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rickgrimes
LSU Fan
Member since Jan 2011
3549 posts

The Stock Market Fails a Breathalyzer
quote:

Joby Aviation, which plans to begin an electric air taxi service in 2024, is worth more than Lufthansa, EasyJet or JetBlue. Does that seem right? In this market, why not? Heck, earlier this year, Tesla was worth more than the next nine car manufacturers combined, though now only the next six. Beyond Meat, made with pea protein, is worth more than the entire market for peas eaten globally—like the bumper sticker says: Imagine whirled peas. Do fundamentals even matter?

I can go on. Used-car sales platform Carvana is worth more than Volvo, Honda, Ford or Hyundai. Airbnb is worth more than Marriott and Hilton combined. Crypto-exchange Coinbase is worth more than the Nasdaq. I live at the intersection of innovation and disruption, but when companies are worth more than any possible reality, watch out.

How about those meme stocks still getting hyped on Reddit’s WallStreetBets? Those who bid GameStop shares into the stratosphere waved at Virgin Galactic Holdings as they soared by. A year ago, the stock was $6 and it is now $190—some dupes paid $483, game over. Short sellers Melvin Capital, Point 72 and D1 Capital focused on fundamentals and got their assets handed to them. Shorts lost more than $9 billion between January and June.

AMC Entertainment’s stock was scraping $2 at the end of 2020. It is now $50 thanks in part to Robinhood speculators, and the company has smartly raised cash. But what about fundamentals? Theaters are still sparse, and Disney and others are willingly putting blockbusters directly onto their streaming services—ask Scarlett Johansson about Black Widow’s ticket sales. Theaters are the new roller rinks.

Venture capital is cuckoo. After investing $120 billion in the 2000 dot-com frenzy, and just $16 billion in 2002, U.S. venture capital invested $130 billion in 2020 and then $140 billion in the first half of 2021. Startups these days raise money as “the Uber of gardening” or “Space as a Service.” Oh wait, the latter was WeWork’s pitch, whose founder Adam Neumann declared in 2017, “our valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.” Is “spirituality” the S in SPAC?

And check this out: In June, an Italian artist auctioned an invisible statue for $18,000—in reality it was an empty box the artist claimed was a “space full of energy.” WeWork energy? Yeah, maybe fundamentals are a quaint relic of a bygone era.

The Federal Reserve deserves most of the blame. Near-zero interest rates means the market has no true north to help compare stock valuations with reality. We are navigating turbulent seas with a spinning compass. Former Fed Chairman William McChesney Martin once explained that the Fed’s job was “to take away the punch bowl just as the party gets going.” From the looks of it, the entire market would blow about a 0.35 (as in Dow 35000) on a breathalyzer test.

So no, fundamentals don’t matter—well, until they do. In 1989 Tokyo real estate sold for as much as $139,000 a square foot—350 times the value in Manhattan. At that price, Tokyo’s Imperial Palace was worth more than all the real estate in California. Not anymore after Japan’s triptych of lost decades.


Yahoo was once worth $125 billion and AOL $200 billion during the dot-com bubble. Both are worth 99% less today. Tesla CEO Elon Musk recently tweeted, “I thought 1999 was peak insanity, but 2021 is 1000% more insane!” Remember, when the selling starts, fear of missing out turns into fear of losing everything as speculators jump like rats off a sinking ship.

Today’s negative real yields don’t reflect reality. The Fed has warned it plans on tapering bond and mortgage purchases later this year. Someone is at least reaching for the punch bowl. The compass may stop spinning soon. Until then and always, stick with fundamentals.

LINK

Copied and pasted most of the article as it maybe behind a pay wall.
This post was edited on 9/13 at 11:29 pm


Twenty 49
LSU Fan
Shreveport
Member since Jun 2014
15075 posts

re: The Stock Market Fails a Breathalyzer
quote:

t: In June, an Italian artist auctioned an invisible statue for $18,000—in reality it was an empty box the artist claimed was a “space full of energy.”


I bought it off EBay for $20,000, or thought I did. Took it to be appraised for insurance, and the expert said mine was a counterfeit copy.


AndyJ
Member since Jul 2008
2239 posts

re: The Stock Market Fails a Breathalyzer
Well shit… I thought that was going to be zerohedge or something. Then I clicked the link and realized I needed to pay attention


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45
Strannix
USA Fan
Banana Republic
Member since Dec 2012
36550 posts
 Online 

re: The Stock Market Fails a Breathalyzer
"New economy"

Sound familiar?


FinleyStreet
Georgia Fan
Member since Aug 2011
6962 posts

re: The Stock Market Fails a Breathalyzer
I think we've all been holding our breath for a while. The market has got to take a dump at some point.


Ross
Auburn Fan
Member since Oct 2007
44838 posts

re: The Stock Market Fails a Breathalyzer
People are saying the recent CPI reading (0.3% month to month, 5.3% year over year) was low enough to kill the idea of the tapering happening in the immediate term

I feel like you have to hear word about the taper to start a meaningful drawdown in the equity markets. People are largely parking money there because they have no clue where else to put it.


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51
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el Gaucho
LA-Lafayette Fan
bawcomville
Member since Dec 2010
44352 posts

re: The Stock Market Fails a Breathalyzer
I don’t know what y’all are talking about the stock market going up. I’ve been hiding in this attic for 2 months during joedolph bidler’s pennocaust and they took all my gains. They’re coming for my fillings next


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35
Auburn1968
Auburn Fan
NYC
Member since Mar 2019
8592 posts

re: The Stock Market Fails a Breathalyzer
quote:

"New economy"

Sound familiar?


Bill Clinton during the dot.com boom?


Strannix
USA Fan
Banana Republic
Member since Dec 2012
36550 posts
 Online 

re: The Stock Market Fails a Breathalyzer
Yes


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01
Twenty 49
LSU Fan
Shreveport
Member since Jun 2014
15075 posts

re: The Stock Market Fails a Breathalyzer
quote:

the expert said mine was a counterfeit copy.


Even if it were real, I've lost it. The wife took it out of the box to display, and now we can't find it. Have looked everywhere, but it's like it disappeared.


supadave3
LSU Fan
Houston, TX
Member since Dec 2005
26031 posts

re: The Stock Market Fails a Breathalyzer
quote:

Even if it were real, I've lost it. The wife took it out of the box to display, and now we can't find it. Have looked everywhere, but it's like it disappeared


You probably put it back in the box. Did it have packing peanuts or was it so much energy that it took up the entire box? I don’t know was $20k worth of energy looks like these days.


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12
bayoubengals88
Wisconsin Fan
LA
Member since Sep 2007
15904 posts

re: The Stock Market Fails a Breathalyzer
Solid points. Thanks for posting.


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20
Decisions
LSU Fan
Member since Mar 2015
1262 posts

re: The Stock Market Fails a Breathalyzer
I honestly don’t see how anyone with a basic understanding of market history can look at this and not call it insanity. NFTs, crypto, and art making new highs are all major indicators. The few who get out early will make fortunes and the rest will be holding bags.

Going back to crypto I truly wish it could be what the enthusiasts want it to be: a replacement reserve currency which can’t be manipulated by governments. Capable of doing for currency what the internet did for information. I don’t see it ever happening. Currency control is simply too valuable a tool for governments to willingly give up.
This post was edited on 9/15 at 9:19 am


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