6/5/2018 – A mixed day with the Dow Jones down 14 points (-0.06%) and the Nasdaq up 31 points (+0.41%)
How crazy is today’s stock market bubble?
Not crazy at all if you listen to the bulls. According to many of them the stock market is undervalued and tech blue chip companies like Apple and Microsoft are providing a once in a life time buying opportunity.
Really?
Let’s explore this notion a little by looking at Microsoft and their bizarre $3 Billion GitHum acquisition offer. Here is a very good look at the subject matter.
Microsoft`s recent purchase of GitHub for for 7.5 Billion in stock tells us a couple of things about financial markets right now. Namely, the number being discussed for GitHub was around 3 Billion, and Microsoft overpaid by 4.5 Billion. But did they, as Microsoft which is sitting at $102 a share with a p/e of 83, yes an 80 p/e handle depending on how you calculate this metric, that is how big a bubble there is right now in these blue chip technology stocks.
Microsoft is the same stodgy mature technology company that traded in a range of $22 a share to $32 a share on a good quarter for the longest time. The only thing that changed is the ECB buying 90 Billion Euros of assets each month and the Swiss National Bank not wanting the Swiss Franc to appreciate (get too strong) versus the Euro, so they created money out of thin air in terms of Swiss Francs, sold these to artificially weaken their currency, thus buying US Dollars, and then happily buying Microsoft stock, and Apple, etc., etc.
In fact, every technology company should buy anyone they want to acquire right now because all their shares are going to be dropping precipitously over the next three years as the technology 2.0 market crash begins. Artificially high paper gains never last and high P/E Ratios for declining revenue growth companies like Microsoft, Apple, Intel, Cisco and the like all revert back to historical norms. Your stock prices are all artificially high due to the Central Bank Liquidity Punchbowl Bonanza so overpaying for companies with future worthless stock is a good idea, and essentially a freeroll.
We couldn’t agree more.
What you seeing today is distortion in nearly all asset classes to the 10th degree. Thanks to the FED and their insane monetary policies. No secret there.
The real trick in knowing when this massive speculative house of cards will come crashing down. If you would like to get that information based on our timing and mathematical work, please CLICK HERE
