Snapchat owners, SNAP Inc, will launch its eagerly-awaited $US3bn initial public offering (IPO) today, the latest tech darling set to create $Billions for the founders despite the company having never made a profit during its 5-year life, only widening losses put at $0.5BN for 2016. Furthermore, SNAP has given no promises on profits to new […]
Impeachment…..Is defined as a charge of misconduct made against the holder of a public office and they do not get any higher in the United States of America than the office of The President. The airwaves and financial talk-shops are abuzz today following the allegation that President “the Donald” Trump asked the former FBI Director […]
When Harold Wilson commenced his first stint as the British Labour Party Prime Minister in 1964, he inherited an unusually large external deficit on the balance of trade from the Conservative administration and despite fighting the markets for a couple of years, the inevitable devaluation of the £GBP came in 1967, when Wilson famously assured […]
“793”…… Global merger and acquisition (M&A) deals have been completed this year as of the end of April 2017, according to “dialogic” who collates the data involving publicly traded corporations. This is 20% lower than the comparable period of 2016 and is the lowest number since 1998, which given that stock and bond markets are […]
French voters face a stark choice in Sunday’s presidential election between joining the wave of populism that has swept across the European and American political landscape over the past year or an attempt to renew the governing principles that have guided their country for decades, albeit via a 39-year-former untested Socialist turned Centrist. With the […]
“3% annualised GDP”…… Is the expectation/hope/dream set out by the new US Treasury Secretary Steve Mnuchin this week, as he and his fellow ex-Goldman Sachs colleague and now White House chief economic advisor Gary Cohn, set out “the biggest tax reform in American history.” Tax cuts, set to slash corporate rates from 35% to […]
“7th May 2020”…… was to be the date of the UK’s next General Election, in line with the fixed-term Parliaments Act 2011. However, the British Prime Minister, Teresa May, called for an 8th June 2017 snap election this week and was backed by the two-thirds majority required from the 650 MPs in the House of […]
Just nine months after British Prime Minister David Cameron resigned, following his failed “gamble” on calling a referendum on EU membership, his successor Teresa May announced a snap election decision this week, to be held on the 8th June 2017, mercifully only 7 short-weeks from today and despite her denying any plans for an early […]
“Liquidity”…… is defined as a measure or extent to which a person or organisation has cash to meet immediate and short-term obligations, or assets that can be quickly converted to cash to do this. Put another way, it’s the life-blood of the markets without which they cease-up. There are numerous clues to assist in […]
In the late February overview, “¥en, a Desire to Watch Closely,” the message was “if ever there is a time to keep a very close eye on the ¥en, or more importantly the $US/¥ cross-rate, it’s now.” At the time the cross rate was 112.5 with four charts outlining the close correlation of the $US/¥ […]
“Rock On”…… is a song written by British singer/songwriter David Essex and recorded in 1973 shortly before a UK referendum took the nation into the European Union. In the week when “Article 50,” the process by which member states may withdraw from the EU, was triggered by the British Prime Minister, “Rock,” hit the news […]
 today, the latest tech darling set to create $Billions for the founders despite the company having never made a profit during its 5-year life, only widening losses put at $0.5BN for 2016. Furthermore, SNAP has given no promises on profits to new […]','https://www.investmentcave.com/2017/03/02/snap-back/uncategorized/', 'https://investentmatters.files.wordpress.com/2017/03/2-march-2017-blog.jpg?w=300');){kind=link}
 today, the latest tech darling set to create $Billions for the founders despite the company having never made a profit during its 5-year life, only widening losses put at $0.5BN for 2016. Furthermore, SNAP has given no promises on profits to new […]','https://www.investmentcave.com/2017/03/02/snap-back/uncategorized/', 'https://investentmatters.files.wordpress.com/2017/03/2-march-2017-blog.jpg?w=300');){kind=link}
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Snapchat owners, SNAP Inc, will launch its eagerly-awaited $US3bn initial public offering (IPO) today, the latest tech darling set to create $Billions for the founders despite the company having never made a profit during its 5-year life, only widening losses put at $0.5BN for 2016.
Furthermore, SNAP has given no promises on profits to new investors, or on just how the company will be run and if that hasn’t quite been enough to excite your speculative juices, you get no voting rights either!
If you suspect that I am “cool” towards the stock, you would be right. Yes, there will likely be a 20-40% pop on it’s day one debut, but what after that? Aside of it being impossible to actually value a stock like this, it’s the timing of its flotation that is of far more interest.
Last July’s piece on “The Madness of Crowds,” aside of reminding of financial bubbles of the past 400-years, was timed to warn of what appeared to be the end of the 35-year bull market in bonds. Thus far that looks to have been a good call.
SNAP neatly joins a rafter of warning signs that were evident at every stock-market bubble-top and evident now: excessive valuations; extreme bullish sentiment readings; historic lows of cash held within stock mutual-funds and excessive use of leverage.
On the subject of leverage, better know as debt, it’s worth a reminder just how out of whack markets can become. The following chart compares the Dow over the past 35-years, in nominal terms and in real terms, which effectively shows the Dow if the debt is stripped out
Added for good measure is the lower chart in blue, which is a standard “relative strength index” a momentum indicator where a reading over 70 suggests that the Dow is overvalued and undervalued when under 30.
Kindly note that during the 1980s and 1990s nominal and real moved together, as they did during the 2000-2003 bursting of the tech-bubble.
But then something changed, with that change being an unsustainable debt binge, larger than any other in history. The 2007/09 financial crash started a re-alignment but then the fire-hoses of “official debt” drove the nominal Dow and other markets to “valuations” unheard of.
“Stretched like a rubber band,” comes to mind, which is great fun whilst it lasts, but then the inevitable snap-back transpires, which sometimes break.