the S&P 500 traded at more than 50% higher than at any prior market peak valuation. The NASDAQ traded at 245 times earnings, 16 times the average NASDAQ P/E from 1971 to 1991. Also, almost every Initial Public Offering (IPO) rose to 3 to 5 times the IPO price, topping all other significant financial manias by a long shot. A large number of these IPOs had no earnings, while others were merely start-ups with no sales.Things are not so much different today, and as usual, history repeats itself and market participants are stroke by amnesia.
Here's my short-list for potential short positions:
- Baidu — most probably a scam in my opinion, and fake earnings (see previous posts on the company)
- Groupon — another company that exists only to go public. No earnings to show, and prospects extremely bleak (see my previous posts on the company).
- LinkedIn — Extremely small profit, no real growth prospect (company has already been around for 10 years) and although down 40% from the peak, it's still trading at a PE of close to 1,000.
- Zynga — Extremely high valuation (PE close to 120) for a company which futures growth I cannot understand.
- Pandora — Another company that has been around for quite a long time now, and which business model is still a mystery to me. No earnings, no growth, down already 40% from the peak, yet valued $2 billion.
- Starbucks — At a new all time high, and given the market collapse that is in the deck, I wouldn't be surprised to see another remake of the 2008 bust, when the share dropped 70% in a few months.
- Amazon — Great company, I do most of my online shopping with them. But a PER of 100? Come on.
- SalesForce.com — Good idea but poor realisation. Small profits for a company trading at 7,000 times their earnings while only down about 50% from their all time highs.