I have been observing the price action this year and a clear theme is emerging. Money managers are running out of "safe" places to earn returns, with Treasuries earning peanuts and rates at zero. They will not touch Europe. They had an infatuation with emerging markets but subzero returns for the past two years in the BRICs have them reluctant to put more down the money pit. They are crowding into the U.S. And with low growth, anything that offers growth will be priced at a premium and will outperform. During the later stages of a bull market, value stocks lag as growth stocks continue their surge higher.Within the U.S., they have found their object of affection. It is the same as a dozen years ago. Tech. We have come full circle from love to hate to apathy and now back to love. You know what the catalyst is. It's the golden one. AAPL. The parabolic rise of a company with a market cap in the hundreds of billions has only been seen one other time. 1999. Those kind of moves will attract fund managers in droves. Yesterday's AMZN earnings weren't even all that great but it beat lowered expectations and it squeezed the shorts, like 1999. FB is going to IPO in May. With its low float, it should fly higher as fund managers scramble for anything tech and growing.
We are witnessing a rebirth of the chase for tech. An emerging bubble. It will be contagious. Tech fever is coming back. During the late stages of a bull market, tech stocks have a history of outperforming. It is something we saw during 1998-2000, the internet bubble, but also in the fall of 2007, when the Nasdaq was outperforming the S&P before the cliff dive. The Nasdaq outperformance has already started this year, but it will only get more extreme as the places to hide shrink further and further.
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4 comments:
Long Jun ZNGA 8 calls @ 1.20
OL DAWG.
You say you want to short these shitty internet companies. You should look at LNKD. That's a real shitty internet company IMO comparatively to its valuation.
11 bln market cap. On 500mln revenue and 12 mln in net income. Net income is probably created from some bullshit internet accounting where they book the entire subscription upfront and other ad revenue book cooking.
So it has a like 900 trailing P/e or something and a 100 forward P/E.
it's a fucking short and a much fatter one than ZNGA.
At least ZNGA you have people addicted to playing games every day.
Once you find a job, wtf is the point of looking at Linkedin?
As a matter of fact, I hope this turd holds up because once I get out of these calls I'm going to think about shorting LNKD in may and going away till it's 40 bucks. LOL
You should look at GRPN, that's probably the easiest short out there. It is crowded, but that is a broken business model. Companies will shy away from giving out coupons as it hurts their margins and angers their original customer base. They will be left with one time coupon users as their sole customers.
The bubble talk begins. And bubble means higher prices. Free kachingos! 100% up room to GO!!
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