Smart Money Is Selling…

…Goldman, Citi, Deutsche Bank (Zerohedge.com).    And then there’s this from Mark Faber, in response to a lead-in statement from Erin Ade of RT that the S&P 500 p/e trades at 17.6x trailing earnings:

“(deep laughter) I have to laugh. Who knows what the earnings are. They’re like the statistics published by the U.S. Government. They’re probably all doctored. So maybe on a normalized basis the S&P 500 p/e is maybe much higher. All I know, and this is a relatively valuable measure of valuation, the price to sales ratio of the S&P 500 IS at the highest level ever.  And sales are less doctored than earnings.”

You can listen to the rest of the interview with Faber here:   U.S. Stocks To Correct 50%.

As Faber points out, the income statement line item below the revenue line at every public company in America is manipulated.  Some, like Amazon.com (AMZN) and the homebuilders,  are manipulated much more than most others.  The SEC lets Tesla get away with manipulating its revenue numbers, which is beyond criminal.

My research reports on the homebuilders and on Amazon.con go into explicit detail which shows how these companies are manipulating their numbers in order to present highly misleading operating and net income numbers.  As an expert in GAAP accounting, if these companies were forced to re-state their earnings using the GAAP accounting standards in place in 1980, they would all be reporting huge losses, especially Amazon.

As an example, AMZN trades at 2x sales.  Retailers historically and currently trade well below 1x sales.   For instance, Walmart trades at .6x sales and Target at .7x sales.  And that’s in an insanely overvalued stock market.  But it gets better.   WMT trades at 7.9x operating income and TGT at 6.8x operating incomes.   BUT Amazon.con trades at 977,528x its 2014 operating income!

My research report on AMZN shows in documented detail why AMZN does not deserve a huge valuation premium to companies like WMT and TGT.  In fact, because AMZN’s operating income has been declining every since 2004, as I show in my report, it can be argued that AMZN should trade at a discount to the WMT/TGT multiples.

Read my report and find out why AMZN is insanely overvalued:   AMAZON.CON  (reader testimonial:  “By the way Dave your ideas regarding Amazon.con were the best I’ve ever heard!  When it finally turns around and crashes it will be something for the history books!)

I include a section that discusses using options to short the stock and to help manage the volatility risk of a highly manipulated market.  And believe me, if big hedge fund managers like David Tepper are dumping stocks, I can guarantee you that most smart money hedge funds are dumping  AMZN into every rally that has volume, as AMZN is one of the largest holdings in the hedge fund world.

4 thoughts on “Smart Money Is Selling…

  1. After the crash of 1929 and the Great Depression that followed, it took decades for Wall Street to regain the trust of investors. In some cases, a generation or two of Americans avoided all stocks like the plague. The stock market was looked upon as crooked, a rigged game and the ultimate con game. Wall Street didn’t really rebuild its reputation after the crash of 1929, it only regained its position as the place to invest as the older generation died off and the younger generation came of age, the generation that had not been burned by the markets.

    Now we come to the hyper-valuation of all of these inflated stocks, when the crash comes (and I believe it will someday) a new generation or two of potential investors will avoid stocks altogether leaving Wall Street with few sheep to shear and less influence in the world (which would not be a bad thing considering.)

    When will the day of the crash come: When some derivatives blow up for some reason and nearly takes down the world’s financial house of cards, when sales of products from Walmart, Amazon and the rest are so low that the companies are too unprofitable to run, or some black swan event pops up that no one saw coming, that day of financial peril is the ultimate question that no one can answer.

    The Stock markets are rigged (false valuations of company, computer algorithms doing the buying and selling, the SEC as toothless and useless as the CFTC)

    The commodity markets are rigged (several years of gold and silver sold short on the market an no one sees anything wrong with this, the CFTC as the new three moneys, see no manipulation, hear no manipulation, speak no manipulation)

    In a world where lying is the norm the powers that be should not be angry or surprised when honesty is abandoned by the public.

  2. Amazon trades at 977,528x its 2014 operating income?

    And so, this is a problem?

    I see PM’s are…look out belowwww…….

    Marty Armstrong has those pm’s pegged right. You should follow him.

  3. In regards of Amazon it seems almost that the stock now has hit the roof.
    They seem to have problems pumping it above 380 dollar and make it stay there.

    Are the hedgfunds aware of the fraudelent accounting and have they just been turning a blind eye to it accepting the whole thing just playing along because of the trading profits they have made?

    If the stock can´t advance any further and they know it´s a fraud they ought to be dumping it very soon or shorting it.

    It would be nice with some critical analysis regarding this in the mainstream media but I guess the illusion must be kept alive at all costs.

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