Mark Pincus' Blog

my amzn/ebay trade up 20.3%

so with some help from a few commentors i've figured out how to calculate the return on this paired trade. i sold $100k of ebay short and purchased the same amount of amazon long. while this was neutral in terms of capital used, it probably required around $100k of capital to create. therefore, i'm now up  11.3% on the amzn side and 9.3% on ebay short for a total gain of 20.4%. given that there was no timing catalyst for this trade, i am now tempted to just take the profit. you have to pay short term capital gains on short positions anyway.

Corruption at the SEC?

there was yet another disturbing story in yesterday's nytimes about allegations that the SEC fired an attorney for investigating hte head of a large hedge fund, pequot capital, who had close ties to bush. apparently the guy wanted to investigate political ties to the head of morgan stanley and then got fired. i just hope they can follow this money trail.

in this case the guy, gary aguirre, had just received a two step promotion when he was summarily fired with no explanation. what really aggravates me is that the SEC immediatly denies any wrong doing. when the facts are this obvious, why cant the guy say 'wow, that is cause for concern and we will investigate'. i am happy to see congress looking into it and the nytimes broadcasting the story though.

i'm up 12% on my ebay amzn paired trade

despite a warning from a google insider that amazon is just as weak as ebay and i should short both, my paired trade has gone well so far. up a combined 10%. both started at $33 a share and now amzn is at $36 and ebay is at $30.

i'm not really sure how you track a return on a paired trade. it seems like i have not created new dollar exposure since i sold short the same amount i purchased long. anyone know how you calculated returns on this type of trade?

Taggable CSPAN on the Web

i've been wondering lately what video for adults might look like on the web. (that's opposed to adult video).

the coolest application i can imagine would be if the entire past library and current feed of cspan was made available. imagine the daily show on blogger steroids. what if thousands of people could share tags and annotations like google earth around this csan footage. the ants would replace the media as the real watchdogs (watchblogs). politicians wouldnt be able to sneak in one bad vote, missed meeting etc without it being blogged almost immediately.

imagine blogging about gore's past voting record and embedding clips of him on the senate floor arguing for or against your cause.

bill gates talked about RADs, or what he calls reality acquisition devices. (dont think he's the best at these catchy names. where's steve jobs when you need him.) seems like cspan already is a RAD for politics.

with all the money put into the library of congress, just think how much more the govt could do for democracy by making this footage of them hard at work available to us all. funny they call it the library of congress. when's the last time you went to an actual library? guess they're not interested in offering the live feed of congress.

Buy amazon and short ebay

from a macro perspective it seems clear that amazon should one day be worth more than ebay. here's my reasoning...

i can see how i will still be doing my ecommerce on amazon in five years as they are the walmart of online retailing. they're the fastest place for me to buy my gifts for father's day, new babies, i even go to them to buy pro flowers for mother's day. it's just more conventient and always seems like a good deal.

ebay is in a tougher spot. as the broker of person to person ecommerce transactions, they are always at risk of buyers and sellers finding each other through other means, like google. i dont see google replacing amazon. i guess they could. google could let you input a credit card. they could 'host' the transaction like amazon and then get your ratings like ebay and amzn.

well, my take is that ebay's market cap of 45 billion has to go down while amazon's has no reason to drop. on a quick look, it appears that amzn is trading at 32x the high estimate of 2007 earnings with 50% expected growth, while ebay trades for 29x with 30% forecasted growth. i recommended shorting ebay on this blog in the fall when it was around $40 per share. it went up a bit before settling down to $32 now.

i need to understand amzn's story a bit better but the idea of a paired trade here is interesting to me. and with the share prices almost the same it makes the math easy too:)

anyone have any deeper insights into these stocks?

Ad quizes

The nytimes reported this week that virgin mobile is launching a campaign to award free minutes to kids for watching ads and answering questions to prove they paid attention.

This got me thinking that a better step might be for an advertiser to run a series of ads that direct users to their site to take product quizes. The better the person does the more free stuff they get.
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