This page has been archived and commenting is disabled.
Speculation In This Sector Will End "Very Badly," Canada's Warren Buffett Says
Whether it’s subprime auto lending, Janet Yellen’s “stretched” biotech sector, or corporate credit, bubbles abound in today’s fragile market and like Mark Cuban, Prem Watsa thinks the valuations investors are placing on private tech companies are simply ludicrous. But the insanity isn’t confined to private companies, Canada’s Warren Buffett says. “Speculation” is rampant in publicly traded shares as well.
From Fairfax Financial’s shareholder letter:
I am always amazed at the speculation that can take place in the stock market, as shown in the table below, and how long it can last:
The continuing speculation reflected in the stock prices of public high tech companies has moved to private high tech companies, as shown in the table below:
The Wall Street Journal says that worldwide there are 73 companies that are valued at more than $1 billion by venture capital investors, versus half that number prior to the dot.com crash. The third column of the table above shows the ratio of the latest valuation of each company to its total cumulative equity funding raised from inception. So Uber has a valuation of $41.2 billion as compared to the cumulative equity capital raised of $2.8 billion – i.e., the valuation is a hefty 14.7 times all of the money that was raised by the company.
We’re confident that most of this will end as other speculations have – very badly!
* * *
Of course this time is always different, but when it comes to multibillion dollar valuations and tech startups, count us among those who think the following warning from Mark Cuban will one day prove to be particularly prophetic:
"The only thing worse than a market with collapsing valuations is a market with no valuations and no liquidity."
»
- 55667 reads
- Printer-friendly version
- Send to friend
- advertisements -
Shit, Kalifornia will be fucked if these companies share values implode...
That or when the water runs out in 12 months
We shall sell them water, cheap. Ten bucks a gallon. I shall call President Obama and ask for an executive order which demands that all Californans must purchase our water. It will be called the safe and plentiful water act.
no worries about the water.....O will build an aqueduct from east to west at your expense
just another couple of trillion to the national debt....and it will employ a million non citizen construction workers at above prevailng wage and not interfere with their food stamps, free health care or tax refunds
They are .
Kali has been fucked and as kali goes so does the rest of us. We are so fucked the question is which black swan will it be and when. I still think Putin will reapear and save the world from wherever they have hidden him
i think the pending 8.0 earthquake will wipe away their ability to manipulate/levitate
I thought earthquakes, plagues, pestilence, natural disasters and disease were good for the economy. /Keynes
As long as they happen next door, sure.
...i'm in canada....so gimme some warning on that pestilence
Mexico evidently has an under the table Repo deal going for Cali; financed by China.
Let it implode, buy the damaged goods.
Reverse Gadsden, win,win.
Gots to keep govmint solvent.
A plague of about 300M of them just south of the border. only a handful are worthy of your time and effort.
I am very pleased with your way of thinking. Correct earthquake and digging a hole is GDP positive.
I'm sure Uncle Warren had his fist up TOTUS's ass when he vetoed the Keystone deal.
Yes, most of that oil was going overseas, as refined product. ~~~Meanwhile~~~ Uncle Warrens' BURNING railroad keeps greasing the tracks of innovation.
His fist, his arm, and part of his shoulder.
FWIW Rand. You're not the resident liberal of Z/H. A bit cynical` YES.
Maybe the "wizard of Omaha" should buy an airline?
Love Prem!
I don't even know what street Watsa is on.
"I don't even know what street Canada is on." - Al Capone
I'm well prepped. I can survive the aftermath.
What I can't survive is the waiting. Will it happen now or later? This year or the next? It's killing me.
Just when we give up and think we are crazy BOOM it happens
The sector is highly likely to end in blood and tears is this failing Empire.
How is the keystone pipeline progressing grandpa? You must be having parental troubles.
The Bitch In The Kitchen
/LOL
When i'm a 108 in 70 years will there still be any virgins left to purify my blood?
Buffet and Murdoch and Soros i expect will be here when i'm not.
You'll be deep into Blade franchise, by then.
I'm getting my " second wind"... The sun must be setting.
You better hope it's not "Sundowning" - http://www.mayoclinic.org/diseases-conditions/alzheimers-disease/expert-answers/sundowning/faq-20058511
We see "more than a few" of these, and the "more than a few" is increasing VERY fast as our population ages . . . . . . .
What does twitter do to generate revenue again?
They sell you body and soul, to the NSA and Mossad.
Like all the others....
They also sell stuff to each other...with free money - it is so easy.
They certainly don't get much from real consumers!
probably the same Facebook does:
http://www.zerohedge.com/news/2015-03-13/facebook-does-it-again-%E2%80%9...
New normal now. We're the zoo, they're the zoo keeper.
The only thing we have learned from World War II is how to be a better Nazi.
"That Planet has just increased in size by 33% Captain" does come to mind however.
And isnt it allways about those valuations!? All bullshit so the name bull market!
I kind of hope SpaceX survives if TSHTF--it's a hardware type venture so maybe there is long term life in it.
Its the only low cost to orbit semi-success atm (still yielding promise). Orbital mining is the only way to return to 3% forever.
Imagine doing energy intensive refining on orbit, using panels designed to take advantage of 0% atmosphere...
Actually. and it only came to me now. Following the whole birth of the "Direct" rocket, what was eventually converted into the "Space Launch System" program, and some of the ideas behind it.
The Direct effort was a behind the scenes move by NASA engineers (in their off-time) to avoid a gap in personnel (like between end of Apollo/Skylab and start of Space shuttle--something many had witnessed). They had the right idea. It just didn't happen fast enough, and a fair bit of the existing shuttle infrastructure had been destroyed by the time this common sense bubbled back up to become policy.
But even early in the Direct days, there was this whole "propellant depot" idea. I think it was supposed to be at the balancing point between the Moon and Earth (L0, L1?), since at the time the Constellations first goals were to demonstrate that we could do Apollo again, quickly, but way better. (And Safer!)
They advocated even back then (cheaper) private launch systems (like the F5?), must have appeared that corporate launch just to push "re-fulleling" mini-launches at a refueling point (an idea that would--not by scale--turn 2x$,$$$,$$$,$$$, into say 1x$.$$$.$$$.$$$+10x$$,$$$,$$$).
Throw that era of thinking at what F9H/R is on the verge of achieving... The economy of scale if spacex gets even some of the stages to become re-usable (even if only for a few times). Time will tell, and hopefully soon.
When did Buffett move to Canada? He's getting out too? Must be listening to Simon Black. Maybe he's buying the Keystone before its approved so he can siphon off the intake. Watch for signs he selling his railroad for confirmation.
Everyone is looking for the new Microsoft.
But Social Media is not a good place to start, remember MySpace and Bebo?
Social media companies are always short lived fads.
Ask your kids (the trend setters here), my daughter barely touches Twitter and Facebook now.
All of these social media tech etc companies get most of their revenues from other similar companies....a big circle jerk that is propped up by easy money and the destruction of real wealth.
If you stip out the circle jerk, few, if any of them will ever make a profit.
I think we are just about at 280AD in Roman times....the barbarians have already arrived and decay is rampant.
Gold is speculative, too. Just saying...
The biggest debt bubble in the history of the world has burst and now the inevitable deflationary spiral will suck every global economy into its vortex as this Anatomy of a Bubble makes abundantly clear...
http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-r...
Prem Watsa is NOT a REAL Canadian and he is a Ponzi schemer Bankster slimebucket that lost his cheap suit on BlackBerry(tm). Moreover, he is also a principal owner of FAIRFAX Financial and likes to control the State Broadcaster CBC when he wants to shill BlackBerry(tm) share value before cashing out his chips. Bottom line is that CANADA does not have an equivalent in terms of The Anal Hoarder of Omaha. Watsa sure as hell ain't it IMO.
Here you can find more detailed reserches on some of the tech stocks mention in this article:
http://prudentvalueinvestor.blogspot.com/2014/12/sell-short-netsuite.htm...