Bubble warning: Bank downgrades all six FANMAG in one blow

From CNBC Pro’s “Barclays says market valuations at dotcom bubble levels, downgrades large tech stocks” ($) posted Friday morning:

Stock valuations are approaching extreme levels last seen during the dotcom bubble, with the some of the largest risk hidden in the technology darlings that led the market rebound, according to Barclays.

The Wall Street firm said that even after the recent pullback, stock valuations are at their 2000 dotcom peaks, forcing Barclays to downgrade the FANMAG (Facebook, Amazon, Netflix, Microsoft, Apple and Google-parent Alphabet) sector to market weight given the stretched valuations.

“Measures of equity valuations are now at 2000 dot-com bubble levels and appear to be pricing in an ideal scenario where there will [be] an extremely strong cyclical recovery driven by a vaccine, the market shares gains from the ‘Resilient’ (large cap tech) stocks will accelerate, and US presidential elections will not pose a significant headwind to risky assets,” Barclays U.S. equity strategist Maneesh Deshpande told clients. “We continue to recommend a selective equity exposure.”

My take:  It’s only been three days since Wells Fargo’s long-time Apple watcher, Aaron Rakers, reiterated his Overweight rating and raised his Apple target to $140 from $121. Maneesh Deshpande is new to me.

Note to free riders: Even at the introductory price, CNBC Pro costs $269 a year. Just sayin’.

22 Comments

  1. David Emery said:
    It would be interesting to capture P/E (or “ISM”) at this point for each of the FANMAG, and reason about the collection.

    1
    September 18, 2020
    • David Emery said:
      Trailing/forward P/E (source finance.yahoo.com)
      Facebook 31.15 23.98
      Amazon 115.63 57.47
      Netflix 79.43 54.05
      Microsoft 35.28 31.06
      Apple 33.46 27.55
      Alphabet 32.90 26.88

      0
      September 19, 2020
  2. Kirk DeBernardi said:
    Since this recent strong upswing in tech stocks began, more and more commentators and analysts are quick to make the lizard-brained comparison to the pre-2000 run-up that lead to the classic tech bubble burst.

    Today’s tech world is largely a different animal and they should know that and be embarrassed by thinking otherwise.

    I’ll bring it all back to Marc Andreessen’s prescient quote of years ago —

    “Software is eating the world.”

    We all know this is true in almost every corner of every thing today, and moreover, will heartily continue on to be as such. Vastly different than the good ol’ nascent days of a potentially omnipotent Internet baby.

    4
    September 18, 2020
  3. Dave Ryder said:
    If you’re reading this you ought to pay for a ped30 subscription.

    6
    September 18, 2020
    • THOMAS E FARRIS JR said:
      Thanks for reminding me. I have enjoyed PED for far too long for free. He has my respect for all he does and has done.

      0
      September 18, 2020
  4. Fred Stein said:
    Pay attention to Katy Huberty, not Maneesh. Her metric, EV/FCF shows AAPL priced fairly. AAPL is in a correction in the literal sense of the word, but a bubble burst. Not a crash.

    Market emotion and external factors, may cause turbulence, and trading opportunities.

    2
    September 18, 2020
    • Fred Stein said:
      typo “not a bubble”

      1
      September 18, 2020
  5. Thomas Larkin said:
    I have no interest whatsoever in subscribing to the stupid FANMAG bundle.

    1
    September 18, 2020
  6. Michael Goldfeder said:
    @ Dave Ryder,

    I found this site from a poster on another blog who supplied the link. This is the best Apple site ever! I greatly appreciate all the work PED puts into this site on a daily basis. Thank you very much!

    Along with the nuggets from all of the folks who post, I’m better informed than ever about Apple. That’s why I signed up and am very glad that I did.

    Keep up the great work everyone!

    6
    September 18, 2020
  7. David Baraff said:
    I’m surprised nobody has remarked on the WeChat ban and the implications for iPhone in China. (Maybe the WeChat ban doesn’t hurt people directly who are in China? Except that they likely can’t communicate with other iPhone users in the US?)

    0
    September 18, 2020
  8. Jerry Doyle said:
    Maneesh Deshpande should follow the advice of former president Abraham Lincoln who said (and I paraphrase), to know nothing about the past is to have little understanding of the present and no concept as to the future.

    I was a small investor during the dot.com era. I lived it and breathed it. I also lost money on dot.com companies. Those were companies that sprung up usually overnight, had little to no track record, little to no cash, little to no experience, nada! All they had going for them were robust ideas.

    We were investing money into companies that had no proven ability to perform. Just ideas and words. Concomitantly, there were all kinds of analysts pushing these companies knowing fully that what they were pushing often times was “crap,” and possibly hoped that the companies would do what they all dreamed they could do.

    It was after this period (dot.com) of my losing money that I learned I often was smarter than the “talking heads.”

    Every single company in the FANMAG has proven track records, piles of cash, great leadership; and, all are innovators who have proven themselves over time. To compare the FANMAG with the dot.com crap companies is ludicrous.

    Maneesh Deshpande must be young, immature & inexperience in the investment world.

    2
    September 18, 2020
    • “Maneesh Deshpande must be young, immature & inexperience in the investment world.”

      On the contrary, nearly 30 years experience at big firms, including at Lehman when it went under, but perhaps not specializing in Apple.

      From LinkedIn:

      Barclays Capital
      Managing Director
      Company Name Barclays Capital
      Dates Employed2008 – Present
      Employment Duration 12 yrs
      Head of U.S. Equity Strategy & Global Equity Derivatives Strategy Research

      Lehman Brothers
      SVP
      Company Name Lehman Brothers
      Dates Employed2007 – 2008
      Employment Duration 1 yr

      Goldman Sachs
      Vice President
      Company Name Goldman Sachs
      Dates Employed2004 – 2007
      Employment Duration 3 yrs

      Morgan Stanley
      Executive Director
      Company Name Morgan Stanley
      Dates Employed1999 – 2004
      Employment Duration 5 yrs

      BNP Paribas
      Vice President
      Company Name BNP Paribas
      Dates Employed1995 – 1999
      Employment Duration 4 yrs

      BNP / Cooper Neff
      Vice President
      Company Name BNP / Cooper Neff
      Dates Employed1995 – 1999
      Employment Duration 4 yrs

      0
      September 19, 2020
    • Robert McDonald said:
      The dot.com crash included some very good profitable companies including Cisco, Microsoft and Intel and it took a very long time to recover. I do agree however that the leaders of this tech rally all have significant revenue and growth at a time when the digital economy is in a huge growth stride and 5G is just around the corner. Yes I have my scars from the dot.com bust and saw my financial assets cut by 50% round numbers.

      0
      September 20, 2020
  9. Arthur Cheng said:
    I find myself reading PED30 almost everyday. Long time AAPL investor. Decided I should pay for all the work PED does to maintain the site, not to mention the cost.

    Hope more of my fellow investors will join in.

    2
    September 18, 2020
    • Welcome!

      Note to new subscribers, your first post has to be approved by the host. If it sits there longer than a few hours, send me a nudge at ped@ped30.com. The rest go up automatically unless WordPress objects to an URL you’ve included. Nudge me about those as well.

      1
      September 19, 2020

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