 Good day, fellow investors. Welcome to the stock market news with a long-term fundamental twist. And in this episode, we'll discuss three crucial things when it comes to investing in stocks like Facebook. The first thing is the complete irrationality of the market when it comes to assessing a stock's value because the stock went from 220 to 120 and now it's back almost to 190 in less than a year, which is something completely irrational. And we have to see what do we have to be careful about not to fall under the market's irrationality. Then we're going to discuss Facebook's earnings, not so much because it's mostly business as usual. And we're going to conclude this video with when to sell Facebook stocks, when to buy or when to just hold. Let's start. So completely irrational market when it comes to Facebook, the stock price hit the high of almost 220 in July 2018. Then earnings came in, worries about security, privacy, the costs of Facebook, and the stock price declined to 123 I think was the low in December in combination with a market correction, in combination with a lot of news about breach security and the media was pumping, pumping completely, constantly negative news about Facebook because that was the news that was selling. And this is the first thing we have to be very careful about. When the media says something, it says because not that is important comparative objective. It says that because that is the news that sells. And when we look at Facebook's stock, we see okay, the news really impacts how investors think the majority of them. And when the majority moves in one way, you see a stock decline 40% over a few months based on bad news. However, since then, since the low point around Christmas, we had two earnings calls, things settled as the news weren't that interest anymore for the media. So they turned on the new topics, new stocks. We have Tesla now always a key feeder to the news. And we see less interest into Facebook, Facebook security, Facebook privacy, Cambridge Analytica, and the stock based on business as usual climbed back to 193 where we are now. So completely rational behavior, be careful not to fall into the news media bombarding trap that is very, very easy to fall into. How not to fall into that trap focus on earnings. Let's see what's going on with Facebook's earnings. So the number of users continues to grow. So does revenue per user. So growth from 5.53 worldwide to 6.42, comparing to the first quarter of 2018. So if we apply the same growth to the fourth quarter of 2019, we could expect revenue per user to go to nine 10 bucks per user, which is amazing growth, stellar growth for such a big company. And further, something that comes out over the scandals of 2018, Mark Zuckerberg in the conference call says how they're going to focus on privacy focused platforms. So they're going to provide even more service to the users, making it difficult for small competitors to enter the market. So they are really making something of it, which means Facebook might come out even stronger thanks to the scandals. Now the question is, okay, Facebook's business is going on, stock price is going up, it's much higher than when it was at 120. And when I was saying it was a buy at 176 in August, and then again at 130, I think. And now the question is, okay, when to sell? When you have such a stock, like every stock that are always volatile, go up and down, 50% up, 30% down is normal for an individual stock. The easiest thing for me to know when to buy, when to sell, or just to hold is to have an earnings model based on the business long-term fundamentals, which go on as usual for Facebook. So those are pretty stable, the growth is there, the potential is there. And when you put that into a model, you can see, okay, when to sell, when to buy. So it depends on the growth rate and the discount rate, which is your required return on investment. Let me show you. So I have just a simple model for Facebook. Anything can happen, but this is the most probable thing that could happen. Let's say if I put a growth rate of 20% over the next five years, 10% from five to 10 years, and then I put a price earnings ratio of 15 to the earnings of 2028, I get to a price of almost $400 in 2028 to 2029. With the discount rate of 8%, which should be the market's discount rate for such a company, I get to a present value of $270 for the stock. So it is possible that Facebook's stock goes to 270 from a market perspective. However, the discount rate there is 8%. I am much more conservative. I go for a price earnings ratio of 10 in 2028 and for a discount rate of 15%, which tells me that the present value with such a conservative approach and growth only of 20% on earnings gives me a present value sum of 127. We are somewhere in the middle of that, so I have to see what to do with my Facebook position in my model portfolio. But I think, okay, fair market value is much higher. Safety value is much lower. So I'm somewhere in no man's land. My view is that if the stock's decline, I simply add more, and I'll talk more about my model portfolio performance tomorrow, I simply add more. If the stock goes up, I'll probably sell somewhere at above 200 because then I have better investments that hopefully will give me the 15% per year. Facebook is a good company, strong company, even stronger now after the scandals because they have the money, they have the cash flows to deal with those things and invest in security protection and crypting privacy, et cetera, which allows them to increase their mode, which is something very, very important. And that's the picture that many missed over the last year because they were so focused on what the news were providing, which is a big mistake and be careful about that. Thank you for watching. Tomorrow I'll discuss my portfolio performance over the last 12 months. It's something I have to do to show that I have skin in the game. So see you tomorrow. Thank you for watching and looking forward to your comments.