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Jan. 27, 2011 12:39 PM ETNFLX5 Comments
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NFLX is all the talk again this morning as they were able to cook the books yet again to get Wall Street all excited and giddy.

Of course no doubt the interviews on the night time stock advice shows are probably lined up and I have no doubt the Cramers of the world will scream BUY, BUY, BUY.

The only thing I wonder is if these TV personalities that are faking as investors, have to go to confessional in order to look themselves in the mirror the next day.

The first chart above looks at 60 years of stock market trading based on leverage-or risk of your investment. Its determined by assets/liabilities; data collected by the Federal Reserve.
As you can see, from 1950 all the way to 1992, the market managed to trade at no more leverage then .50cents to the dollar in tangible assets.

Thanks to Greenspan and his buddy Helicopter Ben, the devaluation of the dollar due to endless printing along with rising corporate liabilities has us now at an all time high of 1.11.

This brings me to NFLX:

According to numbers just released by NFLX today they have as follows (in millions):
Cash $194
Content $181
Property $123
For total assets of $503
Liabilities were $691

For a ratio of 1.37 or 70% above current market multiple of 1.11-(which is 80% above historical avg)

Subtract 70% from $204, the price of today for NFLX, you get $62 per share fair value.

If we look at the weekly chart, that's right about where the 200 day moving average is. Funny how that works out isn't it!

See ya

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