We offer advertisers and marketers a unique combination of reach, relevance, social context, and engagement:

Reach. Facebook offers the ability to reach a vast consumer audience of over 800 million MAUs with a single advertising purchase. For example, a movie studio seeking to increase awareness of an upcoming film release can reach a broad audience of Facebook users on the day or week before the film’s opening. By advertising the release of Transformers: Dark of the Moon on Facebook, Paramount Studios reached 65 million users in the United States in a single day.

Relevance. Advertisers can specify that we show their ads to a subset of our users based on demographic factors such as age, location, gender, education, work history, and specific interests that they have chosen to share with us on Facebook or by using the Like button around the web or on mobile devices. We allow advertisers to select relevant and appropriate audiences for their ads, ranging from millions of users in the case of global brands to hundreds of users in the case of smaller, local businesses. We believe that users have a better experience when ads are effectively tailored to them. Examples of Facebook ads that allowed advertisers to reach a relevant audience include:

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Procter & Gamble chose to advertise on Facebook to generate awareness for Secret deodorant’s “Mean Stinks” program and selected a female audience likely to be receptive to the campaign. The ad featured a confessional-style video of a girl admitting that she had bullied others, realizing the damage she had caused, and apologizing. In the 26 weeks after the Mean Stinks campaign launched, Secret experienced a 9% increase in U.S. sales and an increase in engagement with its Facebook Page.

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CM Photographics, a wedding photography business based in Minneapolis, Minnesota, used Facebook ads to reach the users it cared most about: women aged 24 to 30 living near Minneapolis who shared their relationship status on Facebook as “engaged.” Over 12 months, CM Photographics generated a significant increase in revenue after running a $600 advertising campaign on Facebook.

Because authentic identity is core to the user experience on Facebook and users generally share information that reflects their real interests and demographics, we are able to deliver ads that reach the intended audience with higher accuracy rates compared to online industry averages. For broadly targeted campaigns, for example, adults between the ages of 25 and 49, we were able to reach the desired audience with 95% accuracy, compared to an industry average of 72%, according to a third-party study. For more narrowly targeted campaigns, for example, females between the ages of 25 and 34, Facebook was able to reach the desired audience with 90% accuracy compared to an industry average of 35%, according to this third-party study. As our users maintain and expand their authentic identity on Facebook, they are increasingly choosing to share their interests and preferences regarding products and services. We use this information to improve our ability to deliver relevant ads that we believe are more interesting and compelling for each user.

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Social Context. We believe that the recommendations of friends have a powerful influence on consumer interest and purchase decisions. We offer advertisers the ability to include “social context” with their marketing messages. Social context is information that highlights a user’s friends’ connections with a particular brand or business. We believe that users find marketing messages more engaging when they include social context. Some current examples of social context that we offer include the following:

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Social Ads. We offer tools to advertisers to display social context alongside their ads. As a result, advertisers are able to differentiate their products and complement their marketing messages with trusted recommendations from users’ friends. A recent Nielsen study of 79 advertising campaigns on Facebook demonstrated a greater than 50% increase in ad recall for Facebook ads with social context as compared to Facebook ads that did not have social context.

Our Market Opportunity

Our Advertising Market Opportunity

Advertisers’ objectives range from building long-term brand awareness to stimulating an immediate purchase. We offer advertising solutions that are designed to be engaging for users and personalized to users’ demographics and interests in order to help advertisers better achieve their goals. Facebook’s combination of reach, relevance, social context, and engagement gives advertisers enhanced opportunities to generate brand awareness and affiliation, while also creating new ways to generate near-term demand for their products from consumers likely to have purchase intent. According to an industry source, total worldwide advertising spending in 2010 was $588 billion. Our addressable market opportunity includes portions of many existing advertising markets, including the traditional offline branded advertising, online display advertising, online performance-based advertising, and mobile advertising markets.

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Traditional Offline Branded Advertising. Television, print, and radio accounted for $363 billion, or 62% of the total advertising market in 2010 according to an industry source. Historically, advertisers interested in generating awareness of and demand for their brands have heavily relied on these offline media to reach their audiences at scale. We believe that these brand advertisers will increasingly dedicate a portion of their advertising dollars to Facebook because the broad audiences they are trying to reach are active on Facebook on a daily basis, because we can reach their desired audiences with precision, and because they can spark word of mouth marketing through Facebook. In December 2011, an advertiser could reach an estimated audience of more than 65 million U.S. users in a typical day on Facebook. By comparison, the 2011 season finale of American Idol was viewed by an estimated U.S. audience of 29 million people. In 2011, our advertising customers included each of the 100 largest global advertising spenders, as ranked by an industry source. Examples of Facebook advertising campaigns by large brand advertisers include:

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Nike launched its “Write the Future” campaign on Facebook as an integral part of its 2010 World Cup marketing effort. The launch placement was seen by 140 million users in 20 countries and users engaged with the message more than seven million times by taking actions such as watching the three-minute embedded video, or Liking, clicking, or Commenting on the ad.

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American Express purchased ads on Facebook and put its Facebook Page at the center of its advertising campaign in November 2010 to introduce and promote “Small Business Saturday,” a new local initiative designed to encourage shopping at small businesses on the Saturday after Thanksgiving. The ads reached 84 million Facebook users over the three week campaign. American Express continued the campaign in 2011. The campaign reached 91 million people, including 74 million who were shown an ad that featured a connection with their Facebook friends, successfully leveraging social context at scale. We believe that advertising on Facebook contributed to the successful results of the Small Business Saturday campaign; in 2011 public awareness of Small Business Saturday rose to 65% from 37% in 2010. Additionally, American Express saw a 23% increase in Cardmember transactions at small business merchants on Small Business Saturday.

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Online Advertising. From 2010 to 2015, the worldwide online advertising market is projected to increase from $68 billion to $120 billion, representing 12% and 16%, respectively, of the worldwide advertising market according to an industry source. Currently, the online advertising market is generally divided between display advertising, where the advertiser is seeking impressions, and performance-based advertising, where the advertiser is seeking clicks or conversions.

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Display Advertising. Online display advertising typically includes banner ads, interstitials, video ads, and rich media ads that aim to reach large numbers of consumers within a particular audience segment. Display advertisers run impression-based campaigns on Facebook in order to reach our large user base and because of the amount of time that users spend with us. Since January 2011, Facebook.com has been the number one website worldwide as measured by total minutes spent and total page views, according to an industry source. On average, users in the aggregate spent more than 9.7 billion minutes per day on Facebook on personal computers during December 2011. Display advertisers also use Facebook in order to more precisely reach their target audiences among our users and to leverage social context and our social distribution channels to increase engagement. Examples of display advertising campaigns on Facebook include:

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Walmart U.S. purchased advertising on Facebook targeting users in the United States between the ages of 18 and 49 during the days surrounding “Black Friday” in November 2011. The campaign, which encouraged users to download a Black Friday shopping map of their local Walmart U.S. store to help them find great prices faster, reached 60 million Facebook users.

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Diageo, the world’s largest producer of spirits, purchased advertising on Facebook for a portfolio of its brands, including Captain Morgan rum and Smirnoff vodka, in order to increase market share for its products by targeting users in the United States over the age of 21. The campaign reached 50 million Facebook users, drove a 20% increase in offline sales, and achieved a significant return on investment as measured by an industry source.

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Performance-based Advertising. Performance-based online advertising has typically involved advertisers seeking a specific user behavior such as a click on a search ad or a keyword-based content ad, a response to an email campaign, or an online purchase. We enable new forms of performance-based advertising, where advertisers can connect with users who are likely to have demand for their products based on the information that our users have chosen to share. We believe that performance-based campaigns on Facebook allow advertisers to offer their products to users with inferred intent and enhance users’ experiences by showing them relevant ads tailored to their specific interests. Examples of performance-based advertising on Facebook include:

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A local concert promoter advertised available tickets for an upcoming concert to users who lived in the metropolitan area where the concert was to be held and who had also Liked the artist.

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1-800-FLOWERS.COM purchased a Mother’s Day advertising campaign on Facebook targeted at its fans and friends of its fans in order to drive traffic to its website and increase sales.

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Social game developers including Disney, Electronic Arts, and Zynga purchased performance-based advertising on Facebook to drive player acquisition by promoting new game launches and existing games.

Cost of revenue

2011 Compared to 2010. Cost of revenue in 2011 increased $367 million, or 74%, compared to 2010. The increase was primarily due to an increase in expenses related to expanding our data center operations, such as depreciation and data center facility rent. These expenses supported our user growth, the increased usage of our products by users, developers, and advertisers, and the launch of new products. Credit card and other related revenue processing fees also contributed to the increase.

2010 Compared to 2009. Cost of revenue in 2010 increased $270 million, or 121%, compared to 2009. The increase was primarily due to an increase in expenses related to expanding our data center operations. Credit card and other related revenue processing fees also contributed to the increase.

We anticipate that cost of revenue will increase in dollar amount for the foreseeable future as we expand our data center capacity to support user growth, increased user engagement, and the delivery of new products. We expect costs will also rise for payment processing as we increase Payments volumes and add new payment methods. The expected increase in cost of revenue may be partially mitigated if we are able to realize improvements in server performance and the efficiency of our technical operations. We expect cost of revenue as a percentage of revenue to decline modestly over time to the extent we are successful in meeting our objective of efficiently increasing revenue.

Foreign Currency Exchange Risk

International revenue as a percentage of revenue was 33%, 38%, and 44% in 2009, 2010, and 2011, respectively. We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar, primarily the Euro. In general, we are a net receiver of currencies other than the U.S. dollar. Accordingly, changes in exchange rates, and in particular a strengthening of the U.S. dollar, will negatively affect our revenue and other operating results as expressed in U.S. dollars.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition, or results of operations.

I agree.

Don’t be in a rush to monetize something that could be worth a tremendous amount down the road.

It’s all about timing. You might run into somebody that has a list that is hot right now. And it’s a newsletter that wasn’t even around a few months ago. They’re hot! You should use that list because it’s going to be effective.

The year’s starting now. Everybody was off for the holidays. I’m trying to see what lists have been working right now. Because there’s been inactivity from December and into January, things are kind of dead right now. In the next couple of weeks, though, we’ll learn what list is working… who’s being effective.

I’ll give you some symbols for you to follow and we can see if it works out.

The key is knowing beforehand. If somebody gives you a symbol… tells you there’s going to promotion next week and then you see that the deals work and there’s liquidity and activity that wasn’t there before, and you were told by this group beforehand, then you know that this group was responsible. However, after the fact, you’ll find a lot of people that want to take credit for a promotion that they had nothing to do with. Maybe they heard something about it while it was happening. They just jump on the bandwagon.

These promotions are expensive. Usually the rate is 5 to 1. Meaning if you’re expecting to move $500,000 worth of stock, you’re gonna have to pay $100,000. Usually these promotions are paid for by a third party that has a position in the deal. They try to get liquidity for themselves.

In the past, promoters would get paid with free trading. Usually these promotions are paid for in cash. It all depends on the deal.

The SEC has created a situation where the availability of free trading stock has been minimal. The ability to DTC the stock has been restricted through rules. Now it’s difficult to acquire that free trading paper for promotions. What has to be done is full disclosure. If a newsletter promotes a stock they can have a great writeup, but at the end they have to make a full disclosure about what was paid that writeup. Who paid what? As long as that’s done, that’s fine.

This week I should be getting a “hot” list from a stock promoter.

Traders will keep buying this as long as it holds $35, which it appears to be doing.

This is an unusually low-uncertainty situation. Everyone knows that 4G will replace 3G in the coming cycle. IDCC’s royalty revenue is sure to increase. Just about the only thing that is uncertain is the Nokia litigation.

I started a long position in IDCC today.

We used to have security analysis based on Graham and Dodd. Shares were supposed to reflect the underlying earning power… discounted earning power of the companies concerned. I mean… people who run hedge funds know that that’s not what it’s about. It’s about are the stocks going to go up or down? It doesn’t matter whether the earnings are going to go up or down. It depends on how people perceive the market. As Keynes said, it’s like trying to judge how other people will judge beauty in a contest… it’s not about how YOU judge beauty.

When I see a bubble, the first thing I do is buy. If I’m right and a bubble does develop, I’m going to make money. If I see the flaw in the bubble, then I’m really happy because I’ll know that I have to sell.

http://finance.yahoo.com/q?d=t&s=TLB

“We decided that systematic trading was best. Fundamental trading gave me ulcers.”

“It took us six years to learn how to trade stocks.”

“Trend-following is not such a good model. It’s simply eroded.”

“Statistic predictor signals erode over the next several years; it can be five years or 10 years. You have to keep coming up with new things because the market is against us. If you don’t keep getting better, you’re going to do worse. Our models change every week.”

“Past performance is to some degree indicative of what it’s going to be in the future. Past performance is certainly not a guarantee, but somewhat, it’s likely correlated.”

“It’s 100% automated. It’s as automated as it can be. The computer does its thing. It generates its trade, and the trade gets executed. No one sticks its head to the door, and says: ‘Jeez! You should buy IBM!’ We couldn’t model that.”

Me: “When you were a floor trader, did you use technical analysis much?”

Nick: “Not really. You couldn’t really look at a chart and trade off that reliably. A lot of it was momentum, though. When it was going up, you had to buy it. We did a lot of spreads. We’d check open interest and figure out what deliveries would look like for each month. Some big institutions with a position of 50,000 contracts would close it in April and then redo it for May. They would roll their positions. So we tried to get in front of that.”

“As far as technical analysis for stocks is concerned… I think the fundamentals are IN THE TECHNICALS. Something wouldn’t be going up if it didn’t have good fundamentals. I know a guy who made $1,000 to $2,000 like nothing just trading moving averages. He’d get a buck out of a $13 stock consistently.”

“I saw that the market was gonna drop this summer. Volume was low on the up days and high on the down days. We were making lower highs and lower lows.”

I have watched traders use technical analysis and I must say I find it all very confusing. I’ve seen really good trades and really bad trades based on chart patterns, and the logic behind the good trades was no more scientific than the logic behind the bad ones.