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WallStreetDebunker

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  • Momentum Nosebleed Puts Market In A Nosedive [View article]
    The current bull market started with a Shiller P/E of roughly 13.

    Since 1930, of all the S&P500 bull markets that started with a Shiller (CAPE) P/E greater than 10, only one lasted longer than the current bull market--the one that ended in autumn of 2000. The tech stock bear market began in March 2000.

    Also note that REITs went into a bear market about 8 months before the S&P 500 bear market began in autumn of 2007. REITs have been in a bear market dating back 10 months.

    Not that history ever repeats...
    Apr 6, 2014. 02:28 PM | 3 Likes Like |Link to Comment
  • Facebook: How Low Can It Go? [View article]
    Pity the momentum speculator who fails to see when the bubble has been pricked. They always lose their gains waiting for a return to the bubble highs that never return.
    Apr 6, 2014. 01:56 PM | 4 Likes Like |Link to Comment
  • The Great Rotation Begins - Carnage In Social Media Space Accelerates [View article]
    I wrote this two days ago in other comments, but it might be worth repeating:

    It looks like "sector rotation" will be the latest trendy theme promoting the geriatric bull market to retail investors. Newsletter writers, bloggers, and CNBC talking heads will soon be hyping up a new and improved Great Rotation--because the previous Great Rotation out of bonds never happened as the soothsayers predicted. The new Great Rotation theme will predict the selling of bubble sectors and buying of value traps (like Cisco and RIG), risky debt-burdened junk stocks (like Coal and Steel stocks) and emerging market sandcastles (like China and Brazil).

    The recent meltdown in bubble tech stocks looks like March 2000 all over again, but unlike then, value stocks and small caps offer no refuge because they are not cheap this time around.

    With margin interest at all-time highs and hedge funds hungry to (finally) succeed with the short side of their book, it's a fanciful notion that value traps, junk stocks, and the faddish Dividend Saint stocks will be spared if the momo stocks continue to be tossed out the window by the institutions.
    Apr 6, 2014. 01:34 PM | 4 Likes Like |Link to Comment
  • HFT, QE... Does Anyone Know What's Going On? [View article]
    If the economy improves, the Fed gets the credit. If the economy worsens, the Fed can claim that they didn't provide strong enough medicine. The cause and effect can never be proven.

    Their power and influence has been maintained in the same way that witch doctors held onto their status in the tribal days of pre-civilization.
    Apr 6, 2014. 01:13 PM | 2 Likes Like |Link to Comment
  • Chase The Bigger Tech Names, Especially If You Can't Handle Volatility [View article]
    Popular media offers clues about the lifespan of cultural fads. The film "The Social Network" was a popular drama that captured the buzz of the growth phase of the social media trend.

    In 1993 Mike Judge's "Beavis and Butthead" comedy/music series relentlessly ridiculed the trendy, self-important, and talentless "hair metal" rock bands of the time. It wasn't long before "hair metal" was cast into the dustbin of pop culture history.

    Mike Judge's new HBO comedy "Silicon Valley" will likely go down in history as the show that marked the end of Tech Bubble 2.0. Those who think that most of the hyped up tech stories being peddled by Silicon Valley today will endure are like the hardcore hair metal fans who, in 1992, paid $100 to see the bands play at the Enormo-Dome. Now these bands can be seen playing to a drunk audience of 200 at an Indian casino for $20, which includes a free well drink in the gaming room after the show.
    Apr 6, 2014. 12:38 PM | Likes Like |Link to Comment
  • Momentum stocks tumble, Nasdaq plunges 110 [View news story]
    "Valuations, by any rational metric, are nowhere near so absurd as they were then"

    There's less of the obvious fluff that was present in 2000. Still, "real" tech companies like Cisco had a P/E of nearly 200 at its peak in 2000--and Cisco had a dominant business that was nearly certain to have recurring demand for decades. (Cisco is still 75% below its peak share price in spite of solid performance since 2000.) Compare Cisco in 2000 with, say, Twitter, which recently sold for $75/share and is expected to earn 20 cents next year. Twitter could be obsolete in 10 or 15 years.

    There's a veneer of plausibility for many of the momentum stocks, but the current valuations of many of these stocks exceed the valuations of hyper-growth companies in 2000. When the next bear market bottoms out, many of the stocks will have lost 65-90% of their recent share price, just like in the aftermath of the 2000 bubble.
    Apr 6, 2014. 12:43 AM | Likes Like |Link to Comment
  • The Impact Of High-Frequency Traders [View article]
    Visa and other credit transaction companies skim 1-2% or more from computerized retail shopping transactions. Realtor's skim 6% for intentionally antiquated market making of home sales. In the hierarchy of legal skimming operations, HFT skimmers rank alongside guys who steal aluminum cans from curbside recycling containers. It's a low percentage skimmed, but irritating and unfair nonetheless.
    Apr 4, 2014. 11:54 PM | Likes Like |Link to Comment
  • Momentum stocks tumble, Nasdaq plunges 110 [View news story]
    Be careful what you wish for. With margin interest at all-time highs, programmed trading of ETFs dominating the exchanges, & hedge funds hungry to make some money on the short side--a continued sell-off in momentum names won't likely stop at the door of steady dividend payers.

    A 1987 or 2011 type sell-off could happen in the time it takes to read your neighbor's bumper sticker "My Son Is A Dividend Aristocrat Investor!"
    Apr 4, 2014. 09:53 PM | 9 Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #14 [View instapost]
    It looks like "sector rotation" will be the latest trendy theme promoting the geriatric bull market to retail investors. Newsletter writers, bloggers, and CNBC talking heads will soon be hyping up a new and improved Great Rotation--because the previous Great Rotation out of bonds never happened as predicted. The new Great Rotation theme will predict the selling of bubble sectors and buying of value traps (like Cisco and RIG), risky debt-burdened junk stocks (like Coal and Steel stocks) and emerging market sandcastles (like China and Brazil).
    Apr 4, 2014. 09:32 PM | Likes Like |Link to Comment
  • Momentum stocks tumble, Nasdaq plunges 110 [View news story]
    It looks like March 2000 all over again, but unlike then, value stocks and small caps offer no refuge because they are not cheap this time around. The CNBC talking heads will soon be talking up a new Great Rotation, this time from bubble sectors to cheap value traps (like Cisco), debt-burdened junk stocks (like Coal stocks) and emerging market sandcastles (like China).
    Apr 4, 2014. 05:32 PM | 12 Likes Like |Link to Comment
  • WSJ: Twitter plans to launch 15 new ad products [View news story]
    Twitter's IPO lock up expiration date for nearly half a billion shares is in early May. There's probably a legion of employees frustrated about the fact that they have to sit idly by as the TWTR bubble pops before they're able to dump their (still) outrageously expensive shares. Those who don't dump in May will run the risk of seeing TWTR shares in the mid teens within a year. The good news is that the popping of the internet bubble 2.0 will also pop Silicon Valley's real estate bubble 2.0, making those outrageously expensive suburban cracker box homes a little more affordable.
    Apr 4, 2014. 05:20 PM | 2 Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #14 [View instapost]
    In March 2000, the bubble stocks of that era crashed for two months while the broader market didn't decline much--similar to now. The recent sentiment rotation among sectors indicates nothing. A broader bear market commenced 5 or 6 months after March 2000, in spite of sector "rotation".

    One thing is likely: the bubble sectors/stocks have much further to decline even if they have a reflexive multi-month bounce. The biggest threat to the broader market is the possibility that the popping of the euphoric bubble in social media, 3D printing, biotech, cloud, etc. will kill the "buy the dip" mentality that has been reinforced in the last 2 or 3 years.

    Most people seem to be unaware that this has been one of the strongest and longest bull markets in history(20% compounded returns for over 5 years).

    Many of the people commenting on this instablog didn't even see the bubble in cloud, social media, unprofitable biotechs, 3D printing, etc. Perhaps now they can see it as it explodes in the span of several weeks.
    Apr 4, 2014. 03:37 PM | 1 Like Like |Link to Comment
  • Facebook Is On A Winning Track [View article]
    "What I find laughable is the number of naysayers that feel compelled to tell the Author and anyone else that will listen that $FB's demise or rapid decent in share price is looming large."

    Are you laughing now? Or are you still holding onto Facebook just like the speculators in April 1999 who were surprised by the first leg down of Internet bubble 1.0?
    Apr 4, 2014. 02:08 PM | Likes Like |Link to Comment
  • Why Tesla's 'Not A Recall' Victory Will Crush Q1 Earnings [View article]
    If you skip a safety upgrade and you're the unlucky rare person who ends up in a battery fire accident with severe injuries or fatalities, you're asking for a $200,000 to $10 million liability suit. You won't get lots of sympathy from your insurance company or in a court room. Tesla owners--well, the smart ones anyway--will get the upgrade.
    Mar 30, 2014. 02:29 PM | 7 Likes Like |Link to Comment
  • GM halts Chevrolet Cruze sales at many dealers [View news story]
    Why did GM ban the Cruze? The new CEO just read the 2008 memo in which the Marketing Department confessed to misspelling "Cruise".
    Mar 28, 2014. 01:40 PM | 2 Likes Like |Link to Comment
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