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Facebook (FB) – The Best Short Out There?

Facebook FB - InvestWithAlex

If it is not the best, it should definately be on your radar screen. While most investors today will laugh at me when I suggest that Facebook (FB) will see $20 a share over the next 3 years, I will laugh back when it does. I promise. Here is why……

  • As discussed over the last few days, Facebook is massively overpriced. At its $275 Billion market cap, the company is now worth more than GE. At 10th the revenue base and a P/E of 95. I guarantee you, investors in Facebook today will look back in 2-3 years and wonder “What the hell were we thinking”.
  • I am beginning to notice quite a bit of fraudulent activity on Facebook when it comes to likes, promotions, paid advertising, etc… That is firsthand knowledge, but you can Google the same and do your own research. That suggests the Facebook is running out of growth and its multiple is not justified. By a long shot.
  • See those massive gaps all the way down to $20 a share? Yep, they will have to be closed at some point.
  • We are on a verge of a multi-year substantial bear market. Click Here. When such bear markets develop, if past is any history, such overvalued and over hyped stocks tend to lose 80-90% of their value. Just as the gaps above suggest. I don’t know why this time would be any different.
  • Short interest is low.

Finally, even at $20 a share, Facebook will be extremely overpriced. In other words, I just gave you a 80% gainer, but its up to you what you do with it. As always, TIMING is the key here.

z32

Facebook (FB) – The Best Short Out There? Google

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New Attraction Coming Soon To A Bull Market Near You – Investment Grin Of The Day

z33

New Attraction Coming Soon To A Bull Market Near You – Investment Grin Of The Day Google

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Famous Last Words

CNBC Idiots

Famous last words when it comes to investing. It’s too cheap, too expensive, no way it can go any lower, it’s impossible for this stock to go any higher, it will bounce, it’s too late to sell, I will wait to exit until we are back at break even , etc…..

Speaking of, Cramer delivers again Apple too cheap to sell

Apple might not be expensive when compared to Facebook, but it doesn’t mean that the stock itself cannot decline 30-50% from today’s levels. It has done so on numerous occasions before. And it might do the same here or after investors realize that Apple’s innovative drive has died with Steve Jobs. Apple watch is a failure as I have indicated here so many times before. This same view is now starting to show up in the company’s financial statements.

Point being, investors should take emotion out of the equation and have firm stop loss points in place. And if Apple triggers them, get out. Plus, this is yet another reason as to why you shouldn’t be following mainstream financial media.

Z30

Famous Last Words Google

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Just How Stupid Is Nasdaq’s Bubble Valuation?

Daily Chart Uly 21 InvestWithAlex

7/21/2015 – A down day with the Dow Jones down 180 points (-1.00%) and the Nasdaq down 11 points (-0.21%) 

I’ll give you just one example. Facebook is now worth more than General Electric

  • FB: Market Cap – $ 275 Billion on $13.5 Billion in revenue.  P/E = 95
  • GE: Market Cap – $270 Billion on $144 Billion in revenue.   P/E =17

Still too blind to see the bubble? Fine…..

I often talk about Shille’s S&P P/E being at 27 or at the 3rd highest level in history. Right behind 1929 and 2000 bubble tops. What is it for more speculative indices or stocks out there?

  • Russell 2000: P/E of 76
  • Google:  32
  • Netflix: 205
  • Amazon: 171
  • Tesla: 79
  • Twitter: What earnings?

You get the idea. At least the companies above are somewhat profitable and/or leaders in their respective arenas. That cannot be said for 50-75% of the companies found on the Nasdaq/Russell indices today. And that is during the good time or at the end of this Credit Expansion cycle.

That is to say, I do not see how this is any different from 2000 and 2007 bubble level tops. I was there when it happened and what I saw back then is exactly what I am seeing today. It is as simple as that. And even if market participants end up celebrating Apple’s (AAPL) earnings later today, the laws of physical can only be circumvented for so long.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. July 21st, 2015  InvestWithAlex.com

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Just How Stupid Is Nasdaq’s Bubble Valuation?  Google

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Will Black Box Trading Replace Traders/Investors?

Black-Box-Trading-Investwithalex

Quite a few people believe that most money managers, financial/investment advisers, traders, etc….will be replaced by ever smarter machines and software over the next 10-20 years. That is exactly the topic discussed here How the most powerful female hedge fund manager sees trading changing in the next 10 years

I don’t buy it. Here is why……

The stock market is a much more complex environment. It is based on emotions just as much as it is based on hard data or analysis. As a result, it is only as good as human beings programming the machine. That is to say, you cannot program away emotions of fear and greed.  Sure, the machine might not feel it, but it will behave just as a human being would. Probably more so by intensifying volatility and market swings. That is yet to be seen.

In other words, there will always be a Warren Buffett or George Soros or etc….. But with one primary benefit. The models above, black box trading or systematic trading, can greatly improve the performance of outliers when used properly.

z32

Will Black Box Trading Replace Traders/Investors?  Google

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What You Ought To Know About Upcoming Interest Rate Hikes

A fairly good overview of the market. Definately worth two minutes of your time. Jim Paulsen is right on the mark in terms of historic Fed interest rate increases and subsequent market action.

With that in mind, I will go out on a limb here and say that the Fed is too late to the party. Why? Today’s capital markets will react to the Fed’s proposed rate increases with a massive sell-off while interest rates remain below 1%. At least based on my timing and mathematical work.

This would be the worst possible outcome for the Fed as they won’t have any countermeasures in place to either backstop or alleviate any such financial or economic trouble. QE-4? Sure, but this time around the bond market might react in a negative fashion. Making matters even worse. That is to say, checkmate and game over for the Fed!!!

Z31

What You Ought To Know About Upcoming Interest Rate Hikes Google

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Is The Nasdaq Setting In A Blow Off Top?

Daily Chart Uly 20 InvestWithAlex

7/20/2015 – A positive day with the Dow Jones up 14 points (+0.08%) and the Nasdaq up 8 points (+0.17%) 

Over the last few months a number of market pundits have suggested that we won’t see a major market top until some sort of a blow off top occurs. Here is my question……

Would recent market action on the Nasdaq and Nasdaq 100 constitute just that?

For instance,  last week the Dow was up 1.78% for the week, while the Nasdaq 100 pushed up 5.5%. I don’t honestly remember the last time we had such a massive divergence. Then, take a look at the following reading from today.

Nasdaq 52 Week High/Low: Highs-64 Lows-97

This shouldn’t be happening in a bull market that is setting all time highs.

We all know that the largest stock index by capitalization, the NYSE, hasn’t moved an inch in over a year. Now, Mark Hurbert brings out an important point

Here’s one bear market sign you’ve never seen before

That’s because the degree to which stocks move together in unison is a function of the market cycle. In bear markets the vast majority of stocks do so, whereas in bull markets stocks tend to march to the beat of their own drummer. It’s at market tops, therefore, when stocks’ moves in step with the overall market tend to be at the lowest point.

Such as it is now. Last week, even as the broad market averages rose to within shouting distance of their all-time highs and some secondary averages actually did so, just 7.2% of stocks on the New York Stock Exchange hit new 52-week highs. A slightly greater percentage of stocks — 7.3% — hit new 52-week lows.

That is excellent and precisely correct. It is only a “stock pickers market” until, as Mike Tyson puts in, a bear market punches you in the mouth.

Here is something to consider. During a typical bear market about 60-70% of all stocks decline, 15% stay flat and about 15% advance. When we have severe bear market sell-offs, as we did in 2007-2009, about 80% of all stocks decline, 10% stay flat and about 10% exhibit some sort of an advance.

Point being, it is pointless to pick stocks at market tops. Particularly today. Everything is overvalued and the chances of you finding that winning stock is 1 in 10. And even if you do, it is unlikely to go up very much. Stocks should be picked at the bottom of the market cycle, not the top. That’s when you find future 10 Baggers at giveaway prices.

At the top, everything should be sold and moved into cash. Better yet, invested in bear funds with a proven track record. The fact that today’s investment advisers promote stock picking is yet another sign that the top might be near.

As for the Nasdaq, I’ll let you come to your own conclusion, but the index does bring up more questions than answers.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. July 20th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Is Nasdaq Setting In A Blow Off Top Google

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Jim Rogers: Central Banks To Panic…..Major Correction Ahead

There is only a handful of people worth listening to when it comes to investing. Jim Rogers is one of them. Below is the podcast he did a few weeks ago and it is definitely worth a few minutes of your time.

Jim talks about equity markets, Russia, China, Greece, oil and gold. Plus, bureaucratic idiots in Washington. I’ll tell you one thing, it is nice when Jim’s views match my own.

In short, Jim anticipates major….major problems in the US Equity markets. Should you?

z32

Jim Rogers: Central Banks To Panic…..Major Correction Ahead Google