Amazon Prospects and Valuation

Dear Reader,

Amazon.com Inc, the American online merchandising and cloud services company, has been one of the biggest winners since the coronavirus disease COVID-19 pandemic lockdown. Amazon's stock market price and market capitalization is up approximately 28.7% year to date 2020.

The main driver of this increase has been increased volume of online sales and expected better revenue from cloud services. Due to the coronavirus lockdown consumers are increasingly shopping online for all sorts of products, including groceries. Companies are increasingly using cloud services to work remotely. Amazon is a player in video streaming as well and video streaming is a hot mega trend.

On first glance there are bright prospects for Amazon in the near future. Currently Amazon is valued at 1.2 trillion USD by public markets. However, I believe Amazon's intrinsic worth is 800 billion USD currently. As things stand at the moment Amazon is trading at a Price/Earnings ratio of 116.67. This is simply unrealistic. Amazon is already a huge company recording 280.522 billion USD in revenue in 2019. I doubt Amazon can grow very much more to justify a 1.2 trillion USD valuation in the next 3-5 years, unless, of course, Amazon enters forcefully and successfully other industries, which is essentially a farfetched assumption.

I believe in the last 7 years we have witnessed a technology stocks bubble driven by the largest technology stocks like Apple, Microsoft, Amazon, Alphabet and Facebook. There are even more extreme cases like Netflix, NVIDIA, AMD and lately Zoom Video. I forecast this technology bubble will burst in the next 2-3 years and there will be a major reset of technology companies valuations.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's.Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Will Stocks Fall A Lot From Current Levels Again?

Dear Reader,

Global and US stocks, especially, continue their march higher from the lows reached in March due to the coronavirus disease COVID-19 pandemic lockdown.

US stock market indices are very close to their recent  record highs. If this stock market prices increase is really a bear market rally, it has gone on quite a bit. Personally, I think we are in for two WW-shaped recovery with bounces and troughs. I forecast global stock markets will end the year 20% lower compared with the beginning of 2020 measured by the main indices in USA, Europe and Asia. The coronavirus disease will most likely return in the winter of 2020 and stock markets will fall again.

Up until October, though, global stock markets could very well go on and increase further. The biggest beneficiaries from this short-term rally will most likely be technology companies, which have already benefitted disproportionately from the coronavirus chaos. Especially big technology companies like Microsoft, Apple, Amazon, Google and Facebook. Up and coming technology companies like Zoom Video, Spotify, Snap and Pinterest could also record large increases in their stock market capitalizations in the next 4 months.

I personally think stock markets, technology shares especially, are mid-term overvalued by 20% to 30%. But much depends on how the consumers will react and whether consumption levels will quickly rise to previous levels. Predicting human behavior is notoriously difficult, though.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's.Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Trump's Threat to Censor Social Networks. Winners and Losers

Dear Reader,

Enraged by a fact checking warning on Twitter, the President of the USA Donald Trump threatened to censor or regulate social networks.

Which companies stand to benefit and which stand to lose? The market action from yesterday is quite clear. The stocks of Facebook and Twitter fell, while the stocks of Snap Inc, the maker of Snapchat, and Pinterest rose.

I agree with the market. Facebook and Twitter will suffer  if the US government attempts to regulate or censor them in some way. Snapchat and Pinterest are niche social networks, which are most likely not to be affected in some major way from Mr. Donald Trump's wrath.

What is more, Facebook has been taking the lion share of  time spent on social networks and respectively advertising spending on social media. I have long waited for some other social network to rise and disrupt Facebook. My best bets on the next up and coming network are Snapchat and partially Twitter and Pinterest. Now that Twitter will most likely  be affected, an obvious candidate is Pinterest.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's.Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

How High Can AMD Go? A Cryptocurrency Play

Dear Reader,

Advanced Micro Devices, Inc.(AMD) the multinational semiconductor company that develops computer processors is currently valued at 62.40 billion USD.

AMD's stock price has staged a remarkable rally in the past 5 years. In my opinion, the rally has been mainly driven by the usage of AMD's computer processors and graphics processors in cryptocurrency mining. According to various sources AMD's new computer and especially graphics processors fly off the shelves the moment they are stocked to be used to mine cryptocurrencies.

The process of cryptocurrency mining involves large scale computing power to validate and produce cryptocurrencies so people can sell them for USD and enrich themselves.

AMD's stock price is currently around 53 USD. I forecast AMD's stock price could triple to nearly 159 USD. The main driver will be the usage of computer processors and graphics processors in cryptocurrency mining. In the last two quarters AMD's revenue grew more than 40% quarter on quarter on an yearly basis. If this trend of revenue expansion continues, AMD's stock market capitalization could easily triple from current levels.

I must say that if AMD's stock price really triples in the next 2-3 years, AMD would be grossly overvalued in the mid-term on intrinsic value basis. Yes, in the next 10 years AMD could grow into a valuation of 185 billion USD, but not in the next 2-3 years.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's.Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Oil Prices Keep Rising

Dear Reader,

Oil prices, both West Texas Intermediate and Brent Crude Oil, keep rising.

I prognosticate oil prices could get near 50 USD in the next 2-3 months.

The economy is recovering and  oil supply has been cut by OPEC countries and Russia. What is more, natural cutting of oil supply is happening all the time as hydraulic fracturing companies in the US are either going out of business or reducing drilling for oil drastically, since even at the current oil prices of around 34 USD they keep making losses when they drill for oil and gas.

Large oil majors like Exxon Mobil, Chevron, Royal Dutch Shell, BP, Total, Gazprom and Lukoil will undoubtedly benefit from the ongoing increase of oil prices. Mid-size oil producers like Marathon Oil Corporation and Hess Energy will also most likely see their market capitalizations rise.

I do not think the pending oil price increase is sustainable, though. Not at 50 USD, but at 40 USD oil prices can find a temporary equilibrium.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's.Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Increasing Government Debt Globally. Implications For Global Stock Markets

Dear Reader,

In the last 10 years government debt to GDP calculated as percentage has increased in many developed countries. The coronavirus disease COVID-19 pandemic economic lockdown has exacerbated that problem. Governments the world over are issuing debt to support their economies. The government debt/GDP of Italy is forecast to hit 170%, while government debt/GDP of Greece is most likely going to jump over 200%.

As of end 2019 the USA recorded government debt/GDP of 106.9%. Now, as the US economy most likely will shrink in 2020 and the US government borrowing and ploughing in trillions of USD, to support the economy, the US government debt/GDP will most likely rise above 112% in 2020.

What are the implications of rising government debt/GDP for stock markets? An interesting case in point is Japan. Japan's government debt/GDP is 238.2% as of end 2018. Japan's stock market performance has been lackluster for the last 20 years. Japan has simply run out of fiscal space to support its economy and respectively its stock market. Japan has been in secular stagnation of deflation and low growth for more than 20 years now.

Basically, US and Western Europe are nearing a point where they will use up all of their fiscal resources. Once the government cannot borrow to save the economy, every economic crisis will be deeper and every bear market in stocks will be deeper and longer. If what happened in Japan is any lesson, we can expect lower stock market returns in the next 20 years, visible stifling of innovation and ultimately lower economic growth and weaker prosperity in the near future.

The way out of this is less government regulation, so business can do its creative destruction, innovate and ultimately bring resources in with which to decrease the government debt/GDP of developed economies. The animal spirits of the market have to be unleashed, yet again.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Cryptocurrency Related Stocks That Stand to Benefit From the Cryptocurrency Boom

Dear Reader,

Cryptocurrencies like their main variant Bitcoin are touted by many as the next disruptive technology that is going to change to world. The price rise of cryptocurrencies has lost pace in the last two years.

However, the price rise of the most closely connected to cryptocurrencies stocks like NVIDIA Corporation, Advanced Micro Devices Inc.(AMD) and Microsoft Corporation has continued almost unabated.

What is cryptocurrency mining essentially? You need powerful computers to perform calculations to mine Bitcoin or other cryptocurrencies. NVDIA and AMD provide both graphical and CPU chips for computers and Microsoft provides the software system that makes computers work. Since 2015 AMD and NVIDIA's stock prices basically exploded. 2015 was the year that cryptocurrencies became mainstream. Microsoft's stock price rise starter rising markedly since 2013 driven by cloud services, artificial intelligence and cryptocurrencies.

How high can the market capitalizations of NVIDIA Corporation, Advanced Micro Devices Inc.(AMD) and Microsoft Corporation go? Microsoft already boasts a very big market capitalization at 1.4 trillion USD. Microsoft's capitalization could easily double. NVIDIA's market capitalization could triple, while AMD's market capitalization could quadruple from current levels.

If cryptocurrencies encounter stumbling blocks like regulation, limits of computer power and so on and cryptocurrencies ultimately fade or even die out, the stock prices of NVIDIA Corporation, Advanced Micro Devices Inc.(AMD) and Microsoft Corporation could essentially crash.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich

Why Do Stock Markets Keep Going Up From Their Recent Lows?

Dear Reader,

Global stock markets fell circa 30% when the coronavirus disease COVID-19 pandemic erupted. Since then they have been going up. Why? I think the main reasons are  the Federal Reserve and other global central banks and individual investors.

Large global central banks like the Federal Reserve, The European Central Bank, Bank of Japan have been printing money since long, but their money creation efforts intensified with the coronavirus disease development. The money printed by central banks finds its way into the global financial system through banks and brokerages, which bid up the price of stocks, government bonds, high yield bonds, gold and so on. Banks are using repurchase deals to get more leverage and are thus again in a high risk position.

An interesting recent development has been the entry into the market of millennials and sport betters. Investors, due mainly to the fact that they have not endured a real economic depression in their working lives, seem to think the market is on sale whenever stocks drop a lot. When stocks fall a lot, millennials enter the market and bid up stocks. What is more, sport betting fans now cannot bet on sports, since sport has been temporarily discontinued due to COVID-19. And sport betters have entered the market again pushing up the prices of stocks. The increase of millennials and sport betting new investors is reflected in the sharp increase of new online brokerage accounts at major brokerage houses since the beginning of 2020.

I think this is going to end up badly. Blowing up stock market, government bonds and high yield bonds bubbles in an economic repression is a way to disaster. When these bubbles burst, central banks will not be able to save the economy again, since global central banks have already spent most of their resources. We will live and see if this time it is really different, or human psychology has not changed since prehistoric times.

I must disclose that I am also a millennial.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich