Smart Money Is Selling…
by Dave Kranzler, Investment Research Dynamics
…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.