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Abyss

Nasdaq Biggest Bubble in History

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Anyone seen the charts of Tesla, Amazon prices have gone vertical in the last week almost like Bitcoin / Gold when they hit $1900 parabolic move.... When the mother of all bubbles pop going to cause financial armageddon worldwide.

Chart below percentage gain of these tech socks in the last 5 trading days.

image.thumb.png.b55b247a3b5205e856ec96b83e8b4147.png

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Posted (edited)

I've watched a lot of videos about economics lately, it obviously hasn't sunk in because I'm not sure I will be able to explain very well

Fed creates more dollars, gives to banks, banks buy stocks, no point buying any long bonds with low interest rates 

Apparently over the past few years it's been fairly common for companies to take out cheap loans to do stock buy backs, making directors shares worth more so it's kind of an allowed type of fraud

Because of corona a lot of these companies that took out loans have been hit hard so they might have trouble paying back loans they didn't need to take out to begin with

The dollar isn't in much danger in the short term, there's a problem with liquidity still because people aren't spending that's why there's talk of giving out vouchers to spend, they want and need consumer spending. Apparently there was an issue with the dollar being too strong and countries/banks hoarding. A dollar that's too strong is bad, can't remember why

Apparently 1/3 of Americans didn't pay their mortgages in June

Don't be surprised if there's a universal basic income by the end of the year, it's going to be that or riots because too many people are going to be out of work and unable to afford food

March was a liquidity crisis, soon we will have an insolvency crisis 

For having listened to probably 50+ hours of videos about economics since March this isn't the most intelligent and well explained post is it lol 

Edited by Kman

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Posted (edited)

Watched a video a while ago saying the economy never really recovered from 2008 and was held up by money printing. Interesting times lay ahead it seems

Edited by cornishrich
Spelling mistake

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and 

'The last time equity markets were this “irrationally exuberant” was the famous dot.com bubble.  Sun Microsystems were a poster child of that market.  They saw their shares go from $10 to $60 in 1999.  Their share price compared to revenues went to over 10x in that period.  Their share price subsequently fell back to $10 within 2 years, an 83% loss if you bought at the top from which you’d then have to make 600% gains to get back to even.  Their Founder and CEO, Scott McNeely famously said afterwards (with hindsight):

“At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?”

As we sit here today amid what could be the worst recession or depression in our lifetimes the S&P500, the biggest sharemarket index in the world, has more companies trading at over 10x their revenues than the dot.com bubble and nearly 3 times as many as before the GFC.' (https://www.ainsliebullion.com.au/gold-silver-bullion-news/-e2-80-9cwhat-was-i-thinking-e2-80-9d-hindsight-v-reading-the-e2-80-9ctruth-e2-80-9d/tabid/88/a/2300/default.aspx)

 

Screen Shot 2020-07-12 at 7.52.38 am.png

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"People just want a piece of the action" is the best explanation I have heard for when stocks get to such valuations.

Recent action involves a theory regarding stimulus check influence;

https://seekingalpha.com/article/4354679-rise-of-robinhood-traders-and-implications

I think Tesla is a good example, people want a piece of the action. Anecdotally I have been asked if I owned any Tesla in somewhat of a shoe shine moment, by someone who has previously never touched stocks. Sadly I don't! :(

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I sold my NASDAQ ETF on Friday (Baillie Gifford American B). Top 10 holdings below:-

FB10C286-B6C0-4A3A-832D-8E4B17229079.thumb.jpeg.f2089bc6ff24d2e2e125f4dabe56f299.jpeg
It has done amazingly well, but for me it was time to take profits...Valuations are crazy, but if the Fed has your back this bubble could carry on inflating for some time to come...at least until elections are over towards the end of the year..but who knows? ..I certainly don’t.

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16 minutes ago, KDave said:

I think Tesla is a good example, people want a piece of the action. Anecdotally I have been asked if I owned any Tesla in somewhat of a shoe shine moment, by someone who has previously never touched stocks. Sadly I don't! :(

Always a tell tale sign that the time to exit is getting close....

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US markets where in bubble territory last year.  The reaction to Covid isnt actually helping, pumping money into assets that find their way to stock market (not direct, Fed isnt buy stocks), means the prices are going to distort. This can only lead to another crash of 10-20%.  I dont know what else they could do though to address the liquidity issues facing the economy.  Allowing an crash isnt acceptable, trying to engineer a moderate correction and period of re-valuing, re-alignment is just too difficult.  The problem is the people, they buy in and buy in, and buy in some more. Make as much as you can before it next crash, sowing seeds of the next crash.  

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1 hour ago, Kman said:

When did you start buying those?

fantastic picks if they're from a while ago

Hi..just trawled through my contract notes for the last 90 days...I haven’t been in long, but the returns have been interesting:-

My first purchase was on 28th April at £10.76, followed by several more purchases over the next few days at between £10.54 & £11.69.

I sold them over three days last week at between £14.44 and £14.70.

So...30% + profit in 3 months....that will do me just fine.

Basically, I use this fund as a stop gap for when I sell my mining shares (when a risk on environment prevails)...I may put this money to work next week in more mining ETF’s, but have taken some profit to pay for future coin purchases.

I have never seen valuations like what I am seeing in the NASDAQ at the moment, and that includes the dot.com bubble...Zoom Video are trading at over 300X next years earnings...nose bleed valuations IMO. BUT...while ever the FED is printing trillions and giving it to its owners to buy stocks with...this madness could continue for some time to come....it really is like musical chairs...you never know when the music is going to stop (Unless you work for Goldman or JP Morgan etal)

Folk need to realise that the Federal Reserve Bank is actually privately owned, then the picture becomes a lot clearer!

Happy trading...I hope it buys you some nice coins.👍

 

 

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50 minutes ago, Kookaburracollector said:

Hi..just trawled through my contract notes for the last 90 days...I haven’t been in long, but the returns have been interesting:-

My first purchase was on 28th April at £10.76, followed by several more purchases over the next few days at between £10.54 & £11.69.

I sold them over three days last week at between £14.44 and £14.70.

So...30% + profit in 3 months....that will do me just fine.

Basically, I use this fund as a stop gap for when I sell my mining shares (when a risk on environment prevails)...I may put this money to work next week in more mining ETF’s, but have taken some profit to pay for future coin purchases.

I have never seen valuations like what I am seeing in the NASDAQ at the moment, and that includes the dot.com bubble...Zoom Video are trading at over 300X next years earnings...nose bleed valuations IMO. BUT...while ever the FED is printing trillions and giving it to its owners to buy stocks with...this madness could continue for some time to come....it really is like musical chairs...you never know when the music is going to stop (Unless you work for Goldman or JP Morgan etal)

Folk need to realise that the Federal Reserve Bank is actually privately owned, then the picture becomes a lot clearer!

Happy trading...I hope it buys you some nice coins.👍

 

Ohh sorry, those stocks were part of the etf I thought you picked them individually, still that was a wise etf choice at a great entry time 

Can't argue with a 30% profit very nice 

The Fed have calmed down their spending now - https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm

As @vand pointed out in another thread, June 9th was when they really started to dial it back and you can see on the US markets it's been going pretty much sideways since then 

 

fedliquidity.thumb.png.cc40365849f591bcaf7ad3f04f89b992.png

Gold vs S&P500 since June 9th is interesting, not quite mirror images but you can gold reacted well in blue and spx in red did not (all though it's picked back up in July)

goldspx.thumb.png.cb22b6c88ec017812f22a3a30e53fa55.png


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Posted (edited)

It's not quite dotcom levels of mania yet... but it is getting there. We have a new generation of daytraders, a market which increasingly doesn't care about fundamentals, and a belief that central banks are able to prevent any big downside busts.  I think it could easily run for a few years yet.

Bull markets don't die because of external shocks imo. They die when the reach the end of their natural cycle, and we haven't quite got there yet. IMO we just had a big scare similar to the 1998 Asian crisis which happened towards the end of the 90s bull market but it wasn't the natural end of the business cycle. Traders today are now becoming increasingly emboldened off the back of the recovery, which will probably propel the market to new highs over the next few years. Then we'll reach the end of the natural business cycle and that's when you realy want to be careful with your equity exposure.

Edited by vand

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I lost a few thousand shorting the Covid rebound in April/May. Decided to sit things out until the end of the year.

Until today. I just shorted Tesla 🙃 AT $1700. Obviously didn't learn my lesson!

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51 minutes ago, freefall said:

I lost a few thousand shorting the Covid rebound in April/May. Decided to sit things out until the end of the year.

Until today. I just shorted Tesla 🙃 AT $1700. Obviously didn't learn my lesson!

Why not wait until it actually turns and starts to drop off to short?


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I detect a little sarcasm there. It was still on its way up when i placed the trade. Anyway its worked for me 😎

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31 minutes ago, freefall said:

I detect a little sarcasm there. It was still on its way up when i placed the trade. Anyway its worked for me 😎

No sarcasm at all sorry

Just I've been learning about technical analysis the past few weeks, it's big on waiting for confirmation before making a trade, you might lose a bit of the initial move but it's safer


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On 13/07/2020 at 17:43, freefall said:

I lost a few thousand shorting the Covid rebound in April/May. Decided to sit things out until the end of the year.

Until today. I just shorted Tesla 🙃 AT $1700. Obviously didn't learn my lesson!

Literally ANYTHING is easier in terms of trading than trying to short than the hottest stock in the developed world while it is still going up.

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Facts

Tesla barely makes a profit 

shares trade at 6000 times 2019 earnings 

shares trade at 160 times 2021 earnings 

Tesla now by market capitalisation the largest car maker in the world 

If that doesn't epitomise a bubble I don't know what does

Utter utter madness 

 

 

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These are the stock markets I keep an eye on in my broker account, the biggest bubble in the world NQ (Nasdaq) defies gravity yet again and world stock markets all in the green

image.thumb.png.91ebcee747f918800a96c5170fd0e8e8.png

Defies all logic what happened to the Nasdaq since the pandemic.

image.thumb.png.5a50638288fbbefbb8738fd28ba7adae.png

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Yes, Nasdaq does seem to be taking on all the characteristics of a bubble now. It's going parabolic and stretched so far above its 200wma without any significant correction. Could easily go to 20k in the next 6-12 months. 

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No doubt it's because people believe these digital companies are the only ones able to ride out or even flourish during shut downs. I'm sure that's how a lot of people and institutions feel. Own up though.. who's got shares in BA or Royal Caribbean? Hahahahahahksd'dflasf

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Posted (edited)
On 11/07/2020 at 23:53, cornishrich said:

Watched a video a while ago saying the economy never really recovered from 2008 and was held up by money printing. Interesting times lay ahead it seems

Its totally an extension of 2008, you can literally see it on the graphs when they have initiated each QE! This time it looks like they are running out of ammo. I personally think they are sitting it out as long as they can until next flu season. Bring back Covid, administer a vaccine (thats almost law to take), & mr Swabb's little group will press reset! Game over. I do get the impression it might happen before that though as you cant control the economy perfectly, just look at Lebanon, its all a big chess game in my head, but the opinions above are VERY speculative, but by all accounts it wont happen slowly, literally overnight. I dont care either way I am damn sure Im ready for it!!!

Its amazing who I have mentioned this too and they dont seem to care, they are just so fixated on covid & cant deal with anymore bad news. The problem is this is what its all been about if you ask me. At the very least a very well timed & unbelievably fluky excuse/distraction for the world economic forum. I have also watched every video going on this and everyone is saying the same thing!! Just look at Dalio's principles stuff, he flipping invented QE with benanki in 08!! 

On 13/07/2020 at 11:17, vand said:

We have a new generation of daytraders,

Precisely, No offence to Kman & myself, but we are definitely included in those stats. Yes we are both pretty savvy & due diligent, but capable of making some serious mistakes & not really knowing what we are doing. I would hate to think what the Robin Hood elite's average age is?? The shoeshine boy thing is very much a thing at the moment. 

On 15/07/2020 at 20:47, KRO said:

Facts

Tesla barely makes a profit 

Before i knew anything about this I made a few investments in my head and Tesla was one of them. I would have sold that buy now & it would have made a lot of profit. Its silly as a lot of the people buying into all of this clearly dont look at the charts and take into account how over blow it is, especially the Nasdaq. Compare that to the economy & socio political stuff (ie benefits will stop soon and a lot of people will be jobless!), then it's a smoking gun. 

Tesla, its certainly on my 'crash' list as i can see Telsa evolving over time & adding all sorts of revolutionary services & products. Microsoft also, plus a number of really safe giants, like Coke, Amazon etc. The plan, if I can build up the capital and if it ever happens is to develop a personal mini super ETF the the prices are probbaly the lowest they will be for some time. Maybe just the ones worst hit? 

There is a reason a lot of old school investors are sitting on cash and its very wise to follow them (ie buffet & Dalio) than the little kids on Youtube!!

Edited by Stacktastic

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