Interview - Southwest Airlines, Facebook and Election
Spent some time recently talking with my friend Mike Iscovitz about Southwest Airlines building their own hub in Houston, Texas. While this may be a good thing in the long term for Southwest Airlines (LUV) in the near term airlines continue to struggle making money due to rising oil prices and an equal economy.
We, of course, also address Facebook. Here is an additional point that I did not get to cover in regard to Facebook. Congress, along with the regulators, is now looking into the issue of the Facebook offering to "get to the bottom of how investors lost money on the offering." This is an IPO and with it comes the "risk" of buying into it. There is NO GUARANTEE offered that just because it was Facebook, or any IPO for that matter, that it should go up in value.
IPO's are offerings of company stock at premium valuations — always. This is why private companies go public in order for the private shareholders to capitalize, at a maximum value, on the shares that they own in the company they have built. Furthermore, if this is such an "outrageous grievance" against investors who bought the stock then why is NO ONE investing congress over the public offering of General Motors which was IPO'd at $33 and is now trading close to $22.
Where is the outrage, the investigations and lawsuits over that massive American taxpayer con job?
Also, the recent report by the CBO (Congressional Budget Office) and the potential impact of the "fiscal cliff" on the economy. The "fiscal cliff" is the simultaneous expiration of a multitude of tax credits and breaks at the end of 2012 including the Bush tax cut extensions, payroll tax cuts and more. The impact to the U.S. economy if all are allowed to expire is about a 4% hit to GDP. Given that the economy is currently growing at 2% the "fiscal cliff" would push the economy in recession.