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Robinhood, Reddit, and the Cram Down of Economic Populism
Posted on: February 1, 2021 at 09:47:57 CT
BH O'bonga MU
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"If short-sellers keep the market honest by preventing overvalued stocks, why are stocks so overvalued? Consider the Big Tech stocks, since they’ve become so concerned about eliminating competitors in the name of protecting us from hate speech and misinformation:
Amazon shares have a price-to-sales ratio of 4.8 and a trailing price-to-earnings ratio of 96.3.
Google has a P/S ratio of 7.6 and a P/E of 36.7.
Apple has a P/S ratio of 9.1 and a P/E of 43.3.
Facebook has a P/S ratio of 9.9 and a P/E of 31.0, and
Twitter has a P/S of 11.0 and a P/E of 21.9.
A “normal” price/sales ratio for a stock is between 1 and 2. A “normal” price/earnings ratio for a stock is around 15. If Big Tech stocks were trading at normal, historically sustainable sales and earnings ratios, they would collectively lose trillions in value. They are not alone. The so-called superbubble in asset prices has never been bigger, and “short-sellers” aren’t doing a thing to counter it. There’s a reason for this.
Short sellers don’t necessarily target overvalued companies. They can’t. The market is not rational enough to permit short sellers to do the job they claim they have a moral mandate to do. Short sellers target companies that they think will go down in value, for whatever reason. Those reasons can be based on deliberately spread rumors as easily as financial metrics."
https://amgreatness.com/2021/01/30/robinhood-reddit-and-the-cram-down-of-economic-populism/
Amazon shares have a price-to-sales ratio of 4.8 and a trailing price-to-earnings ratio of 96.3.
Google has a P/S ratio of 7.6 and a P/E of 36.7.
Apple has a P/S ratio of 9.1 and a P/E of 43.3.
Facebook has a P/S ratio of 9.9 and a P/E of 31.0, and
Twitter has a P/S of 11.0 and a P/E of 21.9.
A “normal” price/sales ratio for a stock is between 1 and 2. A “normal” price/earnings ratio for a stock is around 15. If Big Tech stocks were trading at normal, historically sustainable sales and earnings ratios, they would collectively lose trillions in value. They are not alone. The so-called superbubble in asset prices has never been bigger, and “short-sellers” aren’t doing a thing to counter it. There’s a reason for this.
Short sellers don’t necessarily target overvalued companies. They can’t. The market is not rational enough to permit short sellers to do the job they claim they have a moral mandate to do. Short sellers target companies that they think will go down in value, for whatever reason. Those reasons can be based on deliberately spread rumors as easily as financial metrics."
https://amgreatness.com/2021/01/30/robinhood-reddit-and-the-cram-down-of-economic-populism/
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Robinhood, Reddit, and the Cram Down of Economic Populism - BH O'bonga MU - 2/1 09:47:57