De Prado channels Marc

[yuvaltaylor]

The FAANG stocks got a earnings boost from tax reform in 2018. In 2019 the tax reform was already priced in to the stocks, but they went up based on momentum. They are already overpriced and the fact that as a group they benefit more than most (in some cases temporarily), should not be a reason why their PEs should continue to skyrocket. However, that’s the nature of long bull markets. During the Great Depression, the largest stocks held up best, until the last year or so before the very bottom when their prices finally collapsed too.

I’d like to see the math. Netflix is somewhat overpriced, but Facebook, Apple, Alphabet, and Amazon all seem like safe investments to me right now. Especially Amazon. If you want to look for really overpriced stocks, try Roku, Snap, Twilio, Slack Technologies, and Twitter. Those are much better comparisons to the dotcom stocks, in my opinion. And why should we be talking about a Great Depression?

[Tomyani]

I would still be long Amazon still – there Amazon web services has huge upside, and on a price to sales basis about half the price of other big tech companies – and will be more more synergies with their tech and physical stuff (distribution, logisticis) in the future.

They are very, very strongly positioned – Amazon web services and API stuff is real tech company with big upside.

I might also be long facebook, alibaba (and humana on healthcare). A little more expensive, but a lot to like.

They have huge cash positions – and if things get bad, they’ll buy a lot of tech and acqui-hire great talent cheap.

But… none of them are cheap – they are not ‘no brainer’ bets to me. They depend on continued economic growth and high multiples and willing investors and confidence / optimism for future.