History repeats itself, crash is coming

What did we learn from previous crash

Markets have been acting like never before. Not only that we are touching highs every day, which is due for at least a correction. But it also a lot of stocks, and how they trade make no sense. When thinking about 2008 market crash, and what led to the crash. It was a nationwide mortgage fraud. Bank were lending money to people who could not afford payments. Even to unemployed people, with do down payment. The more they did lend, the more home prices went up. More people wanted to get in the market because of investment opportunities. Pushing the prices event higher, bringing in even more people. Until the music stopped, and people ended up from a mansion to a tend.

When it comes to money, people lose reason. That's a proven thing. When it comes to making money (especially easy money, doing nothing), greed kicks in, leaving rationality outside. Before 2008-09 crash, there were a lot of educated people warning about the crash. But nobody would listen, not only average Joe who wanted to own a couple of houses but also wall street traders. Everybody were making money, why they should stop and think.

When I have a conversation about the upcoming crash with friends and family. They all say the same thing, this time is different. In 2008 there was mortgage fraud, but now it's different. Banks don't lend to people they can't pay back. I always tell them, after 2008 bank did not even lend money to people who could pay back, pushing the crash even further.

Stocks: Irrational Exuberance v2.0

Let's forget about 2008 housing bubble and let's see what is happening now. There are thousands of public companies, and if I dig enough off course I can find anything. But I'm not going to look for stocks nobody know, i'm going to look for companies all of you know and use their products. You would be surprised that a lot of them never made any profit, do not plan to make any profit in the future, and their stock goes up and up. They have been covering losses with borrowing money in a low rate environment, but that time is changing. Day is coming that they won't be able to borrow more. Even if they can, they will have to pay higher interest for that.

Uber

Uber is not a public company yet and never will be. That won't matter, they probably never will. They should have done their IPO earlier, now it can be too late. Just because their stock doesn't trade at an exchange, it does not mean that it won't impact the market. Company has been tapping into lending market for years. The only way they can cover their losses. Last year alone, the company lost 2.8 Billion dollars. This quarter the company lost $708, or an average of almost $8 million a day. It does not take a genius to imagine what will happen when bank and investors realize Uber won't be able to pay back.

Twitter

The company last year lost $438 Million.Not only that they have been losing money since day one. This quarter alone the company lost $117.5 Million which is 8.5% higher than last quarter. At all time high the company was trading at $70.43 while now is trading at $16.98, which represent 76% drop. Still the company market cap is 12.38 Billion, still to high justify a company that never made a single penny, and does not have any plans or strategy to do so in the future.

Tesla

Although I admire Elon Musk and his commitments to change the world for a better place. He did things that no other businessman did before, Tesla still does not make any sense. The company has been losing money still day one, and there is still chance they never will. At best, this is a high risk investment and if economic environment change, the company can go easily bankrupt. Last year the company managed to $675 Million, while the first quarter alone lost another $330 million. Besides this, the company at a time had the highest market cap compared to other us car manufacturing companies.

Snap Inc

Not much to say about Snapchat. The teenage messaging company is very creative when it comes to losing money. And, probably will keep losing until it goes to zero. Last year alone the company managed to burn $514 million. That is overshadowed by first quarter of 2017 $2.2 Billion loss. Since their IPO in March 2017, for 3 months stock price fell 50%. This is nothing what yet to come, next year lock-up will expire. Snapchat lock up totals 6 times higher its IPO float. Currently the company is valued at 16.22B (which is 16.22$ higher than its worth, in my humble opinion).

The list goes on and on ... and everybody is saying, this time is different.

Follows and upvotes are appreciated :)

---

Disclaimer: The information contained herein is not guaranteed, does not purport to be comprehensive and is strictly for information purposes only. It should not be regarded as investment/trading advice.