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by Ancal » Tue Mar 20, 2018 12:44 pm

Hyperborea wrote:
Tue Mar 20, 2018 12:31 pm

Facebook isn't cool anymore for young people because Grandma is on there to see their drunk party pics. They are leaving for sites like Snapchat.
Take a look at SNAP's stock chart since it went public last spring.

Snapchat is in trouble. Facebook basically copied all its functionality into Instagram. That's Facebook's real value to under-25s.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by peterinjapan » Tue Mar 20, 2018 1:14 pm

Facebook is a ridiculous buy now.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by ReformedSpender » Tue Mar 20, 2018 1:22 pm

peterinjapan wrote:
Tue Mar 20, 2018 1:14 pm
Facebook is a ridiculous buy now.
Relative to what? Valuation currently sits at half a trillion dollars for a social media platform. For reference Twitter sits at $25B


:beer
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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by willthrill81 » Tue Mar 20, 2018 1:55 pm

peterinjapan wrote:
Tue Mar 20, 2018 1:14 pm
Facebook is a ridiculous buy now.
Image
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by invst65 » Tue Mar 20, 2018 3:11 pm

willthrill81 wrote:
Tue Mar 20, 2018 11:04 am
mega317 wrote:
Tue Mar 20, 2018 4:09 am
There is no such thing as paper losses, at least as a separate entity from real losses. At any time you can exchange from stocks to cash or back. Plus the price may never recover before you do need to sell.

How about a personal example. Let's say you are completely new to investing and don't know a darn thing, so you act on some bad advice and put it all on Cisco and JDS Uniphase. In 2000. I'm sure glad I didn't lose anything.
:thumbsup

If we say that paper losses aren't real, does that mean that those who still have Enron stock certificates that they didn't sell haven't lost anything? :wink:
We should probably start calling them digital losses. Personally, I've never even seen a stock certificate. Does anybody here have one?

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by fortyofforty » Tue Mar 20, 2018 9:49 pm

invst65 wrote:
Tue Mar 20, 2018 3:11 pm
willthrill81 wrote:
Tue Mar 20, 2018 11:04 am
mega317 wrote:
Tue Mar 20, 2018 4:09 am
There is no such thing as paper losses, at least as a separate entity from real losses. At any time you can exchange from stocks to cash or back. Plus the price may never recover before you do need to sell.

How about a personal example. Let's say you are completely new to investing and don't know a darn thing, so you act on some bad advice and put it all on Cisco and JDS Uniphase. In 2000. I'm sure glad I didn't lose anything.
:thumbsup

If we say that paper losses aren't real, does that mean that those who still have Enron stock certificates that they didn't sell haven't lost anything? :wink:
We should probably start calling them digital losses. Personally, I've never even seen a stock certificate. Does anybody here have one?
Not active ones. I have some collectible types I received for asking the best questions during a radio call-in show many years ago. They are nice looking, but I never bothered to have them properly framed for hanging.
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | Original Vanguard Diehard

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by investorpeter » Tue Mar 20, 2018 10:18 pm

The experience of using Facebook has changed. It used to be a convenient way to keep in touch with friends and family. Now it is an endless stream of ads, "viral videos" that we have all seen multiple times, and click bait. The interesting posts are drowned out by all the noise. Facebook feels like Times Square in NYC - everyone and everything from every direction is trying to get your attention for just a few seconds.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by fennewaldaj » Wed Mar 21, 2018 1:53 am

invst65 wrote:
Tue Mar 20, 2018 3:11 pm
willthrill81 wrote:
Tue Mar 20, 2018 11:04 am
mega317 wrote:
Tue Mar 20, 2018 4:09 am
There is no such thing as paper losses, at least as a separate entity from real losses. At any time you can exchange from stocks to cash or back. Plus the price may never recover before you do need to sell.

How about a personal example. Let's say you are completely new to investing and don't know a darn thing, so you act on some bad advice and put it all on Cisco and JDS Uniphase. In 2000. I'm sure glad I didn't lose anything.
:thumbsup

If we say that paper losses aren't real, does that mean that those who still have Enron stock certificates that they didn't sell haven't lost anything? :wink:
We should probably start calling them digital losses. Personally, I've never even seen a stock certificate. Does anybody here have one?
I had a stock certificate for the shares I had in a very small local private bank. They recently sold to a somewhat larger bank and now shares are no longer represented by a certificate.

DanMahowny
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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by DanMahowny » Wed Mar 21, 2018 7:27 am

FB is worth more than Coke, Pepsi, and McDonalds combined. Ridiculous, if you ask me.

FB is in trouble NOT because of the recent scandal, but because FB sucks. Eventually, people will figure this out.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by willthrill81 » Wed Mar 21, 2018 11:44 am

DanMahowny wrote:
Wed Mar 21, 2018 7:27 am
FB is worth more than Coke, Pepsi, and McDonalds combined. Ridiculous, if you ask me.
I'm inclined to agree. It's an example of why I'm not a fan of market-cap weighting. IMO, it's a popularity contest more than anything else, and research has shown that there are more effective (i.e. higher return) ways to index a market (e.g. equal weighting).

That being said, we've been moving from a 'tangible' economy to an 'intangible' one for a long time. FB may go away, but this trend isn't likely to change.
Last edited by willthrill81 on Wed Mar 21, 2018 11:50 am, edited 1 time in total.
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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by Glockenspiel » Wed Mar 21, 2018 11:48 am

lostdog wrote:
Tue Mar 20, 2018 9:54 am
alter wrote:
Mon Mar 19, 2018 7:55 pm
Facebook is way overvalued, and users are leaving in droves. Expect that it drops more.
If they're leaving, where are they going for social media?
Snapchat, Instagram, and others. Most teenagers these days don't even have a Facebook account.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by fiskalisch gesinnt » Wed Mar 21, 2018 12:17 pm

Snapchat, Instagram, and others. Most teenagers these days don't even have a Facebook account.
[/quote]

Exactly. Facebook is for old(er) individuals. My kids, nor any of their teen friends use Facebook. Currently they use Instagram, tomorrow it will be the next trendy source.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by Hustlinghustling » Wed Mar 21, 2018 1:34 pm

Glockenspiel wrote:
Wed Mar 21, 2018 11:48 am
lostdog wrote:
Tue Mar 20, 2018 9:54 am
alter wrote:
Mon Mar 19, 2018 7:55 pm
Facebook is way overvalued, and users are leaving in droves. Expect that it drops more.
If they're leaving, where are they going for social media?
Snapchat, Instagram, and others. Most teenagers these days don't even have a Facebook account.
instagram is owned by FB too.

invst65
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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by invst65 » Thu Mar 22, 2018 4:04 pm

willthrill81 wrote:
Tue Mar 20, 2018 11:04 am
mega317 wrote:
Tue Mar 20, 2018 4:09 am
There is no such thing as paper losses, at least as a separate entity from real losses. At any time you can exchange from stocks to cash or back. Plus the price may never recover before you do need to sell.

How about a personal example. Let's say you are completely new to investing and don't know a darn thing, so you act on some bad advice and put it all on Cisco and JDS Uniphase. In 2000. I'm sure glad I didn't lose anything.
:thumbsup

If we say that paper losses aren't real, does that mean that those who still have Enron stock certificates that they didn't sell haven't lost anything? :wink:
The final arbiter of what represents a "real" loss comes at tax time and is spelled out by the IRS. Unless Mr. Zuckerberg's advisers suggest that he sell all of his stock for TLH purposes I don't think he will be able to claim a $6.06 billion dollar capital loss. Holders of Enron stock certificates - that's a different story because the paper became worthless when the company went bankrupt (as far as I know any way). If you held Enron in a mutual fund however, you would still be SOL.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by alfaspider » Thu Mar 22, 2018 4:26 pm

invst65 wrote:
Thu Mar 22, 2018 4:04 pm
willthrill81 wrote:
Tue Mar 20, 2018 11:04 am
mega317 wrote:
Tue Mar 20, 2018 4:09 am
There is no such thing as paper losses, at least as a separate entity from real losses. At any time you can exchange from stocks to cash or back. Plus the price may never recover before you do need to sell.

How about a personal example. Let's say you are completely new to investing and don't know a darn thing, so you act on some bad advice and put it all on Cisco and JDS Uniphase. In 2000. I'm sure glad I didn't lose anything.
:thumbsup

If we say that paper losses aren't real, does that mean that those who still have Enron stock certificates that they didn't sell haven't lost anything? :wink:
The final arbiter of what represents a "real" loss comes at tax time and is spelled out by the IRS. Unless Mr. Zuckerberg's advisers suggest that he sell all of his stock for TLH purposes I don't think he will be able to claim a $6.06 billion dollar capital loss. Holders of Enron stock certificates - that's a different story because the paper became worthless when the company went bankrupt (as far as I know any way). If you held Enron in a mutual fund however, you would still be SOL.
The the tax rules are written by Congress, not the IRS. I suppose the "final' arbiter of when a loss is recognized would be the federal courts, but I digress...

Tax has two separate (but related) concepts- realization and recognition. You can realize a loss without it being recognized. You would realize a loss when you sell a stock in your IRA, but there is no recognition event for tax purposes. Likewise, you might recognize a gain on a real estate investment after it is realized. For example, if you did a 1031 exchange for another appreciated property, then sold the new property at a later date for the same FMV as the one you exchanged earlier. The tax treatment is independent from the economic reality.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by invst65 » Thu Mar 22, 2018 4:41 pm

alfaspider wrote:
Thu Mar 22, 2018 4:26 pm
invst65 wrote:
Thu Mar 22, 2018 4:04 pm
willthrill81 wrote:
Tue Mar 20, 2018 11:04 am
mega317 wrote:
Tue Mar 20, 2018 4:09 am
There is no such thing as paper losses, at least as a separate entity from real losses. At any time you can exchange from stocks to cash or back. Plus the price may never recover before you do need to sell.

How about a personal example. Let's say you are completely new to investing and don't know a darn thing, so you act on some bad advice and put it all on Cisco and JDS Uniphase. In 2000. I'm sure glad I didn't lose anything.
:thumbsup

If we say that paper losses aren't real, does that mean that those who still have Enron stock certificates that they didn't sell haven't lost anything? :wink:
The final arbiter of what represents a "real" loss comes at tax time and is spelled out by the IRS. Unless Mr. Zuckerberg's advisers suggest that he sell all of his stock for TLH purposes I don't think he will be able to claim a $6.06 billion dollar capital loss. Holders of Enron stock certificates - that's a different story because the paper became worthless when the company went bankrupt (as far as I know any way). If you held Enron in a mutual fund however, you would still be SOL.
The the tax rules are written by Congress, not the IRS. I suppose the "final' arbiter of when a loss is recognized would be the federal courts, but I digress...

Tax has two separate (but related) concepts- realization and recognition. You can realize a loss without it being recognized. You would realize a loss when you sell a stock in your IRA, but there is no recognition event for tax purposes. Likewise, you might recognize a gain on a real estate investment after it is realized. For example, if you did a 1031 exchange for another appreciated property, then sold the new property at a later date for the same FMV as the one you exchanged earlier. The tax treatment is independent from the economic reality.
Okay, the next time I have a question about the tax rules I'll consult my congressman to see if he differs with those published by the IRS and then I'll ignore the IRS.

As the OP in this thread I'm going to stick with my assertion that the "Facebook slide" didn't "cost" the young Mr. Zuckerburg anything and that it was just an interesting headline to get people's attention.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by Old Guy » Thu Mar 22, 2018 8:54 pm

wolf359 wrote:
Mon Mar 19, 2018 5:33 pm
Eh, lose a billion here, a billion there. Eventually we'll be talking about some real money.
Thank you Senator Dirksen for one of the all time great quotes.

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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by Afty » Thu Mar 22, 2018 8:58 pm

That's one heck of a car he could buy, per Livesoft's Rule.

alfaspider
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Re: Facebook's slide cost Mark Zuckerberg $6.06 billion in one day

Post by alfaspider » Fri Mar 23, 2018 7:12 am

invst65 wrote:
Thu Mar 22, 2018 4:41 pm
alfaspider wrote:
Thu Mar 22, 2018 4:26 pm
invst65 wrote:
Thu Mar 22, 2018 4:04 pm
willthrill81 wrote:
Tue Mar 20, 2018 11:04 am
mega317 wrote:
Tue Mar 20, 2018 4:09 am
There is no such thing as paper losses, at least as a separate entity from real losses. At any time you can exchange from stocks to cash or back. Plus the price may never recover before you do need to sell.

How about a personal example. Let's say you are completely new to investing and don't know a darn thing, so you act on some bad advice and put it all on Cisco and JDS Uniphase. In 2000. I'm sure glad I didn't lose anything.
:thumbsup

If we say that paper losses aren't real, does that mean that those who still have Enron stock certificates that they didn't sell haven't lost anything? :wink:
The final arbiter of what represents a "real" loss comes at tax time and is spelled out by the IRS. Unless Mr. Zuckerberg's advisers suggest that he sell all of his stock for TLH purposes I don't think he will be able to claim a $6.06 billion dollar capital loss. Holders of Enron stock certificates - that's a different story because the paper became worthless when the company went bankrupt (as far as I know any way). If you held Enron in a mutual fund however, you would still be SOL.
The the tax rules are written by Congress, not the IRS. I suppose the "final' arbiter of when a loss is recognized would be the federal courts, but I digress...

Tax has two separate (but related) concepts- realization and recognition. You can realize a loss without it being recognized. You would realize a loss when you sell a stock in your IRA, but there is no recognition event for tax purposes. Likewise, you might recognize a gain on a real estate investment after it is realized. For example, if you did a 1031 exchange for another appreciated property, then sold the new property at a later date for the same FMV as the one you exchanged earlier. The tax treatment is independent from the economic reality.
Okay, the next time I have a question about the tax rules I'll consult my congressman to see if he differs with those published by the IRS and then I'll ignore the IRS.

What your congressman thinks the rules say is irrelevant. The rules are in the tax code, which congress writes, and the IRS cannot ignore them. If they do, a court will overturn them.

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