Wednesday, September 2, 2020

👉The FAANG Bubble Bigger than The Dot Com Bubble , TSLA Bubble Ready to Burst

👉The FAANG Bubble Bigger than The Dot Com Bubble , TSLA Bubble Ready to Burst

The FAANG Bubble now Bigger than The Dot Com Bubble , TSLA Bubble Ready to Burst US Stock Market Cap to GDP Ratio Reaches 190%, Eclipsing the Dot-Com Bubble High. It is up 1.2% today. There seems to be no end in sight. The Nasdaq is in an almighty bull market. The Nasdaq won’t stop going up. The indices are going up and up every single day, without good news and even with bad news. The entire stock market today is being lifted by just a handful of stocks. It looks like every single dip is bought. Prices bear no relation to earnings. Just half a dozen stocks account for more than 50% of the index. It’s way too geared. It’s going to crash. FANG Stocks Up 400% Since 12-31-2014, S&P 500 Index ex-FANGs up 35%, S&P 500 Index up 45%. Take that in for a minute. $100 invested in the FANG stocks (Facebook, Amazon, Netflix, and Alphabet is worth $403.90 through yesterday. In comparison, $100 invested in the S&P 500 ex FANG is worth $135.12, and $100 invested in the S&P 500 is worth $145.31. Five years and nearly five months. If you were to equal weight, your exposure to the four FANG stocks, your gains would be even better. $100 grew to $522.43 over the same period. The point here is that just four stocks are driving returns of the major indices – especially the cap-weighted indices. At the end of April 2020, FANG stocks represented 16.38% of the S&P 500 Index . Add in Microsoft and Apple, and together the FANMAG stocks represent 21.38% of the index. It is the large over-concentration in just a few names that are cause for concern. FAANG contributed about 358 Basis Points of incremental IRR to your S&P 500 total return over the last five years. FAANG outperformed the market significantly, starting in 2016. FAANG is an acronym that refers to the stocks of five American technology companies: Facebook, Amazon, Apple, Netflix, and Alphabet (formerly known as Google). Welcome to the Technocracy . All Your Base Are Belong To Us. The six horsemen are looking wobbly this AM. But algos swooped in to buy the dip. The pumps fire up at 10 AM sharp, and the manufactured gains resume. Another day of fraud in the first legalized Ponzi scheme in world history. I keep hearing: don't fight the Fed. To that, I say, read Ponzi Nation by Edward Chancellor, February 07, 2007. Chancellor predicted both the 2000 and 2008 crashes, and he places much of the blame on the Fed's easy money policies. Ask the people who paid $1.2 million for an New York City taxi medallion because they were buying a government-supported monopoly. After the advent of Uber, they lost 85% of their value. That's the problem with buying things you know are overpriced based on the belief of government support. What the government giveth, the government can taketh away. As I said before, I'm going to enjoy watching this bubble burst. People need to be taught a lesson that wealth actually requires hard work, not just printing and bubbles. There is an old saying: It's all about the economy stupid. Our nation's economy has already crashed .Nearly 60 million unemployed, the biggest decline in our nation's GDP ever seen, federal deficits and Federal Reserve balance sheet skyrocketing, and federal spending is now far higher than incoming tax revenue. Yet here we are in the Twilight Zone where none of the economic factors seen the impact Wall Street , which is now totally disconnected from Main Street USA. One hundred eighty-five thousand virus deaths and trillions of government and corporate borrowing, and millions of people not paying their rent or mortgage now. Nothing matters here in the Twilight Zone. All I know is I won't buy in at these prices no matter how high they go ,unless earnings literally double. Circuit breakers will be igniting like fireworks. Not to mention that the Fed's liquidity is becoming less and less effective. Sooner or later, investors are going to learn that markets are bigger than governments and central banks. It will be exciting. Everyone is expecting a drop. What they're not expecting will be the magnitude and quickness of the drop. Right now, we're at the end of a Jenga game. Everyone knows that the entire financial system is unstable, but is hoping for a few more rounds to let someone else knock the tower over. But when everyone KNOWS their stocks are overpriced, they'll all try to sell at once and blow past their sell stops. We've seen this game before. The market is on such tenuous footing that I guarantee most will not be able to get out when a large drop starts. I'm serious. We could have a 30% drop in one day. Welcome back to The Atlantis Report. You are here for your daily dose of the truth, the whole truth, and nothing but the truth. Please take a second to smash that like button. And as You know friends, I rely on your donations to keep this channel functional; as you know, it takes a crazy amount of research and time to bring you this content on a daily basis, so I hope you consider helping with whatever donation you can afford. Thank You. Tesla is a sign of things to come. It certainly is demonstrating what a busting bubble looks like. Tesla now has a greater market cap value than Toyota, Volkswagen, GM, Ford, BMW, Mercedes Benz, and Hyundai combined! Those combined car companies sell over 60 million cars per year and Tesla around 500,000. You do the math on the craziness of Tesla's valuation. Tesla investors think that Tesla is the only car company present and future that can and knows how to build a car chassis, body, and put a battery pack underneath it. Seriously the Price to Earnings Ratio will never fill in the value proposition unless Elon musk becomes emperor of Mars .Which is ironically more likely than Tesla valuation making sense. Tesla is down 25% on news that the company's largest outside shareholder Baillie Gifford, is reducing its position in the company. And this just one day after the stock split, and the company announced plans to sell up to about $5 billion in new shares. A mere coincidence and absolutely not insider trading at all.Sarcasm! Parabolic chart, parabolic stock. Like the Dutch tulip frenzy so long ago, Tesla will descend. This company is a total con. But like apple, there is no shortage of ectomorphs willing to buy its crap. Too many idiots and too much free cash in the market. The vampire squids of Wall Street have been frontrunning the mom & pops, with a very modest PE of 1222.47, especially for a company that has never been profitable ,and likely never will. Tesla's stock has already soared about 500% in 2020, and the company is now worth about $475 billion. Elon Musk, with a net worth of $115 billion, is now the third richest person in the world. He is now richer than Facebook CEO Mark Zuckerberg. But the richest man in the world is now Amazon's Jeff Bezos. Bezos will just buy robots faster. They don't get sick, pregnant, tired, hungry, or vote. No PMS, cramps, mood swings, morning sickness, nor HR complaints. No salary, no lawsuits, no unnecessary opinions, no ethics, no whistleblowers, no coffee breaks, no lunches, no corporate gatherings with the underclass, no motivation talks. But how about the customers? Who the hell needs customers when you can have an obedient army of robots. They also don't consume cheap plastic from China either. Bezos is hardcore. His workers don't get pee breaks. They get low pay and stand for twelve hours a day. They can't form a union. If you think this is just Amazon, you are a fool. Not a single major corporation wants its labor force organized, and most of them have people actively engaged in undermining those efforts. Of course, it's a lot easier under a global economy and when dealing with third world countries that don't care about their own people. This is the #1 priority of the Human Resources department at every company. It has been that way since the '70s. It's no secret. Stocks relying on dumb money (Tesla, Apple, Zoom, and the likes) will be in for a reckoning, sooner or later. Forget earnings, ok, but P/S above 20 is not sustainable. With tens of millions unemployed, and countless businesses gone for good, the heavy hand of government continues to pile on. State and local governments are looking to raise taxes in this environment, and the Federal Reserve, the enabler of big government, intends to escalate the counterfeiting of dollars on top of the trillions already created out-of-thin-air. More taxes and higher prices ahead, which makes for more economic heartache for the American people. Stock market volatility is affecting the dollar plunge. You cannot count consistently to the dollar for your investments in a market that remind Las Vegas better than a place reflecting the economy you would like to be part of. Wall Street misread the shape of the recovery. Stupid Wall Street! There was never any recovery. The entire nation's economy is bottom bouncing! We have been doing this since 2007 because none of the problems were ever fixed since that time. All the pandemic done was to simply expose the fact that there is no resilience to our economy. They shut down the main street and put them all out of business, forcing the remaining consumers working at home, with free cash flow, to buy at the online stores of the mega-cap companies. Goes a long way in explaining why we are screwed, because the dead half of the economy can no longer sustain the consumer purchases that the FANG stocks depend on. Depression 2.0 has started in earnest. The trend is a slow melt-up ( during the next 8-12 months) with increased volatility due to the increased uncertainty about P/E expansions.Which has similarities with a kind of valuation ,revolution. Any corrections do not change the long-term upward trend because very powerful forces, i.e., over liquidity from central banks and governments, the capitulation of the short-sellers, and the extreme optimism that has momentum right now as long as the big global stimulus treatments on the real economy continue ;and there are improved news on therapies and global economic activities. Anyway, be prepared for bigger turbulence at the time of the US presidential election! The volatile melt-up in 2021 will cause real headaches for central banks and governments who must continue to stimulate the real economy (2021-2022), but at the same time, their stimulus measures also stimulate even the stock market in an unintended way. I love how people needed a pandemic to realize that the economy doesn't need to grow in order to have higher stock prices. Large investment firms, banks, and corporations manipulate stocks in many ways without having to worry about increasing earnings: Buybacks ;Pump and dump Slingshots. All of this behavior happened before the pandemic and is now being completely backstopped by the federal reserve. It's literally a Ponzi scheme. It's also why quick stock growth can hit a wall at any time and drop like a lead brick. It depends on the actions of the large firms and the policies of the central bank. This is why the stock market needs to crash, so we can focus on the real economy and why the federal reserve needs to be dissolved back into the treasury. Industrial economies should always come before stock markets. If they don't, you just have financial manipulation and debt pyramiding with grotesques amounts of "money" that moves quickly on computers. But when you have politicians who stake their re-election on high stock prices, and whom themselves are invested in the stock market, the cycle continues. And people are surprised to see social unrest right now! Wake up and focus on the real people screwing over the entire economy. They are small in number but control trillions in wealth. If you stay invested in equities - you will be broke. It is the biggest bubble in the history of the world. It is just a question of how long central banks can keep it propped up. People say don’t fight the Fed , but free-market forces are a couple of trillion times more powerful. Entrap banks are like ants running around in front of the biggest steamroller in the world!! This was The Atlantis Report. Please Like. Share. Leave me a comment. Subscribe. And please take some time to subscribe to my back up channels; I do upload videos there too. You'll find the links in the description box. You will also find a PayPal link if you want to make a donation. Thank you wholeheartedly to all those of you who have already donated. Stay safe and healthy friends!

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

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