FormerXBC Inc XEBEQ

Bubblespeak

[tamaracktop]

This is quite interesting, but shouldn't cause concern.
    The Fang stocks are getting pounded again, and taking the indices with them. Just as a few of the biggest tech stocks took the market higher in a rally that was anything but broadly based, now they're taking the indices lower. That's okay. It's overdue, and not all bad. Is it a bubble? Maybe in a few stock, but not all.
     I remember the dotcom bust back in the days of Alan Greenspan's "irrational exuberance". How could I forget? Everything technology was going ballistic to the upside. Companies that were years from making a profit, if ever, were doubing again and again and again.
     I remember the high trade on Nortel. Not the precise date, but the price. It was $124.25. Nortel was worth around $400 billion back then, as I recall, and accounted for 37% of the composite index, I think. If you put $124,000 in to what was then Canada's biggest company back then, you'd have $67 left today, the last time I checked. Many people don't know it but never once in its history did Nortel report an annual profit. Not once. John Roth timed his exit well.
      When the bubble burst, the total market losses were equivalent to one in four houses in the United States burning to the ground without insurance. That's a fact.
     This time is different. This time there's nowhere to go. There's nowhere else to go so money can make money. Back then, 10 year US treasuries were yielding 4%. Today they're paying nothing. Is money coming out of high flying Fang stocks going to go into bonds? I doubt it. Is it going to go into Value stocks? Maybe some of it. 
      I think managers will be looking stocks with fundamentals that unquestionably merit investment. Fundamentals that argue a strong case for investment. Socks like Xebec, at 30 or 40 times next year's earnings, and 3 times next year's revenues. A simple example, for the purpose of illustration only, would be a switch from Ballard to Xebec. How can you not look at the fundamentals of the two and think that would be an ill-advised switch? But it's not just Ballard. There are many many stocks that could be switched to Xebec with a resultant reduction of risk, and even a coincident  increase  in potential return. It wouldn't necessarily be secular rotation, it would be tweaking the portfolio.

[tamaracktop]

Bad wording at the end there

[westcoast1000]

Thanks for the toughtful post, TT. I agree the lack of alternatives, along with super low interest rates, are strong forces that will provide bouyancy to the price of non-FANG stocks. But in the process nearly all tech is coming off a bit.