Posts by Henry Blodget
- Henry Blodget at Daily Ticker8 days ago
Editor's note: This post originally appeared on Business Insider.
Financial markets are on edge Friday morning after yesterday's bloodbath in momentum stocks.
On Thursday the Nasdaq suffered its worst one-day decline since November 2011 and is off 7% from its March high; the Dow and S&P 500 are down about 3% from their highs.
Some signs suggest that this pullback — or another one sometime soon — could get much more severe. Why?
Three basic reasons:
Let's take those one at a time.
Even after the recent drops, stocks appear to be very expensive. Does a high PE mean the market is going to crash? No. But unless it's "different this time," a high PE means we're likely to have lousy returns for the next seven to 10 years. So that's price. Next comes profit margins.
- Henry Blodget at Daily Ticker25 days ago
In January 2014, Blodget predicted stocks could fall up to 50%.
This post originally appeared on Business Insider.
I've written frequently about my concern about today's stock prices.
I believe stocks are now so expensive that they will likely deliver crappy performance over the next decade. I also believe that there is a decent chance of a 40%-to-50% crash in the next couple of years.
This view is based almost entirely on valuation: According to most historically valid and cyclically adjusted pricing measures, stocks are at least 50% overvalued, and I don't think it will end up being "different this time." I described the facts underlying this view in detail here.
- Henry Blodget at Daily Ticker26 days ago
Apple (AAPL) is in talks with Comcast (CMCSA) about a new TV-over-Internet service, The Wall Street Journal reports. The service would allow Apple to replace the cable TV set-top box and, thanks to a special deal with Comcast, provide streaming TV services with better performance than most video-streaming services like Netflix can currently offer. Apple wants to control the customer relationship and get a cut of Comcast's subscriber fees.
As described, this deal would seem to have almost no chance of being implemented.
- Daily Ticker1 mth ago
Well, everyone that is, except for Apple (AAPL), which never appears at conferences like these.
Not surprisingly, the announcements are coming fast and furious:
- Daily Ticker3 mths ago
As regular Daily Ticker viewers will know, I have recently become concerned about the possibility of a stock-market crash — or, at the very least, a long period of crappy stock returns.
Importantly, I'm not predicting a crash, but I think the odds of one are increasing. And I am holding onto my own stocks only because I have a balanced portfolio and a long-enough investment horizon that I am comfortable with the possibility of stocks plunging, say, 50%, over the next year or two.
- Daily Ticker4 mths ago
Cable network A&E suspended the star of its mega-hit reality show "Duck Dynasty" after the star, Phil Robertson, made some comments in GQ magazine. Robertson blasted homosexuality, bestiality, adultery and other "sins." He also said that black people were perfectly happy under the old segregation laws and that he had never personally witnessed any racism.
For obvious reasons, these comments infuriated people.
- Henry Blodget at Daily Ticker4 mths ago
The value of the electronic currency Bitcoin is creeping back toward $1,000 again.
And as is $0.01.
This is because Bitcoin has no intrinsic or determinable value. Bitcoin's adherents refer to it as a "store of value," but Bitcoin is only a "store of value" because, right now its price keeps going up. Unlike gold or dollars or other things that have widely accepted utility, Bitcoin's price is currently determined entirely by what someone else is willing to pay for it. Right now, because Bitcoin's price is going up, and Bitcoin is in relatively short supply, people are willing to pay almost $1,000 for it. And the ever-increasing demand for Bitcoin will keep driving the price up until people don't want to buy or hold it anymore.
- Henry Blodget at Daily Ticker5 mths ago
Economists like Larry Summers and Paul Krugman are arguing that the U.S. economy is not, in fact, still struggling to recover from the financial crisis of 2008-2009, but has instead entered a "permanent slump" in which high unemployment and slow growth are the norm.
This stagnation, Krugman argues, will be occasionally interrupted by bubbles that will temporarily create full employment — like the dotcom bubble of the late 1990s and the housing bubble of the mid-200s. But the bubbles will then burst and and plunge the economy back into the depressing new normal.
Why might we have entered a permanent slump?
Because, Krugman and Summers say, we are suffering from "inadequate demand."
In other words, the main engines of economic spending and growth — consumers, companies, and the government — aren't spending as much as they could.
- Henry Blodget at Breakout5 mths ago
Twitter (TWTR) is a media company, it makes its money through advertising. It sells little advertisements that look just like tweets that companies can buy and they can fix in your twitter stream, and they sit there and you can interact with them the way you interact with other tweets.
And Twitter charges a lot of money for these adds; the company should generate about $600 million in revenue this year, so ultimately Wall Street thinks that Twitter will be a very, very, profitable company.
One of the big differences between Twitter now and when Facebook (FB) went public is that Facebook was already very profitable. Twitter, if things go well, should go though a period where suddenly it turns profitable, and it gets more and more profitable every quarter, surprising the skeptics who are crying the company can’t make money.