What we have in the certain stocks today is a bubble every bit as epic as the one that took the NASDAQ Composite Index (INDEX:.IXIC) to its previous record of 5048 back in 2000.
There are few certainties in this world, but one of them is that bubbles pop.
And like all previous bubbles, this bubble will pop too.
One of the key signs of a bubble is when investors and the analysts that cheer them over the cliff refuse to acknowledge facts that contradict their bullishness.
The Evidence Is Irrefutable
Exhibit “A” is Tesla Motors, Inc. (NASDAQ: TSLA). At the beginning of the year, analysts were forecasting that the company would earn $2.78 per share and had an average price target on the company’s stock of $269 per share – $49 per share higher than where it was trading at the time. Since then, a series of setbacks have led analysts to radically lower their earnings estimates to a mere $0.53 per share – a reduction of 80%.
But instead of lowering their price target on the stock by a commensurate amount, analysts have only lowered it by $19 per share to $251 – a reduction of a mere 7.1%.
That is bubble thinking. The psychological term for that is denial. The Wall Street term for that is careerism.
Exhibit “B” is Amazon.com Inc. . . (Read more from “Desperate “Bubble Thinking” Takes Hold on Wall Street” HERE)