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Comment Valuation is wrong. (Score 3, Interesting) 295

The valuation of a pre-market company is biased. I am surprised this is not more widely known.

Ordinarily, (and according to all the market analysts at the WSJ and elsewhere), a "valuation" is performed by market-driven factors when an equity interest is purchased in an arms-length transaction. The calculation of valuation is easy: If you buy 1% of the company for X, then the company must be worth 100X, right? Here, Goldman bought 0.9% of FB for $450M, creating a valuation of $450M/0.009 = $50B.

Wrong. It's not an arms-length transaction. Goldman is getting a lot of value out of the deal aside from the value it expects to earn purely as a shareholder.

(1) Goldman is setting itself up to be the underwriter for Facebook's IPO. That's worth a lot.
(2) Goldman is getting a lot of press, advertising, good will, bragging rights, etc. That's worth a lot.
(3) Goldman may get other business opportunities associated with Facebook such as contacts, financial services for FB & related companies & executives, a potential talent pool for ppl looking to jump ship (esp. at executive level?), etc.

If Goldman put a value of $441 million on all those "extras", the intrinsic amount paid for the 0.9% stake in FB is only $9M, putting Goldman's valuation of FB at a measly $1B.

Looks a lot different now, doesn't it? That Goldman's "internal" valuation of FB must be so different from the "external" market valuation just goes to show you how ignorant most financial types (and reporters) are.

The reported valuation (or any valuation based on an investment) is only accurate if you know the full extent of what was purchased.

Comment Re:Logical positivism to the rescue... (Score 5, Informative) 798

I also have mod points and would love to mod you down, because education at this point is probably futile. There is a subtlety to understanding the nature of the universe that is difficult if not impossible to explain to the layman. But I will try.

Your reasoning is subtly but fundamentally flawed. Yet as with all subtlties, pinpointing the exact nature of the flaw is difficult without having a back-and-forth conversation.

You are right on target with respect to Ohm's law and Hooke's law -- but quite off base with your general assertion. The deep laws of physics *are* eerily symmetric, independent of our need to describe them so.

For example, the inverse-square law of gravity or electromagnetism can be derived as a consequence of living in a 3-dimensional universe. (Integrate your favorite conserved quantity over concentric spherical surfaces and you get something that must "fan out" as 1/r^2). Nothing very suprising there. Nevertheless the deeper into exploration of physical laws you get, the more surprising interconnections pop up independent of our need to observe them.

Your assertion that "momentum" is simply a convenient and observed quantity is both false and misleading. "Momentum" is a fundamental quantity that relates directly and ... well, fundamentally to the nature of energy, space, time, et cetera. It is particularly noteworthy that the nature of space and momentum should relate to our perception of time -- a property/dimension/quality which is quite distinct from all others in its one-way observable nature. The laws of "physics" seem to be time-invariant, yet the laws of "thermodynamics" which are equally fundamental seem to recognize that time is somehow special.

Thus, it is misleading to imply that our physical laws are simple and elegant because we have simple and elegant requirements to describe the universe. An accurate description of the universe need not be simple -- and often it is not. For instance, I understand (although lack the mathematical sophistication to prove) that the electron spin g-factor has a theoretical value of exactly 2. Yet it is observed to be approximately 2.00232 and is one of the most precisely measured physical constants. So it is not always simple truth and beauty. Which makes it all the more surprising when the simplicity is there nevertheless.

And while it is true that the inverse-square law breaks down at relativistic energies, even that corrective factor of "gamma" remains mathematically simple, and in fact geometrically constructable via a pythagorean triangle analysis of a certain thought-experiment.

My point is that the easy examples are easily explained away by laymen, yet the surprisingly simple nature of the fundamental laws of the universe continue to pop up where you wouldn't expect. That is why expert scientists, true geniuses, of the sort that don't come along every day, routinely make comments about the "beauty" of physics. They have a deep understanding and "feeling" about the way the universe fits together that isn't captured by your example about momentum.

First Person Shooters (Games)

Submission + - Mom shoots son playing video games

grumpyman writes: A woman who shot her three teenage sons should be acquitted of murder because she is insane, as the lawyer explains, "She thought her children were being turned into clones or robots."

Submission + - Potentially Habitable Planet Found

JJOnGG writes: For the first time astronomers have discovered a planet outside our solar system that is potentially habitable, with Earth-like temperatures, a find researchers described Tuesday as a big step in the search for "'life in the universe."'

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For every complex problem, there is a solution that is simple, neat, and wrong. -- H. L. Mencken