Stocks & Gold Should Rally Post Facebook IPO

Market thoughts by Biderman,

A major stock market event will occur later this week when Facebook goes public. Stocks and gold likely will keep selling off until the Facebook offering hits the market. And everything else being equal, I then expect a sharp rebound in stocks and gold after the offering.

I personally will be buying Facebook and gold on the IPO day.

The Biderman Market Theory says all there is in the stock market are shares of stock. Not very complicated. 80 percent of all shares are held by mutual funds, Exchange Traded Funds, hedge and pension funds and family offices. Money flows in and out of those institutions.

Now Facebook will be selling anywhere from $12 billion to $15 billion of new shares in a few days. The main reason stock prices have being going down recently is that there is not $12 to $15 billion in cash sitting on the sidelines waiting for this deal. That means almost all the money that will going into Facebook has to come from the sale of existing stocks or gold. Video below.