Dear Reader,
It looks like technology companies are the real winners from the coronavirus disease COVID-19 so far. Especially mega capitalization stocks like Amazon and Microsoft. Why? Investors seem to believe remote working, remote shopping and remote communication will benefit technology companies. The logic is quite straightforward.
However, I believe most technology companies are grossly overvalued. Amazon and Microsoft, for example, I estimate are overvalued by 30% to 40%. If people really believe companies like Amazon and Microsoft could escape unscathed the coronavirus, I think this is a fallacy.
Amazon now makes consumers in some countries pay higher shipping fees and requires a deposit to purchase books, for example. This often doubles the price of books. Yes, people are using computers more, so Microsoft can benefit a lot, but Microsoft's stock simply reflects too much future revenue and profit growth, especially in its cloud services business.
I forecast the time of value stocks like oil, mining, industrial and automobile companies will soon come again, as the economy shifts. I exclude banks, because I believe it is highly likely the global banking sector will run into trouble due to future and current nonperforming loans.
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
1 comment:
I think we live in a world, where it becomes harder and harder due to robots taking over jobs to make a decent living. It gets harder to fairly trade working hours for money.
You have to be in assets, keep tight and hold them, do not sell.
We have bubbles everywhere and that is why the rich get richer. Suppose there are rich people only in one asset class. Even if this asset class gets beaten for 10 years, in 10 years the cycle reverses back and then these men are rich again.
I just looked at precious metals stocks - these were so deadly beaten in 2015, today they are almost three times their value from 2015.
If you just held tight, you should be fine now.
Here I agree with the author. Today the oil companies are so deadly beaten, but if you hold tight, you will be safe on the other side in a couple of years, meanwhile enjoying your high dividends.
So if you hold home equity, stocks or bonds, and some precious metals - just imagine how difficult becomes for the average Joe to accumulate such a portfolio with the years, because today the house prices are higher than 10 years ago, stocks are higher than 10 years ago and gold is higher than 10 years ago.
Did nominal wages grow over this 10 year period accordingly? I do not think so.
So we have a world, which is fostering the creation of wealth for the rich and making portfolio asset allocation more a privilege of a few.
I do not follow the principle - buy low, sell high. I buy low with good dividends and I do not sell. I need to create cash machines for passive income.
I am bullish on Amazon, Google and Facebook, but not at that price.
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