Papa Putin to the Rescue

Apparently, Putin said he’d talk about resolving the Ukraine issue. As a result, european stocks are sharply higher and US futures are indicating a +92 open for the Dow.

Back to the subject of buying internet stocks. After careful consideration, gawking at the “pin-action” in stocks like FEYE and TWTR, I’ve decided that anyone found guilty of buying these stocks should be offered the electric chair. Clearly, these people have little regard for their own money, or personal well being. I say we expedite the issue and shock them back into the graces of humanity.

How do we value these companies? What are reasonable levels to start buying? The answers are right in front of our faces, with some of the old line tech names. Let’s discuss, shall we?

We shall.

EBAY 4x sales

YHOO 8x sales (inflated due to Alibaba)

GOOG 6x sales

BIDU 10x sales

PCLN 9x sales

I think it’s fair to say the above companies have proven to be successful. While their stock prices may or may not be inflated, I believe their price to sales ratios could serve as a guideline to where some of these newer names might trade. For one, most of these newer names do not make money. However, since they’re much smaller, they deserve  takeover premiums.

The average p/s ratio of the stock mentioned above is 7.4. Let’s affix a 30% premium to that and say these new “cool” stocks should be priced at around 10x sales. Fair? Now let’s look at where these stocks are trading, post meltdown.

WDAY 29x sales

TWTR 27x sales

Z 21x sales

SPLK 21x sales

GRUB 18x sales

FB 17x sales

QIHU 16x sales

YELP 16x sales

TRIP 13x sales

LNKD 11x sales

PANW 10x sales

AWAY 8x sales

OPEN 8x sales

SALE 8x sales

TRLA 7x sales

CRTO 2.9x sales

ANGI 2.4x sales

SFLY 1.8x sales

GRPN 1.8x sales

Potentially, some of these stocks have 60% further downside–if we’re gonna go all the way. Other names are within reasonable valuations and can be accumulated, if you’re into that sort of thing. The danger lies most in the names trading above 10x sales.

All that aside, it looks like a bounce this morning. I am sure it will last for a solid 15 to 20 minutes before selling off in horrific fashion.

Why did all of those “talented” programmers choose to work at Twitter? As a matter of fact, why do any of these modern day electricians, plumbers and handymen, also known as programmers, choose to work at their respective companies?

Did they choose Twitter for the culture, innovation, moral code? Or, perhaps they felt it’d be a good company to work at for the next 30 years, build a career, retire and live happily ever after?

The answer is no.

The only reason why people work at these hot internet firms is for money. We are not talking about a little bit of money either. We are talking about hitting lotto type of money. The sort of money you do not walk away from. It’s life changing, it’s awesome, and it’s legal.

All of the early investors in Twitter were selling today. This isn’t rumor, but fact. They own it for practically nothing and know the gig is up. We all knew this day of reckoning would come, eventually. None of these tech firms were worth 10, 20, 30 billion dollars. We were chasing dollars in a dust storm, trying to grab one more hundo before we choked to death.

All of these disgusting companies, “Silicon Filth”, as I like to call them, promote of brand of vulture capitalism that can only be described as “a culture of losing.” These people never tossed a football in their lives. They do not know what it feels like to be on a team–not some sort of tech nerd team either–a REAL team. As such, they now find themselves at the top of the pyramid. It’s a house of cards, ready to fall down, and the last man out loses. They do not have allegiance to the companies they work for, only themselves. They are losers and that’s how losers behave.

Look at Twitter, how that company was forged on deceit, a giant ponzi scheme thrusted upon the masses amidst a carnivale of praise by Wall Street’s finest and smartly dressed media titans. There aren’t any loyal employees at Twitter, only opportunists.

When I founded iBankCoin, for good or for worse, I decided we wouldn’t take in outside money and become beholden to craven bloodsuckers, whose sole purpose in life was to sell to the highest bidder. Although small, we’ve been profitable from day 1 and now have 6 full time employees, all with job security because we make our own way. iBankCoin dies if no one cares. Luckily, we all care and will make sure she lives for the next thousand years.

But Twitter, in all of its glory and unprecedented growth, no one seems to care. They sold stock today and will sell tomorrow and will continue to sell, like a glutton eating chocolate cake, until they are good and fat.

That just about sums about Silicon Valley.

UPDATE: Need I say more?

QTWW -52%

AEIS -21%

ININ -19%

TWTR -18%

HDY -17%

EDMC -17%

FLDM -16%

ATHN -14%

YELP -13%

TREE -13%

VRNS -13%

ECOM -13%

FEYE -12% (these misfits just announced an acquisition after the bell. The stock is down 60% over the past two months)

MWIV -12%

SGY -11%

HGR -10.5%

CRTO -9.5%

P -9%

BNFT -9%

And there were nearly 200 other stocks down more than 5% today.

TWTR is down more than 15%! today because its lock up period expired. If that makes sense to you, well then, you are a very intelligent martian–because you’re not from this planet. Stocks don’t trade down 15% because their respective lock up periods expire. That’s patently absurd. This isn’t an illiquid stock or even an up stock for that matter. Quite frankly, the computers have gone mad, selling everything remotely related to high multiple technology–grinding them into the ether.

Look at CRTO. The computers must be confused with this one, trading at a touch over 3x sales. They just smashed earnings and guided higher with a BIG beat on the top line. Early going, the stock had climbed 10%. Now it’s down 5% and rapidly taking on water.

Inside of The PPT, I built a bubble basket of my own. It’s down 3% for the day, led by losers such as FLDM, TWTR, YELP, ATHM, FEYE, PLUG, RUBI, MKTO, ECOM etc. It’s just more of the same, relentless selling into a black sea of uncertainty.

This is what I do know, however: these stocks are the plague. They should be avoided at all times. In the case of CRTO, I insist this isn’t a bubble stock and its shares should rebound shortly. As for everything else, falling by the wayside, I offer you a eulogy in 140 characters:

The bubble was great fun. It was invigorating and we all got to experience the essence of youth, to be gratuitously rich, careless–perfect.
-Fly, May, 2014

UPDATE: David Einhorn’s short ATHN to single digits presentation from yesterday.

Remember this moment boys, for as long as you live, for it is the exact moment in time when Wall St said “enough is enough.” The moment animated candies stepped onto the NYSE to mingle with the cynical alcoholics on the floor, all hope for extending the bubble died.

This is the tipping point in stock market history. It must be documented here– for the children– so that future generations learn from our mishaps.

TO HELL WITH KING DIGITAL AND MAY TWITTER BURN IN THE HELL IT WAS FORGED IN.

Try to explain to me how Italian 10 yr yields (Italian debt to GDP is approaching 130%) are now under 3% for the first time ever? Is it Russian oligarch money in search of safe haven? Are equities that unattractive that people would rather invest their money in insolvent governments? It’s not just Italy. All of the PIGS are enjoying record low yields now. Here at home, our yields continue to compress, which is a boon for governments, by the way. We tend to view these things as canaries in the proverbial coal mine. But what about the benefits?

Surely these governments benefit from having to pay less interest income on their insane amount of debt, no?

The only thing that is supremely messed up with this market is the flight out of high growth, money losing ventures, into old man stocks. Why the change in risk appetite now? Did the bubble just pop because time took its toll and people woke up and learned what a price to sales ratio was after years of ignorant bliss? Or maybe there is something insidious lurking beneath the surface?

For the most part, earnings are coming in better than expected– for the momo names. However, most of them are trading down anyway. This morning my CRTO posted much better than expected results and offered a BIG guide up. These guys aren’t valued crazily, at just a tad over 3x sales, so the stock should do well. However, if you own stocks that trade more than 10x sales and they are due to report, WATCH OUT.

I’ve only begun investing again because I felt I had to. The market demanded–so I obliged in kind. I bought a basket of stocks, some value– others beaten down momo–with the intent to make a “little bit of money.” I’ve been in ruts before and I tend to get very stubborn after being on the wrong side of a trade.

As I type this annoying blog, my G, H, J, K and L keys on my laptop barely work. It is driving me nuts, so I am going to cut this short.

I am convinced that I am cursed by devils. These same devils have afflicted me in the past and I’ve become accustomed to their evil ways. I must cleanse myself of the rot and negativity that has permeated my brain. I cannot sail these waters rudderless and I am in great need of purpose.

Once upon a time, I was an oil man, a coal man, a man of gold, leisure, tech nerd etc. Now I am just some guy with BIG ASS LOSSES (BALs) trying to make it back, wholly pathetic and I know it. There can be no swagger without imposing my will upon the markets, with extreme force and savage ferocity. That’s something that emanates from passion, not luck or technical analysis.

I might have to go on a journey, travel to distant lands to “find myself” and come back a new man, one who has seen the future and isn’t afraid of mushroom clouds or the Four Horsemen of the apocalypse.

ODF DAMN IT TIS APTOP SUCS!!!!

Fuckers.

The market plunged at the open, down more than 120 points, only to snooze the remainder of the day, quietly drifting higher–led by old man stocks. I spent the better part of my day stuck inside of the dealership, repairing a flat tire. As I type this on my laptop, I see the keyboard isn’t working as it should, so I will be making an appointment at the local Apple store shortly.

Speaking of Apple: it is Wall Street’s piggy bank, once again. No one is concerned with the lack of innovation anymore, because Samsung seems to have stalled themselves. What we are left with is a commoditized company, with a dominant market position and cash reserves that make the US government jealous.

All of my peers are keenly interested in the Ira Sohn conference today, a charitable event where narcissistic hedge fund managers get to aggrandize themselves, all for the sake of charity.

I couldn’t care less, truly.

Into the bell, I have some up stocks, some down, nothing too exciting. I will look to invest the rest of my cash this week, completing my journey from degenerate stock gambler to a person with a reasonable portfolio of stocks that can be expected to preserve my capital, if nothing else.

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way–in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.

 

-Master of the English language, Charles Dickens

There isn’t anyone who has ever written a passage as succinct and haunting as the opening paragraph in A Tale of Two Cities, by Dickens. The first time I read those words, I was hooked. In many ways, it describes the plight of mankind, at least since the invention of fire and the wheel.  There will always be injustices thrusted upon the lower wrung of society and there will always be excesses enjoyed by those in a position to enjoy them. Somewhere in the middle we fight for position, trying to outmanoeuvre one another for the spoils of capitalism. To that end, many of us (speaking in general terms here, nothing personal you insolent knave) cheat and steal to further our position, regular mountebanks living in the shadows of treachery.

Here is my point: how is it that we were stricken by panic, sheer unadulterated panic, when rates were going higher? Now that they’re going lower, these same blackguards are trying to instill fear into the hearts of all of you in the middle, who rarely refuse an opportunity to step on each other’s faces in order to get a leg up on the competition. This is intellectually insulting and you should try to ignore what the hucksters in the bond markets are doing, for they are always led astray–easily tricked like red meat tossed at a dog…by a burglar.

I was going to post some research that I’ve been doing, pertaining to cash rich companies that might be worth your while in this era of obscene value we find ourselves in. But then it dawned on me,  none of you are interested in “uncovering” long term value. This ludicrous wave of value bargain shopping is ephemeral and will not last though the summer.

While I’ve been taking my hits with equanimity, there is nothing that I want more than to throw my African spears through the chest cavities of the parasitic fainéants who fritter away in the comments section of this great house. If you are intent on offering nothing to the conversation, as we try to wade through, mind you, this Warren Buffet market, then you and I have very little to discuss.

The bannings shall continue until morale improves.

I invite you to continue reading, bearing witness to what can only be described as Annus Mirabillis, a year in which I intend to perform great feats of magic and introduce the pangs of misery to my enemies, the very same misery that I’ve been burdened with for the past 8 weeks, only a lot stronger. Remember, it’s not paranoia if people are truly out to get you. After seeing how many catamites decided to appear– in the comments– when I was at my lowest point in over a decade, there can no longer be a discussion of whether or not I exaggerate the threat.

S&P futures are down 2, after reports that a single Russian soldier was spotted inside of Ukraine with a loaded pistol.

https://www.youtube.com/watch?v=ZvclxOKoAug