AMAZON is in a massive stock valuation bubble and will crash hard, warns analyst
08/10/2017 // Ethan Huff // Views

Over the past five years, Amazon's stock price has gone to the moon, rising from about $200 to almost $1,000 per share in recent days. But the pomp and circumstance won't last, warns a prominent stock market analyst, as all of this wild growth represents little more than speculative mania – meaning the bubble has reached epic proportions and is on the verge of a big fat pop.

Things really started to take off in 2015 when Amazon's stock value more than doubled from $285 per share in January of that year to $575 in October. In the 21 months to follow, that same stock value doubled again to nearly a grand, to the excitement of investors. There seems to be no end in sight for Amazon's market cap – or is there?

When you really stop to consider why Amazon's stock value has increased so significantly in this relatively short period of time, it's difficult to come up with a solid answer. It's not as though the general sector in which Amazon does business – primarily the sourcing, moving, storing, and delivering of goods and services – has seen this type of growth. The latest figures show a mere 2.2 percent annual increase in this particular sector of the economy, which doesn't match Amazon's astronomical growth rate.

So what is it? In truth, it's a whole lot of people betting in the Wall Street casino that Amazon is doing fantastically, what with its recent purchase of Whole Foods Market and its continued and growing dominance over the e-commerce realm. In other words, it's speculative greed – not to mention central banking fraud – that's driving up the price of Amazon stock, and not necessarily anything wonderful that the company is supposedly doing in the market.


"The Amazon business model is fatally flawed," writes David Stockman for Daily Reckoning, adding that Jeff Bezos' e-commerce business strategy "is that of a madman – one made mad by the fantastically false price signals emanating from a casino that has become utterly unhinged owing to 30 years of Bubble Finance policies at the Fed and its fellow central banks around the planet."

Most of the current economic growth is taking place among the Big Six, and most of this is a speculative bubble a well

But what about the stock market in general? Isn't that doing fantastically overall? Not quite. As it turns out, the so-called "Big Six" are responsible for the dramatic and unrealistic market increases that are currently being witnessed. These include Facebook, Apple, Amazon, Netflix, Google, and Microsoft, the collective weighted average price/earnings (PE) multiple of which is responsible for about 40 percent of the market's entire gain.

In other words, the reason why the market appears to be doing so well is because of these six companies and the speculative drivers that are pushing their stock values up as well. The bread and butter of the actual economy, also known as those sectors of the stock market that are hinged to real world economics, are floundering, if not declining. This is especially true with regards to energy sources like oil and gas, both of which aren't doing all that well.

"It's only a matter of the precise catalyst that will trigger the realization in the casino that this is another case of the proverbial naked emperor," Stockman adds. "Needless to say, I do not think AMZN is a freakish outlier. It's actually the lens through which the entire stock market should be viewed because the whole enchilada is now in the grips of a pure mania."

"Stated differently, the stock market is no longer a discounting mechanism nor even a weighing machine. It's become a pure gambling hall."

Sources for this article include:

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