Facebook Could Be A $1 Trillion Stock

I think Facebook (FB) has the potential to be a the first trillion dollar market cap stock, the key word being potential. Facebook is the social media platform stock. And in my opinion social media is the platform upon which we will do business and govern ourselves in the future.

Yes, that future is several years from now. But still right now my understanding is that about 5% of the almost billion Facebook users are online each and every day. And most Facebook users are lots younger than me. Will Facebook achieve its potential? Time will tell. For right now, I am willing to have Facebook be 2% to 3% of my portfolio.
 
As past videos can tell you, I had been expecting that the overall market would sell-off up to the Facebook offering. I was also expecting that stocks and gold would rally after the deal came.

So far that is what has happened. I also said that the rally in stocks could be rapid but also short lived. The real worry is that so far in May companies are selling many more shares than they are buying and that is very bearish. Why is that very bearish you ask? Companies buying of more shares than they had been selling was the only source of new money with which to buy stocks since the end of QE2 almost a year ago now. Therefore, if company buying does not pick up over the near term, I expect I will double my shorts in a week or so.
 
Currently the US economy has started to slow. We look at real time withheld income and employment taxes paid daily to the US Treasury to determine wages and salaries. And currently wage and salary growth before inflation has dropped below 3% year over year from a high of around 4% earlier this year. With income growth below 3%, then depending upon the rate of inflation you use, wages and salaries are at best growing fractionally and at worst losing the inflation battle.
 
The real worry about the global economy is China. China’s growth has been the reason d’etre to be bullish by the bulk of the buy side. If China cannot manage a rebound soon, then all long bets go off.
Finally, each Biderman’s Market Picks will give you a recap of my investment ideas expressed in percentage terms using a $100,000 model portfolio as a starting point. For the record, I might use margin at times in the future.
 
What follows is my total portfolio holdings, although the percentages I hold at any one time could be at variance from the model portfolio. Going forward, I will track my model portfolio results and report all trades weekly in BMP. For the record, I am not recommending anyone invest in anything. What I am offering is my opinion on the markets, the economy and how I invest. If my opinion is worth the price, please buy Biderman’s Market Picks. In the next issue of which you will have to pay for, I will go into the whys and what I think about each position currently.
 
As of yesterday about 22% of my portfolio is in five US stocks. Specifically my largest holding is Apple (AAPL), then TrimTabs Float Shrink ETF (TTFS), Salesforce.com (CRM), Amazon.com (AMZN)followed by Facebook.
 
For disclosure purposes, I am the portfolio manager of TTFS. Even though I am short term bearish on energy prices, I still have 1.7% in Oxy Pete, basically to have something at stake in the energy arena because longer term I am certainly bullish on oil and natural gas prices in dollar terms.
 
Then I have a 30% stake in gold and silver, divided currently 85% gold and 15% silver. For pricing in this portfolio I will be using the spot price of a one ounce bar of gold and silver. I don’t think I have to tell this audience why I am long such a high percentage gold and silver.
 
I am short about 18% of my portfolio. The largest two largest shorts are SEF, ProShares' short financial ETF and EFZ, ProShares' short Europe ETF and also EUM, ProShares' short emerging market ETF. In the near future, I plan to add a short on the euro, because I think ultimately the euro will drop at least 30% before it disappears.
 
Finally I have about 28% in inflation protected securites, one quarter in the one year maturity TIP ETF and three quarters in VIPSX, the Vanguard Inflation Protected Securities mutual fund, which has a 7+ year average maturity. Given the huge US government printing of money the odds are very high that the black swan will fly and that inflation will surge; and I want to be prepared.

Below You May Find The Video.