A short while back I did a post on the attempted controlled correction in the FANGS. FANGs A Controlled Correction Facebook had just traded under it’s long term trendline. I made the point that in all probability that would bring on a short squeeze. Friends of the Fed use technical analysis dogma to trap all traders large and small. Traditionally, when a long term trendline is broken, that is a good time to take out a short. Traders for the most part still see it that way. Anytime a lot of short positions are taken because of a pattern like this, it is a gift to the manipulators. There was short squeeze in facebook but it didn’t last.
When I say cooked, I am not being cute. Stocks like Facebook have a life span. Facebook is about like AOL was when its best days were over. There is a big difference however. Facebook is dishonest. AOL was not. Most Americans have never experienced a genuine bear market. Even the dotcom bear market was quick and out of the way compared to the 1973-1975 bear market. The market really did not start recovering until 1982. In a real bear market a stock like facebook can drop below $5.00 per share. I am not kidding.
All of the FANG stocks have vulnerabilities that cannot be reduced to numbers. One threat is simply a change in tastes and preferences. No one can predict that but look at the NFL. Their declining viewership is not all because of the kneeling issue. People’s interests do change on an aggregate basis. Not one of these companies would be where they are today without criminally low interest rates.
Human herding has become the biggest profit engine in the world. That won’t be as effective in the next ten years as it has been in this decade. Back in the days when I used to write radio ads I noticed that people build up a tolerance to any advertising approach after it had been used for a while. As being herded works against people, they won’t come to grips with the fact are being led around by their nose. They will just quit responding when someone tries to manage their opinions and behaviors.
All of these companies are vulnerable to changes in behavior which can come from out of nowhere. None of them have much if any utility to society. In a genuine depression, companies which do have utility to society are the only ones which survive. The time will come when there are no safe stocks. Just owning a stock will represent a guaranteed loss.
Don’t forget that the economy actually has been destroyed. The free market concept has been discarded. That alone is enough to destroy the country.
The truth is a hard sell. Fantasy Free Economics gains readers one at a time. Major search engines simply do not list blogs which disagree with their political agenda. As long as folks share the link to this blog and others speaking out against the grain, the truth will at least trickle into the public consciousness.
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