Record debt, record number of people of people homeless and collecting food stamps for survival. No decent paying jobs, if any at all. Meanwhile: AMZN - $386 NTFLX - $362 GOOG - $1063 And two of these three companies don't even make a fucking profit. What bubble?
Last stock bubble, nasdaq went up 1000% in around 5 years. What we are seeing now is not a bubble in that sense. Now we could still correct 20 to 40% down from these levels. But i doubt we going to see a 80% crash like we saw after the last bubble. But there may more upside before any correction. S&P >2000. Dow >20000 etc. NASDAQ makes a new all time high above 5000. Then the whole thing collapses 50%.
The bubble is there but not visible because there has been earnings growth justifying current PE ratio. But earnings growth has been due to share buyback, low interest on debt, layoffs. There is no revenue growth. The only visible bubble is in Russell 2000. Earnings are actually declining still it keeps going up. http://online.wsj.com/mdc/public/page/2_3021-peyield.html Highly optimistic analysts are pointing to forward PE ratio of Russell 2000 close to 27. The average forward PE is around 15. Guess how it much it has to fall so it comes close to average. The average forward PE of S&P is 12.8 during last 6 years. Guess how much it has to fall so it comes close to average.
12.8 is from a depression, maybe what the forward PE might be...otherwise... 16-19 is the norm and the larger the company the lower that "average pe" will be. Your Russell 2000 is from a high number of small cap companies with higher growth potential consequentially and even furthers my point about cherry picking data. This past half of the decade isn't representative of norms and highly selective to prove your point. Revenue growth doesn't have to be high for there to be high earnings growth and retained earnings are all that matters. We're also at a seasonal point of change for a look into 14, and whether earnings go up it's cheaper than ever to keep businesses scalable and highly so through the cloud.
Stock yields are high and interest rates are low. If I were a company I would easily raise earnings: borrow at say 2% and buyback shares yielding 4%.
I hear ya, man. You're one of the few that have been calling out this bullshit for what it is... What's most remarkable is that one doesn't even need much of a memory to recall that we are in our third asset bubble in just over a decade. Each one orchestrated by artificially low rates.
It's very "third world". One can look at any number of examples in South America and find similar disparities. Hordes of people living in complete squalor against a class of elites with private security forces and walled off communities to keep the peasants out.
thanks, I just bought some QQQ puts. AMZN, NTFLX and GOOG have not yet the necessary competitors to drive their revenues and profits down? Will these companies ever get competition in a meaningful way? YES, definitely - latest in about 10 years time.