Apple and iPhone Sales. A Valuation Perspective

Dear Reader,

In the fourth quarter of 2020 Apple became the largest seller of smartphones for the first time since 2016.

Apple Inc., the consumer electronics producer, made inroads with its first generation of 5G enabled iPhones. It seems consumers are prepared to pay up for premium iPhones with the premium 5G feature. Apple commanded 20.8% of smartphone shipments in Q4 2020. This is remarkable given the fact that Apple's share of the global existing smartphones market has been hovering around 12 %.

What is especially astounding is that Apple has achieved the aforementioned first place in Q4 smartphone shipments with smartphone sales declining by 12 % year on year in 2020

Since several years Apple does not break down the iPhone units it sells, but iPhones most probably account for approximately 60 % of the nearly of 300 billion USD yearly revenue Apple achieves. This is a remarkable number, which coupled with Apple's regular more than 20 % net profit margin explains at least to 70 %  Apple's current 2.04 trillion USD valuation.

That said, I estimate Apple's current intrinsic value is around 1.4 trillion USD. Apple has benefited from the coronavirus crisis as people started working from home en masse and bought many more Macs and iPads than usual. Along with the services revenue, which Apple says is also at record levels, this explains to a large extent investors' current enthusiasm for Apple's stock. However, the coronavirus pandemic will soon end and Apple cannot count on the recent speed of digital transformation for long. What is more, last year smartphone shipments fell by 12 % which points to market saturation to say the least. The information technology boom since 2013 was mainly driven by rising smartphone adoption. Now that has ended. The new hope for fast growth the IT sector now places on artificial intelligence. But the development of artificial intelligence has proven not very fast in the past. And Apple does not collect data extensively and data fuels artificial intelligence. The general peak cycle economy we are currently experiencing and the recent developments in the information technology sector make me think that Apple is 30 % overvalued at current stock price levels.

Yes, information technology is the future as companies look more and more to cut costs by using software algorithms. But most of the technology stocks worldwide have grown in value much above their intrinsic worth driven by money creation by the leading central banks. Sooner rather than later this bubble will burst and pending stock market crash will cause a new economic downturn.

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 Bitcoin Be Adopted By Corporations?

Dear Reader,

Square and recently Tesla decided to invest part of their cash reserves in Bitcoin. Tesla, in addition, is contemplating adopting Bitcoin as a means of payment for its electric vehicles.

It is a fact that many technology entrepreneurs and many other technologists are extremely interested in Bitcoin and cryptocurrencies. Technologists, in general, are highly intrigued by new products and new developments. Bitcoin is at the intersection of finance and technology. Thus it is not surprising that technology companies like Square and Tesla are the pioneers of Bitcoin adoption.

As regarding other large corporations like for example General Electric, Pfizer, Nestle, Mondelez, Altria, Volkswagen, BMW, Toyota and others the matter is more complicated. In order for such large blue chip corporations to accept Bitcoin, Bitcoin's price volatility must decrease. Another factor is governments' seal of approval on Bitcoin by adopting laws regulating Bitcoin. If Bitcoin is regulated its price volatility will decrease. On the other hand, government regulation of Bitcoin could decrease the appeal of cryptocurrencies as an untainted alternative to money.

The largest by market capitalization technology companies like Apple, Amazon, Microsoft, Alphabet and Facebook are an  interesting case. By definition, as technology companies the aforementioned large 5 IT companies are open to new innovations and they are likely to adopt Bitcoin.

On the other hand, Apple, Amazon, Microsoft, Alphabet and Facebook are huge, now established corporations with tens and even hundreds of billions of USD yearly revenue. If they accept Bitcoin as a means of payment for their services or start investing their huge cash and cash like reserves in Bitcoin and Bitcoin's price falls a lot or Bitcoin is even banned by governments this could threaten the financial well-being of these companies.

Facebook, as is known, is contemplating introducing its own cryptocurrency stable coin. If one of Apple, Amazon, Microsoft, Alphabet and Facebook adopts first a cryptocurrency it is highly likely that it will be Facebook.

Basically, for Bitcoin to receive mass corporate adoption, Bitcoin has to go a long path forward. This chiefly entails lower volatility of Bitcoin, most probably by being tied to a basket of leading currencies like the USD, EUR, JPY and GBP. This, however, could prove a disadvantage in the long-term for Bitcoin's allure of a pure, clean alternative to fiat currencies.

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 to Determine Bitcoin's Intrinsic Value?

Dear Reader,

Unlike companies or bonds, Bitcoin and other cryptocurrencies do not have underlying cash flows.

Rather, Bitcoin derives its value from its usage in the payments infrastructure as a means of exchange, store of value and unit of account, which are the three defining characteristics of money.

So in short Bitcoin's value depends on the public's adoption of Bitcoin as money. The main determinant for that is whether Bitcoin is useful as money. Or with other words whether Bitcoin saves people time, money and effort when they transact with it. Another factor is government regulation. If governments forbid the usage of Bitcoin, it will be very hard for cryptocurrencies to take off.

But the sheer fact that Bitcoin has been traded since 2013 and its price has risen almost intermittently since than shows that Bitcoin does save people money, time and effort and in one way or another acts similarly to money.

So, if Bitcoin becomes a global reserve currency, Bitcoin's price could easily surpass 200 000 USD in the next 3 to 5 years. What is more, blockchain as infrastructure holds huge promise for many industries, which only raises Bitcoin's intrinsic value.

If one believes Bitcoin will become more and more accepted by the general public, than simply Bitcoin's intrinsic value will rise with its gradual adoption. 

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

Two Theories of Price and Value. Warren Buffett And Benjamin Graham

Dear Reader,

There are basically two theories of price and value. One theory postulates is that value, price , of something is what someone pays for it. This is basically Keynesian economic theory.

The second theory says is that value is what during time proves to be the equilibrium price. Or as arguably the world's greatest investor Warren Buffett says "Price is what you pay, value is what you get". His teacher Benjamin Graham says that the stock market in the long run is like  a voting machine. This second theory is basically classical economic theory that the "invisible hand" of the market over time determines "the right" price.

Where is the truth? Basically, both theories are true, but at different times. Technology entrepreneurs that sold their stock in 2000 - 2001 and became millionaires or even billionaires would certainly take a look at the theory that price is what someone pays for your company. Especially, after the 2001 dot-com stock market crash. This sort of thinking is predicated on the fact that there are no catastrophic risks. This has been true, at least since the Great Depression in the 1930s. If you put your money in the bank and the bank does not fail you are still a billionaire. The same is valid for real estate investments, when the price of real estate does not crash.

Here Warren Buffett and Benjamin Graham would beg to differ. Warren Buffett seems to believe, obviously correctly judging by his net worth, that value is created by owning companies and increasing their value. Warren Buffett, like his teacher Benjamin Graham, thinks that value is realized over time. Warren Buffett looks for companies with a durable competitive advantage. That is, value is fixed and stable and can grow over time if the company has an edge and is managed right. Buffett and Graham's favorite holding period is "forever". Again value is perceived as stable and growing over time.

GameStop recent stock's frenzy is a case in point. In the space of one month the price of GameStop's stock went from 18 USD to 340 USD and then back to 40 USD. If someone bought at 18 USD and sold at 340 USD he would certainly say that price is what someone pays. If, however, an investor bought at 340 USD and now the price of GameStop's stock is at 40 USD would rue his decision and side with Warren Buffett and Benjamin Graham.

To employ successfully the "price is what someone pays" theory one should be very fast and agile. To be successful with the long-term intrinsic value theory one should make very rigorous analyses and be patient. Combining the two approaches is the best option, but extremely difficult due to people's psyche.

I personally side more with Buffett and Graham. Because if you enter at the top then your losses could be 80 % of your initial investment. While the margin of safety advocated by Buffett and Graham at least provides that you will not loose your net worth. That is, you avoid catastrophes.

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 Bitcoin Reach 100 000 USD?

Dear Reader,

In one blogpost from 2017 I forecasted that Bitcoin could reach 100 000 USD.

Then, shortly afterwards Bitcoin's price crashed.

I stand by my forecast that Bitcoin could not only reach 100 000 USD in value, but even surpass the 100 000 USD mark.

Why? Slowly, but surely Bitcoin is becoming an investment vehicle of choice not only for retail investors, but also for hedge funds, asset managers and even companies like Square and Tesla most recently. Bitcoin is on a path to become a USD 2.0, a global currency for transactions. The huge volatility of Bitcoin for the moment prevents the attainment of global reserve currency status. But as more and more financial institutions enter the cryptocurrencies markets Bitcoin's price will stabilize since Bitcoin's liquidity will increase and the price fluctuations will decrease, because institutional investors are more long-term focused in their investments.

What is more, as the price of Bitcoin rises to new highs, this will enrich the market for cryptocurrencies. Bitcoin's rising tide will lift the prices of other major cryptocurrencies like Ethereum, Ripple and eventually the prices of more peripheral cryptocurrencies issued by companies to finance various projects. Such tokens issued by companies are tied to the future success of companies, so they should be analyzed as stocks. But one should bear in mind that cryptocurrencies carry no participation in the bankruptcy estate of the particular company.

Success leads to new success. And as the main stream media news are filled with reports of Bitcoin's price rising to new highs more and more investors enter the cryptocurrency market. Bitcoin's decentralization will soon bring about greater trust in cryptocurrencies. If I have to put an intrinsic value on Bitcoin, I would say that Bitcoin could be worth 200 000 USD in the next 5 to 7 years.

If government regulation via central banks in some way supports Bitcoin, Bitcoin will only be a short distance away from becoming a global reserve currency.

For now Bitcoin remains mainly an investment vehicle, but as Bitcoin matures it will get closer to official money status.

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

Palantir Technologies and Reddit. Artificial Intelligence Companies Valuation

Dear Reader, 

Palantir Technologies, the artificial intelligence, big data analytics company, has become a top trending topic on Reddit’s WallStreetBets forum, right after GameStop.

Other artificial intelligence, cloud companies like Snowflake and C3Ai trade at close to100 times Price/Sales ratio. Palantir currently is valued at a Price/Sales ratio of approximately 50. Given the future promise of cloud artificial intelligence I forecast that Palantir's market capitalization could rise above 200 billion USD in 5 to 7 years.

Driven largely  by retail investors and the institutional investors that would follow them, Palantir's value could rise to 200 billion USD much sooner than that. All this is predicated on Palantir Technologies reaching profitability. If Palantir does not start earning money in the next 3 to 5 years, Palantir could end up fighting for its survival or struggle to stay a going concern.

I believe that global stock markets, mainly the US Nasdaq Composite and NYSE listed technology stocks are overvalued. Money printing by the Federal Reserve, The European Central Bank, The Bank of Japan, The Bank of England and other central banks has lead to asset prices inflation. Almost infinite amount of money is chasing a very limited amount of sound investment opportunities. This leads to almost every listed company looking like a good investment, given the almost zero or even negative interest rates on bank accounts and government bonds. Thus, we are living in the greatest stock market bubble in human history lead by technology stocks predominantly from the USA, but also from China and to a lesser extent from Europe. 


Without central bank money flowing into technology companies, I would say Palantir Technologies' market capitalization could rise to 200 billion USD in 12 years. And this is based on an assumption, that Palantir achieves a net profit margin of 20% in 5 to 7 years and artificial intelligence really brings about the fourth industrial revolution. Yes, many would say "Look at Amazon". But Amazon covered its expenses for a long time, even if barely. And now Amazon has its cloud business with which it makes profits and justifies to a certain extent its market capitalization.

The Federal Reserve is about to test how banks would cope with a 55 % fall in equity prices. I would say, that the Nasdaq Composite is overvalued by even more - by more than 60 %.

The bursting of the stock market, bond market and real estate bubbles would lead to a new Great Recession and economic suffering.

But until then, stocks' prices could go even higher.

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 Big Is the Technology Stocks Bubble?

Dear Reader,

Many analysts, economists and portfolio managers are saying we are in a technology stocks bubble.

But how big is the global technology stocks bubble? I estimate the global technology stocks bubble's value is around 9 trillion USD. The Nasdaq Stock Market value, where most US technology stocks are listed, is 17.2 trillion USD. If US technology stocks crash, this will lead to a fall in the value of global technology stocks, especially those listed in China which are remarkably big in market capitalization.

Actually, the current technology and general stock market bubble is the greatest in terms of market capitalization in history. 11 years of money creation or quantitative easing by leading global central banks, which is an euphemism for printing money, brought unprecedented liquidity to income generating assets like stocks, bonds and real estate.

Due to the structural competitiveness of the Information Technology sector much of the money created by global leading central banks buying up assets went into technology stocks. Firms all around the world due to the sluggish economy and in search of ever higher profits are trying everything to cut costs. Firms are replacing humans with computers and computers with cloud based IT services. This only brings greater demand and revenue growth for the largest technology companies leading to them producing spectacular revenue growth and net profit. At least most of them are profitable.

And Wall Street equity research analysts are giving a helping hand by producing equity research reports constantly raising their price targets for technology firms based on future projections of continuing spectacular revenue and net profit growth driven by the secular move to technology to cut costs and produce more efficiently. And later their analyses are followed by fund managers investing more and more of the money entrusted with them in technology stocks and technology exchange traded funds. Thus prices of technology stocks keep going higher and higher leading to new analyses by Wall Street equity research analysts raising prices of technology stocks, new money flowing in and new technology stock prices records.

This will all work until it doesn't. Some technology bubbles like Groupon, Fitbit, Gopro, Blackberry have already burst. 

One trigger for the 9 trillion USD  US technology stocks bubble to burst will be leading central banks like the Federal Reserve, The European Central Bank, The Bank of Japan and The Bank of England raising their key interest rates due to a sudden spurt of inflation. This will raise the general interest rate levels in the economy, money will flow into bonds' higher yields and to the higher interest rates on deposits and flow away from technology stocks. The prices of commodities like corn, wheat, oil and soybeans have already risen which may be the precursor of sudden inflation bouts.

The current 9 trillion USD bubble in global technology stocks is the biggest in history. If I have to estimate, I would say that the global overall stock market bubble is worth no less than 30 trillion USD or 34 % of the global stock market capitalization of 89.5 trillion USD.

I forecast the global technology stocks lead bubble will continue inflating for 1 to 2 years more. It may burst even earlier.

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

Tesla and Its Investment in Bitcoin. An Analysis

Dear Reader,

Tesla, the electric vehicle manufacturer, recently announced that it has bought 1.5 billion USD in  Bitcoin and that it has changed its investment policy so it can invest in Bitcoin to increase the return on the cash and cash equivalents it holds.

Tesla is now valued at 783.36 billion USD by public markets. How is Tesla's Bitcoin investment going to affect Tesla's market capitalization? First, I have to say that Tesla, with its current market capitalization of 783.36 billion USD, is grossly overvalued. I estimate Tesla is not worth more than 120 billion USD in the long run.

To justify its current valuation Tesla has to take over 80 % of the automobile market and to exhibit profitability like boutique sports car producers like Ferrari. Simply, this is a farfetched assumption. I do not believe Tesla has such an edge to achieve such a market share in the automobile market. And producing cars is characterized with notoriously low net profit margins.

Tesla's investment in cryptocurrencies will do little to alleviate its current overvaluation. Tesla's 1.5 billion USD investment in Bitcoin is simply dwarfed by its 783.36 USD billion market capitalization. Even if Tesla triples its cryptocurrency investment it will win 3 billion USD, which is still a lot, but not much compared to the cash company burns to finance its growth.

Tesla is also contemplating accepting Bitcoin as payment for its cars. This, actually can change things, because Tesla made 31.5 billion USD in revenue in 2020. If the price of Bitcoin and cryptocurrencies shoots up in the short term, Tesla could make significant gains on its revenue proceeds. If Tesla makes let's say 40 billion USD in revenue in 2021 and the price of Bitcoin doubles in the next 1.5 years, Tesla could probably make 27 billion USD profit on its cryptocurrency revenues, because it also needs to cover its costs. If that scenario turns out to be true, this could raise my estimate of Tesla's intrinsic value to 170 billion USD in the long-term.

However, if Bitcoin crashes Tesla's cryptocurrency strategy could burn the company heavily.

All in all, I estimate Tesla's intrinsic value currently stands at 120 billion USD. Tesla's cryptocurrency investment, though, is an optional swing factor that can raise that estimate. That premise hinges on the future adoption and price movement of Bitcoin.

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

Bumble Valuation

Dear Reader,

Bumble, the online dating site and application, staged an IPO on the Nasdaq last week.

Bumble's current market capitalization stands at 8.26 billion USD.

I believe that Bumble is roughly fairly valued. In its most recent year and quarter Bumble's revenue growth seems to be stalling. What is more, Bumble is barely profitable. With all that in mind, Bumble current valuation seems to be a fair representation of its current intrinsic value.

And all this is premised on the current euphoric state of the US stock market, technology stocks especially. The US and global stock markets are in a bubble. We are living currently in the biggest stock market bubble in terms of market capitalization in history. I believe the Standard and Poor's 500 index is overvalued by more than 35%, the Dow Jones Industrial Average by more than 25 %, while the Nasdaq composite is overvalued by more than 55 %.

However, as long as we are in this euphoric state, the current valuation of many technology companies may seem reasonable. Once reason sets in, though, many technology stocks' prices will fall abruptly. Bumble is a case in point. If we have a stock market crash Bumble's value may fall to 2 billion USD. Now, however, a valuation of 8.26 billion USD for Bumble seems not farfetched.

Investors simply have unrealistic growth expectations for the global economy and companies' profits. And much of this state is helped by global central banks' money creation.

All this will end badly, of course. The bubbles will burst, stocks' values will come crashing down to earth and a severe recession will follow. But due to leading central banks' stimulating policies the stock markets run higher could go on for 2 to 3 more 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

Can Bitcoin Be an Alternative to Gold and Hedge Inflation Risk?

Dear Reader,

Bitcoin is currently trading at 47 391 USD.

Manu analysts are extrapolating that Bitcoin could replace gold as an inflation hedge.

Such a premise may well be one of the reasons that the price of gold has not risen really a lot, despite leading central banks creating money by using the printing presses.

Actually, I think it would be difficult for Bitcoin to fully replace gold. Bitcoin's price is significantly more volatile than the price of gold. Which precludes Bitcoin as a very safe investment vehicle. Bitcoin could become more similar to real money, which gold never did due to not fulfilling the functions of unit of account and means of exchange. Many are saying that Bitcoin is USD 2.0, a new global currency. Actually, I think Bitcoin, if it exhibits less volatility, could easily function as money.

But Bitcoin's main usage now is as an investment vehicle, similar to gold. However, when inflation comes, the Federal Reserve, the US central bank, and other leading global central banks will raise their key rates which will raise the general interest rate levels, which on its turn will burst the stock market bubble. Bitcoin is a risky asset which has high correlation to stocks. When inflation appears again, I forecast Bitcoin could well fall a lot.

Much of the money being created by central banks now is finding its way into stocks, real estate,  Bitcoin and other cryptocurrencies. But when central banks stop creating money, this could well crash the prices of cryptocurrencies, stocks and real estate assets.

However, the global economy is very weak, so central banks are compelled to go on stimulating growth by buying up assets from the economy and market participants in exchange for money. The electronic cash that enters the economy will go on finding its way into many assets, cryptocurrencies including.

I think Bitcoin and stocks could go on rising for 1 to 2 years more.

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

At What Level of the 10 year US Government Bond Yield a US and Global Stock Market Crash Could be Triggered?

 

Dear Reader,

The yield on 10 year US government bonds is at 1.169 %.

Many analysts are saying if the yields on government bonds rise a lot, this could trigger a stock market crash. And the 10 year US government bond yield is the obvious global benchmark for the yields on bonds.

I forecast that when the yield on 10 year US government bonds starts nearing  3 %, stock markets in the US and the world over could easily fall by more than 30 % to 40 % measured by the main stock market indices.

The main reason for that is that  higher yields would make US government bonds more attractive, capital will flow in the US bond market, which in turn will appreciate the USD exchange rate to all other currencies. As most assets are measured in United States Dollars this would bring a fall in the price of equities and commodities. Global stock market indices could fall more than 30 % and the Nasdaq Composite could fall more than 50 %.

Will the yield on the 10 year US government bonds reach 3 %? Not in 2021, I think. The US government is well aware of the effect that a very expensive USD could have on global markets. So I think the USD will appreciate mildly, which will limit the gains of stock markets, but stock market indices, especially the Nasdaq will go on rising, nonetheless. 

What is more, a very strong US dollar could have a devastating effect on emerging markets which mainly finance their government and corporate debt in USDs. Thus, emerging markets seeing their aggregate output going down, on their turn will stop consuming US and Western European goods, which will slow the global economy and the proverbial and expected economic recovery from the coronavirus could prove illusive. 

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 Much Will Be Tesla Worth in 7 Years?

 

Dear Reader,

Tesla, the electric vehicle manufacturer, is valued by public markets at 807.8 billion USD.

I estimate Tesla is grossly overvalued. Tesla is barely profitable and trades at Price/Earnings and Price/Sales multiples several times other major car manufacturers.

I believe Tesla could be worth no more than 120 billion USD once the current stock market bubble bursts. Money creation by central banks aided by retail investors' investments in "dream to possess" stocks like Tesla and Apple has lead Tesla to reach valuations that can only be justified if the company somehow achieves global automobile market share of 80 % with 20 % net profit margin. Other luxurious sedan car makers selling more automobiles than Tesla like BMW and Daimler currently boast net profit margins of no more than 10 % even in spectacular quarterly reports. Audi, part of Volkswagen, exhibits similar numbers.

In short, to justify its current valuation Tesla should simply break into other industries or have almost the whole automotive market for itself which is a real stretch of the imagination.

I could easily see Tesla worth no more than 120 billion USD 7 years from now.

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

Cryptocurrencies as Investment. An Analysis

Dear Reader,

Since their introduction in 2015 cryptocurrencies are becoming ever more popular investment vehicle. Now even large financial institutions like asset managers and hedge funds are investing in Bitcoin and other cryptocurrencies, in addition to the already present individual investors.

Cryptocurrencies issued by companies are basically a leveraged play on a company's projects. Bitcoin is a bit different, since it is basically the founding type of ecosystem and a flagship for cryptocurrencies.

One problem with investing in cryptocurrencies is that cryptocurrencies due to not participating in the companies' capital structure are very volatile. One can make multiples of the initial investment, but loose more than 80 % if the investor has a short-term investment horizon and enters at a short term cryptocurrency price peak.

Nonetheless, all points to the fact that cryptocurrencies are here to stay. Bitcoin saves time, money and effort for people. Bitcoin is still far off from becoming real money due mainly to its unstable price which prevents Bitcoin attaining the store of value function of money. That said, however, Bitcoin has proved a great investment since 2015. Bitcoin and other cryptocurrencies' prices hinge on their adoption. Here at play is people psychology, but people like new things, they like technology, they like saving time, money and effort and enjoy success. All attributes that cryptocurrencies seem to provide, at least at present.

Investing in Bitcoin and cryptocurrencies has its pitfalls, but also can provide huge windfalls. 

Agile risk management is key.

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

Palantir Is at the Forefront of Artificial Intelligence. A Valuation.

Dear Reader, 

Palantir Technologies Inc., the software company that specializes in data analytics, is at the forefront of artificial intelligence.

Palantir has arguably the only really scalable suite of artificial intelligence products. Palantir is currently valued at 61 billion USD by public stock markets. Palantir's market capitalization has more than tripled from its IPO. 

I believe Palantir is overvalued currently. However, in the long term, 7 to 10 years, Palantir could well prove grossly undervalued. Palantir is on track to have reached 1 billion USD in 2020 revenue. The company is heavily loss making.

However, artificial intelligence is the fourth industrial revolution itself. Artificial intelligence epitomizes how machines driven by algorithms will become more efficient and productive. And Palantir harnesses data, uses artificial intelligence/machine learning to produce insights.

That is why, if Palantir goes on developing its artificial intelligence products set ambitiously I think Palantir could reach 200 billion USD market capitalization in 7 to 10 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