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America's Five Biggest Tech Stocks Lost $97 Billion Friday (yahoo.com)
An anonymous reader quotes CNBC:
The so-called "big five" -- Apple , Alphabet Class A shares, Microsoft , Facebook and Amazon -- lost more than $97.5 billion in market value between the close on Thursday and the close on Friday, according to FactSet, dragging the Nasdaq to its worst week of the year. Shares of Apple fell nearly 4 percent on Friday, while the other four companies fell more than 3 percent. For most of the day, only 3 stocks in the S&P 500 tech sector were in the green: IBM , Teradata and Western Union . Apple, Facebook, Amazon, Netflix, and Alphabet all traded more than 2 times their 30-day average volume... "They're just plain overbought," said David Bahnsen founder, managing director and chief investment officer of The Bahnsen Group, a private wealth management firm. "They are extremely stretched from a valuation standpoint."
CNN notes the drop occurred "after a Goldman Sachs analyst questioned this year's run-up in the industry's five biggest names." They also added that "The top five techs today account for 13% of the market value weighting in the S&P 500, even though they are only 1% of the companies in the index."
CNN notes the drop occurred "after a Goldman Sachs analyst questioned this year's run-up in the industry's five biggest names." They also added that "The top five techs today account for 13% of the market value weighting in the S&P 500, even though they are only 1% of the companies in the index."
This is really just the fallout from the devastating news on Friday that Microsoft is closing up shop on Docs.com. It's madness, sheer madness I say! ;)
Anons need not reply. Questions end with a question mark.
Why do people own stocks? There are three primary reasons:
1. Control.
The mindset that prevails now among tech companies, and especially those founded by Silicon Valley types, is that investors are a necessary evil to be controlled. So they issue special shares to themselves to ensure that no matter how many shares somebody else owns, they still have control. It's a giant middle finger to the average investor whom the Silicon Valley types have zero respect for. Why would you want to invest in a company that doesn't care about you or your capital? It's like paying for the privilege of being abused. So in the case of these tech companies control is essentially impossible which eliminates this reason to own the stock.
2. Dividends.
Another reason to own a stock is to have a claim to a share of the profits that are distributed periodically to the owners. Some tech companies pay a dividend and some don't but even those that do offer a relatively miserly amount compared to their profits and market valuation. A look at tech company balance sheets reveals huge war chests full of cash or equivalent short term liquid investments. Doesn't this money belong to the shareholders? Why do the tech companies need such large hordes of cash in what is essentially a low capital equipment expense business? Again, this signals a lack of respect for the shareholders.
3. Capital Appreciation.
The final reason to own a stock is to have a stake in a growing business that will, by virtue of the business becoming larger and more profitable, grow in value over time. However, in the case of these tech companies, the lack of control makes any liquidation event, even in the distant future, a theoretical impossibility during the lifetime of the founder and probably for some time afterward too since tech billionaires like to put their shares into charitable trusts for long term social engineering projects. These trusts will probably continue to monopolize these assets for decades after the passing of the founders. Where is the capital appreciation if nobody can ever get control and liquidate the stakes?
Given all of these factors, how is tech an attractive investment? It looks more like a vehicle for speculation to me, at least for the average investor.
All you have to do is look at the P/E ratios of the S&P500 to see that current stock valuations aren't based on fundamentals.
The PE for the S&P is about 25. That is a 4% ROI. Apple's PE is about 18, which is an ROI of over 5%. Ten year T-bills pay 2.5%. So unless you think interest rates are going to soar, stock prices look reasonable.
Amazon's PE is WAY higher (over 500) but Amazon is a growth stock. You don't buy AMZN for the dividends.
If/when rationality returns to the market, it'll be a bloodbath.
I have heard a lot of chicken-littles voice both of these opinions:
1. Robots/AI are going to steal all the jobs, and all the wealth will go to capital.
2. Stocks are way overvalued
If you believe both of these, you have some severe cognitive dissonance.
Disclaimer: I don't believe either of these things.
Lots of other tech stocks also got hit after big runups this year. Unless there's a war, it should just be a pause though.
We have low unemployment and rising wages. Cloud computing is still ramping up. Semiconductor companies can look forward to VR and AR, autonomous driving, 5G, AI, industrial automation, defense projects, video gaming, and IoT for above-GDP growth opportunities over the next 2-5 years and beyond. Network buildouts in the US for 5G, in China for better connectivity outside major cities, and eventually in India will be the future story for communication equipment makers.
Things are still running along nicely, but even the strongest runners need to take a rest sometimes.
Comparing stock valuations to an artificially-depressed and manipulated interest rate produces skewed valuations metrics. Naturally that's why the Fed has interest rates so low, to encourage such comparisons and thus more risk taking. But what's good for short-term boost to economic investment is bad for he investors' long-term results.
Comparing stock valuations to an artificially-depressed and manipulated interest rate
Right ... there is a vast conspiracy of the rich to push down interest rates so poor people make less money on their vast bond holdings. Whatever.
Interest rates are low because inflation is low, and higher interest rates would push us into ruinous deflation. There would be nothing "natural" about that.
Amazon has been a Growth stock for 20 years. The reality is that is a speculative stock that has never been pressured to earn a profit.
If Amazon has to actually generate real profiles, you can beat Amazon's stock price would crash spectacularly
After nearly a decade of QE, and with prime interest rate next to zero, there's a lot of "hot money" floating around in search of "investment" opportunities. International corporations have a couple trillion (collectively) parked in off-shore tax havens -- against which they can borrow at borrow at rock-bottom rates, and then use that money to buy-back their own stock and pad the already obscene bonuses of their fat-cat CEOs.
This is just another bubble, pumped up by the shameless, libertine excess of the FED's printing press. Look for more "volatility" like this in the future as the bubble nears its bursting point.
XML is like violence. If it doesn't solve your problem, you're not using enough of it. --AC
Silicon Valley learned from older companies what happens when you let shareholders run the show entirely. Corporate Raiders, leveraged buyouts, asset stripping, golden parachutes (used to counter raiders, now abused by management).
Shareholder driven mean short term only, long term profitability be dammed.
Now, has tech taken it too far in the other direction? Probably. As for the warchests, no, those do NOT exclusively belong to shareholders. Shareholders are only one of many stakeholders in a company, along with management, employees, and customers. Investor money is a necessary but NOT sufficient ingredient for a company. If shareholders direct the company in a way that you lose all the productive employees, thereby killing the company, what was the point?
The 8 years of scapegoating you're referring to were all the liberals blaming Bush for everything that happened under Obama's watch.
- The economy, years 0 - 8
- The Patriot Act, extensions, and expansions, years 0 - 8
- The murder of countless innocents in several farcical wars, years 0 - 8
- The expansion of pervasive and invasive spying programs along with the erosion of liberties, years 0 - 8
- The continual undermining of law and abandonment of duty with regards to border control, years 0 - 8
- The murder of an American citizen via drone strike
- The huge spike in health care premiums after the "Affordable Care Act" was passed
But hey, keep on trucking, retard.
Partisans like you, with your pitiful talking points taken directly from party heads, are exactly why America will never be great again.
Democrats, Republicans, talk about getting behind a bunch of idiots. It was hilarious watching a literal election between a giant douche and a turd sandwich.
And you idiots go "don't blame me! I voted for giant douche!"
Congratulations. Enjoy your welfare cheque.
AAPL: 5% off split adjusted all-time high, set less than 1 month ago
AMZN: 3.8% off split adjusted all-time high, set less than a week ago
FB: 4% off split adjusted all-time high, set same day
GOOGL: 3.8% off split adjusted all-time high, set less than a week ago
MSFT: 3.5% off split adjusted all-time high, set less than a week ago
No drop more than 5% and four of five set new all-time highs this week. What part of this does not look like profit-taking?
Step 1: Short major tech stocks to the tune of billions with accounts obfuscated through a beach of shell companies.
Step 2: Your analyst "Has a press release noting that they are overvalued"
Step 3: Wipe with thousand dollar bills for the rest of your days.
You've got something backward here. Inflation forces you to use it or lose it, because its value is going down. Deflation encourages you to hold on to it because you can get more use out of it later than you could now.
-Forrest Cameranesi, Geek of all Trades
"I am Sam. Sam I am. I do not like trolls, flames, or spam."