Dear Reader,
I believe Microsoft, Apple, Amazon, Alphabet(Google) and Facebook are overvalued by between 30% and 60%. Why? Simply because their market capitalizations imply very high future growth of both revenue and profits, which is very improbable to occur, given their already extremely high market capitalizations and extent of revenues. If this future growth of the largest technology companies is going to happen, they would simply have to subsume entire industries outside of their current scope of activities.
Tesla is another glaring example of a bubble. The stock implies that Tesla is about to become by far the dominant automobile manufacturer in the world. Very improbable. I estimate Tesla is overvalued by 75%. Groupon, Fitbit, DDD, Gopro are examples of smaller technology companies bubble that have already burst. All of these companies were envisioned to experience rocket growth which never materialized and their stock prices came crashing back to Earth.
I forecast the Nasdaq Composite will fall more than 60% from current levels in the next 5 years. Money chasing money and money chasing winners works until it doesn't. This does not mean, however that artificial intelligence is not going to change the world.
On the contrary, artificial intelligence is the new internet. Artificial intelligence will change our lives almost to the extent that the internet did. And yes Microsoft, Apple, Amazon, Alphabet(Google) and Facebook will benefit massively from artificial intelligence in the next 10-15 years, but the stock market, especially concerning technology companies, is way ahead of the near future much like it was in the dot-com bubble.
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:
Fully agree. Dow - gold ratio is at 14, trend is to become 0.5, e.g. in favour of gold, we are in a bear market for stocks and in a bull market for gold and commodities. Especially interesting is silver, gold to silver ratio is at 90, whereas in nature it is 9. Silver is also one of the oldest means of money and is consumed in industries as well. In French money means silver - argent. At that price - 33 dollars for physical ounce compared to 1850 dollars for an ounce of gold you can buy 60 silver ounces at the price of one ounce of gold. Poor man's gold at that price level constitutes low risk and has high asymmetry for upside move and remains divisible for smaller trades, in case people lose faith in paper money with no intrinsic value.
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