After doing that a few months ago I didn't think much about FB until I saw Rick Santelli go off on one of his entertaining rants about FB and TWTR and he mentioned the market cap of FB being $138 billion with a B. I wondered how that can be possible given that it doesn't provide any essential goods or service. At least not in a real world where people have to work for a living. Perhaps in the land of the partially unemployed it provides a service to those wanting to post a daily "selfie". But the numbers do not lie. Since Rick's rant, the fake market cap is up another 4 billion (33% more than the entire market cap of a major semiconductor engineering company named AMD). Forget about the 148 trailing FB PE, pay it no attention
Oh, and price to sales of 20x? Never mind that. This is NOT a bubble!! Price to book of 10.7? HA HA HA HA HA!! All I can say is that these are massive, fed pumped, ridiculous dot bomb style bubble valuations that will not stand the test of time. FB will eventually BK IMO. My 5 year price target for it is $0. It's all flash and no substance. They are now in the game of having to buy up any potential competitors for their market. People should just start writing up business plans for peer to peer socialization that contain 1 line: "we plan to take 1% of FB market cap". That should be good for at least 50 million of investment. LOL.
OK, enough laughing at the fluffy valuations, let's have a look at the graph because I think FB will trade in line with the broader markets so what's true for FB is likely true for the Dow, S+P, and NASDAQ. Per below, I currently model FB shares as being in a 3rd wave. The first wave was an ending diagonal. The second wave was a sideways correction meaning that the 4th wave will be a vee correction. I think the entire stock market will stumble badly over the first quarter of the year. Then Yellen will probably re-add stimulus or undo tapering. In other words, she will get her chance to say and do things to keep the Ponzi pump going.
But toward the end of the Ponzi the herd starts to recognize the end game is near and so it needs ever larger bribes/stimulus/accommodation/call it what you want. The same ole, same ole no longer cuts it. So that will lead to a 5th wave that could go all the way to the top of the channel before plummeting, or it could fail mid channel as shown below. I'm going with mid channel failure for now because it would result in wave 5 being the same length as wave 1 and it would also leave us with "The Owl". After you see that 2nd peak sputter out, just short anything and everything because the scam will then move into full collapse mode. If my model is correct, it will be a "walk away in May" year.
With a hat tip to Prechter, this deflationary move will likely bring increased conservatism, increased public scrutiny of politicians, bankers, CEOs and anyone else who has been profiting by the Ponzi pump. People will catch up to me in losing interest in FB and Twitter and all the other ridiculous wastes of time that constitute today's "bread and circus". Expect major public names to have to step down in disgrace and I think some bankers of note will finally be sent to jail within the next 18 months. We will be lucky to avoid major social unrest as the population of unemployed grows beyond 20%.
Anyone who believes in the official 6.7% unemployment number is a flaming idiot. The unemployment figure is an in-your-face example of government conspiracy to spread propaganda as a control mechanism over the people. The government is fraudulently counting any able bodied person who would rather live on welfare, disability fraud, or face down in a gutter as "not unemployed". In other words, you are only unemployed if you are trying to find work. Everyone else can just retire in some form and still be able to feed and clothe and shelter themselves off the backs of the remaining workers.
That is crap. In a real economy there are not piles of fake money to go around. You are either independently wealthy or your family (or church) supports you. The only other alternatives are to get your lazy ass to work or starve to death. I don't care if your back hurts or you have mood swings or if both your legs got chopped off in a car wreck in which the other guy was not insured. If you want to eat and if you want clothing and if you want shelter, you work. Period. In a real economy there is no option like "I'll just go apply for disability from the government and then have all of my time free for rest and leisure". Government has no wealth. Anything that it appears to have was either stolen from the people via forced, gun to your head taxation or via borrowing on the backs of the workers or on money printing, again on the backs of the workers. There is no "free value" in this universe, no zero point economic energy. Anything that is consumed must first have been produced.
Our Ponzi economy is on its last legs and the collapse of the financial markets of all types will be the harbinger of this truth.
Actually, I beat you canceling my Bookface account over a year ago. Though it was a good way to keep in touch with my extended family, there was way too much noise and I just got tired of wasting my time in it.
ReplyDeleteBesides, over time, the ads started to be all the more raunchy, perhaps the last-ditch effort to increase ad revenue before the IPO.
To be honest, I rarely logged in even when I had the account open. My wife would tell me there was a tidbit like a family photo, etc. to go look at and so I might log in to see it. I was certainly never an active "ate up" facebook socializer. I did use it on a few occasions to test the mentality of the herd WRT conservatism but the ping always came back as "flaming liberals detected". I have not tried any ping like that in perhaps a year. I bet the story would be different today but I'm not going to invest any time checking it out.
ReplyDeleteCongrats on turning off the herd-noise!