shtfusa

Are you Prepared?

Have We Just Reached Peak Stock Market Absurdity? April 26, 2017

Have you ever wondered how tech companies that have been losing hundreds of millions of dollars year after year can somehow be worth billions of dollars according to the stock market?  Because I run a website called “The Economic Collapse“, there are naysayers out there that take glee in mocking me by pointing out how well the stock market has been doing.  This week, the Dow is flirting with 21,000 and the Nasdaq crossed the 6,000 threshold for the first time ever.  But a lot of the “soaring stocks” that have been fueling this rally have been losing giant mountains of money every single year, and just like the first tech bubble this madness will eventually come to an end in a spectacular fiery crash in which investors will lose trillions of dollars.

Anyone that cannot see that we are in the midst of an absolutely insane stock market bubble simply does not understand economics.  Every valuation indicator that you can possibly point to says that we are in a bubble of epic proportions, and history teaches us that all bubbles inevitably come to an end at some point.

Earlier today, I came across an article by Graham Summers in which he persuasively argued that the price to sales ratio indicates that stock prices are far more inflated than they were just prior to the great stock market crash of 2008…

Sales cannot be gimmicked. Either money comes in the door, or it doesn’t. And if a company is caught messing around with its sales numbers, someone is going to jail.

For this reason, Price to Sales is perhaps the single most objective and clear means of measuring stock valuations.

This metric, above all others, you can point to and say, “this is definitively accurate and has not been messed with.”

On that note, as Bill King recently noted, today the S&P 500 is sporting a P/S ratio that is massively higher than it was in 2007 and is only marginally lower than it was during the Tech Bubble (the single largest stock bubble of all time for most measures).

To me, looking at profitability is even more important than looking at sales.

Large tech companies such as Twitter certainly have lots of revenue coming in, but many of them are deeply unprofitable.

In fact, Twitter has never made a yearly profit, and over the past decade it has actually lost more than 2 billion dollars.

But despite all of that, investors absolutely love Twitter stock.  As I write this article, Twitter has a market cap of 11.5 billion dollars.

How in the world is that possible?

How can a company that has never made a single penny be worth more than 11 billion dollars?

Twitter is never going to be more popular than it is now.  If it can’t make a profit at the peak of its popularity, when will it ever happen?

And guess what?  ABC News says that Twitter actually just reported a decline in revenue for the most recent quarter…

Twitter has never turned a profit, and for the first time since going public in 2013, it reported a decline in revenue from the previous year. Its revenue was $548.3 million, down 8 percent.

Net loss was $61.6 million, or 9 cents per share, compared with a loss of $79.7 million, or 12 cents per share, a year earlier.

The only reason why financial black holes such as Twitter can continue to exist is because investors have been willing to pour endless amounts of money into them, but now that bubble is starting to burst.

In his most recent article, Simon Black discussed how Silicon Valley investors are starting to become more cautious because so many of these “unicorns” are now going bust.  One of the examples that he cited in his article was a company called Clinkle…

(Given that investing in an early stage company is high-risk, investors might provide a few hundred thousand dollars in funding, at most. Clinkle raised $25 million.)

The company went on to burn through just about every penny of its investors’ capital.

There were even photos that surfaced of the 21-year old CEO literally setting bricks of cash on fire.

At the end of the farce, Clinkle never actually managed to build its supposedly ‘world-changing’ product, and the website is now all but defunct.

Most of you may have never even heard of Clinkle, but I bet that you have definitely heard of Netflix.

Netflix has revolutionized how movies are delivered to our homes, and that revolution helped drive movie rental stores to the brink of extinction.

There is just one huge problem.  It turns out that Netflix is losing hundreds of millions of dollars

Netflix might be my favorite example.

The company’s most recent earnings report for the period ending March 31, 2017 shows, yet again, negative Free Cash Flow of MINUS $422 million.

Not only is that a record loss, it’s 62% worse than in Q1/2016, and over twice as bad as Q1/2015.

Netflix just keeps losing more and more money.

But even though Netflix is losing money at a pace that is exceedingly difficult to imagine, investors absolutely love the company.

I just checked, and at this moment Netflix has a market cap of 68.4 billion dollars.

Sometimes I just want to scream because of the absurdity of it all.

Companies that are losing hundreds of millions of dollars a year at the peak of their popularity should not be worth billions of dollars.

Nobody can possibly argue that these enormously inflated stock prices are sustainable.  Just like with every other stock market bubble in our history, this one is going to burst too, and I have been warning about this for quite a long time.

But for the moment, the naysayers are having their time to shine.  Despite the fact that U.S. consumers are 12 trillion dollars in debt, and despite the fact that corporate debt has doubled since the last financial crisis, and despite the fact that the federal government is 20 trillion dollars in debt, they seem to be convinced that this irrational stock market bubble can keep inflating indefinitely.

Perhaps they can all put their money where their mouth is by pouring all of their savings into Twitter, Netflix and other tech company stocks.

In the end, we will see who was right and who was wrong.

Comments Off on Have We Just Reached Peak Stock Market Absurdity?

Here’s How to Tell If a Riot Is About to Erupt in Your City

It seems like civil unrest has become an increasingly common occurrence in America over the past few years. Since the election we’ve seen a lot of protests turn violent, and in the years preceding the election, just about any controversial police shooting could spark a riot. As these incidents become commonplace, more people are becoming aware of just how tumultuous our nation really is. They want to know how they can protect themselves from civil unrest or avoid riots in the first place, especially if they live in urban areas.

Coincidentally, I have firsthand experience on this subject. Though I have thankfully never been in a riot, I know exactly what it looks like on the streets in the hours before a riot kicks off. I was visiting Berkeley, California on December 6th, 2014, just before a massive protest for the deaths of Eric Garner and Michael Brown turned violent.

I left the city a couple of hours before things got crazy, though not because I knew what was coming. Though I had heard earlier in the day that there was going to be a protest, I didn’t think that anything serious was going to happen, because protests are a pretty common occurrence in Berkeley. This may sound crazy now, but at the time there was no reason to think that there was going to be a full-blown riot.

Always Be On the Lookout for Warning Signs

Though I was completely ignorant of what was about to go down, in hindsight there were plenty of red flags. I noticed them as I was walking through the city in the late afternoon, on my way to catch a BART train home.

For starters, there was a massive police presence everywhere I looked. There were more cops walking or driving around than I had ever seen in the city before before. That may sound like an obvious sign, but it was what the cops were doing and what kinds of equipment they had on hand that was significant. You could hear helicopters overhead, and there were several large nondescript buses parked near where the protest was about to begin. They were kind of like school buses, but painted white. In other words, the kind of buses that are often used to transport prisoners. They were clearly getting ready to detain a lot of people.

As for the behavior of the police, there was one thing I saw that stands out. I distinctly remember seeing two police officers tell a homeless man to leave the area. That’s common in some cities, but not Berkeley. There are homeless people everywhere and I’ve never seen the police do that. Unless the homeless are being unruly and someone calls the cops (which most people rarely do), the police seem to leave the homeless alone in Berkeley.

In hindsight it makes a lot of sense. After they close, the homeless often sleep in front of the shops where the riot was about to take place. And when the cops interacted with this guy, they weren’t being aggressive. The interaction looked pretty courteous. They weren’t removing someone who was causing a problem. They were removing him for his own safety.

And perhaps the most interesting warning sign I witnessed, has to do with what many of the businesses in the area did to prepare themselves for the protest. I saw dozens of shops close early. Their owners and employees had boarded up windows and doors, as if they were getting ready for a hurricane to rip through the city.

The reason why that’s so intriguing, is that before 2014 I don’t think Berkeley had seen a major riot in decades. I’m really not sure how these businesses knew that there was going to be unrest in the streets. Remember, Berkeley is practically the protest capital of the world. It seems like there is a protest going on in that city every week, and they rarely turn violent.  So how did they know that this time was going to be different? My only guess is that the police must have warned them ahead of time. Without that kind of advice, they would have been as much in dark as I was.

So keep these warning signs in mind the next time you visit a city. Don’t be like me. I just happened to leave as the city was gearing up for civil unrest. I had no idea of what was going on, and basically avoided the riot by dumb luck. When you see the police and the locals getting ready for a street battle, take note and get the hell out of there.

 

Additional Reading:

8 Prepper Principles for a Prepared Mind

Think Like a Navy Seal: Training Exercises to Toughen Your Mind

Step-By-Step Guide To Help You Through Any Disaster

7 Tips To Improve Your Situational Awareness

Joshua Krause was born and raised in the Bay Area. He is a writer and researcher focused on principles of self-sufficiency and liberty at Ready Nutrition. You can follow Joshua’s work at our Facebook page or on his personal Twitter.

Joshua’s website is Strange Danger

This information has been made available by Ready Nutrition

Originally published April 26th, 2017
Comments Off on Here’s How to Tell If a Riot Is About to Erupt in Your City

The Democrats Get Trump And The Republicans To Fold, And That Means There NEVER Will Be A Border Wall April 25, 2017

Well, that didn’t take long.  Yesterday I reported that the Democrats were threatening to force a government shutdown if money for a border wall was included in the bill to fund the government, and one day later Donald Trump has unconditionally surrendered.  Despite all of Trump’s promises, a border wall isn’t going to happen at this time, but of course he is pledging to “try again” in September.  But will anything change for the Democrats between now and September?  Of course not.  The Democrats will continue to use these same tactics whenever funding for a border wall comes up, and because Republicans always end up backing down on the most controversial issues that means that there never will be a border wall.

Do you know why the Democrats always get virtually everything that they want?

It is because they have a backbone.

They would have been willing to force a government shutdown that could have lasted for many months just to make sure not a single penny of taxpayer money was allocated for a border wall.

I certainly don’t agree with their principles, but at least the Democrats are willing to stand up for them.

On the other hand, Trump is showing that he is willing to flip flop on just about anything once he meets the least bit of resistance.

And if Trump is willing to give up on his number one campaign promise so easily, what else will he be willing to give up on?  The Huffington Post has compiled an excellent timeline of Trump’s border wall promises right here.  As you can see, he was very bold while he was campaigning, but now according to NBC News he has essentially thrown in the towel on a border wall less than 100 days into his presidency…

President Donald Trump has indicated that he’s willing to back away from his demand that a government funding bill include money to build a wall on the Southern border, a move that could help clear the way for Congress to avoid a shutdown.

A senior administration official tells NBC News that the president is open to obtaining funding for the border wall in the regular appropriations process for 2018 later this year instead of insisting it be included as part of the large spending bill to keep the government’s lights on past this week.

Of course we are being told that building the wall is still “an important priority” for Trump and that the administration will try again in September.  The following comes from Bloomberg

“Building that wall and having it funded remains an important priority to him but we also know that that can happen later this year and into next year, and in the interim you see other smart technology and other resources and tools being used toward border security,” Trump counselor Kellyanne Conway said on Fox News on Tuesday.

But why in the world would the Democrats change their minds and give him funding for a border wall in a few months when they are so vehemently against it right now?

I have to say that I agree with Rush Limbaugh on this one…

“The Democrats seem to have successfully used this stupid, silly threat of a government shutdown to get their way,” Limbaugh said Tuesday, in one of his first major rebukes of the president. “What Trump is saying is if we need to get this done, then I’ll delay the spending on the wall until September. And it’s just a measly billion dollars.”

He continued: “Trump, I’m sure, does not ever think he caves on anything. But outward appearances are what they are. And the bottom line is that if he is willing to withdraw a demand of his for a measly billion dollars for the wall because the Democrats are threatening a shutdown, then the Democrats will have just learned that this threat works on Trump, too, not just all the other Republicans.”

Of course Trump and the Republicans have caved in on defunding Planned Parenthood too.

Actually I don’t think that they ever intended to put up much of a fight.

This is another battle that the Democrats would have been willing to shut down the government indefinitely to win.  They are completely united in their support for Planned Parenthood, and they would have been willing to risk the greatest governmental crisis in U.S. history to get their way.

So even though the Republicans control the White House, the Senate and the House of Representatives, the Democrats are winning on big issue after big issue because they back up their convictions with courage.

Yes, there are potentially other ways that the Republicans could sneak the defunding of Planned Parenthood into various pieces of legislation, but because enough Republican members of Congress are “squishy” on this issue it isn’t likely to ever actually happen.

I have said it before, and I will say it again.  If Planned Parenthood was going to ever be defunded, now was the time.

Since the Republicans have chosen not to even put up a fight, that is a very, very ominous sign for our nation.

Just like every single one of the Democrats, any Republican that votes for any bill that includes funding for Planned Parenthood or that signs such a bill is going to be partially responsible for the blood of the countless number of babies that Planned Parenthood slaughters each year.

Unfortunately, most of these gutless Republican politicians seem unwilling to stand up for much of anything these days.  In fact, one Republican member of Congress has openly stated that she is “not going to risk a shutdown over anything”

Republicans will also be content: many members of the GOP had indicated they would be satisfied with a spending bill that included money for means of strengthening security along the border other than a wall. “Border security’s the main issue—whether that includes a wall or technology, drones, or repairing what we have,” Sen. Shelley Moore Capito (R., W.Va.) said Monday evening. Ms. Capito said she wasn’t interested in risking a shutdown over the border wall.

“I’m not going to risk a shutdown over anything,” she said.

So the Democrats are going to use the threat of a government shutdown to get their way on these big issues year after year until Republicans finally grow some spines and decide to stand up for themselves.

Comments Off on The Democrats Get Trump And The Republicans To Fold, And That Means There NEVER Will Be A Border Wall