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After Crashing 20%, Is Facebook Stock a Good Buy Now?

Just last month, I made a trip to the Facebook HQ in Silicon Valley, and I was very impressed by the work culture and vibe of the whole community there. It made me glad to be a shareholder of Facebook, and since then, I have been waiting for an opportunity to buy more of it. 😀

Yesterday, after a disastrous Q2 earnings call, Facebook’s stock has plunged almost 20% so far; is this the start of something really bad, or the long-awaited chance to buy this stock?

 

Personally, I am a big fan of the tech sector, and I have been accumulating positions in the US tech giants since I liquidated all my Singapore stocks portfolio in 2015. but I am not going to jump in blindly, so let me sum up some of the key considerations:

  • The comment that spooked investors was the CFO’s prediction that revenue growth rates would continue to decelerate in the “high single-digit percentages” in Q3 and Q4.
  • While the results were not as fantastic as in the past, the disparity to analysts’ revenue and user growth forecast were not very major.
  • Facebook is likely being extremely conservative and has plenty of opportunities to gain back the momentum.
  • They are constantly innovating and acquiring new companies, some of these might turn out to be big winners
  • Its valuation based on PE is still ok compared to other stocks in the tech sector (about 30x)

 

The last time there was a plunge in FB shares due to the Cambridge Analytica scandal, it dropped almost 10% overnight in March. However, prices recovered very quickly, and before long prices were back to hitting all time highs, bringing valuation close to a $1 trillion market cap.

Some of the key risks could include more regulations that will hurt its bottom line, or anti-trust actions that attempt to split up the company.

But there are also upsides, such as the company leveraging on its technological innovations and data to expand to other industries and eat up the value chain.

So, in conclusion, I will not buy in immediately as I do not want to be catching a falling knife, instead I will wait for selling momentum to wane and the dust to settle before scooping up more of this stock. This is to ensure that I can get in at the best price. After all, I am still optimistic for the long run.

Will the Stock Market Crash or Continue Going Up for Another 10 Years?

Since the crash of 2008, and the recovery which started in 2009, the stock markets (especially the US markets), have been on a steady uptrend.

Chart: S&P 500 index (weekly chart)

Many of us have heard about the 10 year cycle, where the market is supposed to crash once every 10 years, for example the Asian markets during the 1997 currency crisis, and the global markets in 2007 during the subprime crisis.

However, in 2017, we did not see any significant crash or correction, which have led many analysts to rethink the theory.

Now, it is 2018, so should we be expecting a delayed crash, or are we experiencing a structural change in the markets?

If we observe the supercycles of major human technological innovations, we see that each major wave of progress is driven by a major technological innovation, such as the steam engine in the 1700’s or the internet and IT advancements in the 1900’s.

And based on the cycles, we could be in the early stages of the 6th wave, which is going to be driven by the upcoming huge advancements in applications of big data, artificial intelligence, virtual reality, augmented reality, internet of things, and blockchain technology.

Source: The Market Oracle

This means that we could be on the cusp of a super bull market, if these technological advancements are able to create a quantum leap in productivity for businesses and a huge jump in the standards of living across the globe. All these would translate into stronger stock prices, which instead of crashing the market, would propel it to new heights.

However, there are also major concerns:

  • Unequal gains across companies: the major tech companies may soon dominate all industries via the application of new technologies.
  • High unemployment: If machines take all the jobs, what are humans going to do?
  • High debt and leverage of US and European economies
  • Political risks: clash of superpowers (US and China)

In summary, many retail investors are wary of entering the stock market now because it is at all time highs and has already “gone up a lot” since 2009, hence they are waiting for a “big crash” before going in. However, this big crash may not come if successful widespread application of new technologies and innovation are able to drive a quantum leap in productivity.

P.S. I talked about this during my previous FB live session here, and there are many new exciting topics that we discuss every week!
Official FB page: https://www.facebook.com/synapsetrading/

P.P.S. Next week, I will be heading to Silicon Valley to explore the latest technologies and innovation at some of the biggest tech companies, join me for live updates here:
My personal FB: https://www.facebook.com/iamrecneps
My Instagram: https://www.instagram.com/iamrecneps/

Cheers! 😀

I’m Back from One Month of Travelling – Exciting Times Ahead!

At last, I’m back! After one month of travelling the US, Mexico and Cuba, I’m back in Singapore and just in time for the Great Singapore Sale! 😀

Here are some photos of my travels, and I will be adding more when I have time in this album:
https://www.facebook.com/iamrecneps/media_set?set=a.10153508321583430.1073741836.530303429&type=3

travel map

usa mexico cuba

wallstreet bull

 

How has the market fared while I was gone?

The great plunge in global equity markets (especially China) was great for my forex short positions, as well as my Gold long positions.

2015-08-24 16.27.41

 

What about the Singapore markets?

All I can say that we were prepared a long time ago, and I have documented the proof below on the STI chart.

straits times index 300815

 

1st warning – http://synapsetrading.com/2015/06/good-value-investors-know-how-to-buy-at-the-right-price-right-time-do-you/
NAC event in front of 2000+ people – http://synapsetrading.com/2015/07/thank-you-for-the-overwhelming-response-at-nac-2015/
2nd warning – http://synapsetrading.com/2015/07/is-this-the-right-time-to-buy-gold-now/
3rd warning – http://synapsetrading.com/2015/07/sti-index-artistic-charts-expanding-triangle-pattern/
Last warning just before my trip – http://synapsetrading.com/2015/07/chinas-stock-market-8-5-crash-where-was-the-precise-turning-point/
Blog post on why I loaded up on Gold – http://synapsetrading.com/2015/07/is-this-the-right-time-to-buy-gold-now/

Is this the best time to enter the market NOW? Which counters?

I am looking forward to great and exciting times ahead in the market for bargain hunters, and I will be sharing all my secrets and stock picks next week in my final sharing session for this quarter.

Check availability: http://synapsetrading.com/events/training-workshops/

Don’t miss this last chance to find out how you can take advantage of this rare market correction, which may not last long!

This is also a last call for those who are keen to sign up for our top-rated mentoring program, where I impart all my skills to a selected group of 20 people.
http://synapsetrading.com/the-synapse-program/

See you there! 😀

Good Value Investors Know How to Buy at the Right Price & Right Time – Do You?

Today, after the Greek saga over the weekend, the STI plunged another 40 points, continuing its steady move downwards.

I know of many people who claimed to be value investors, and they told me that if a stock drops, they will happily buy more. But they sounded a bit shaky today when I spoke to them.

Thankfully, I have already liquidated most of my portfolio, so I’m just watching from the sidelines. And thankfully, I have also given my readers (and private forum members) ample time and warning to avoid the most recent big crash.

My Recent 2 Blog Posts on the STI:

http://synapsetrading.com/2015/06/a-startling-discovery-what-has-been-brewing-in-the-sti-for-the-past-5-years/
http://synapsetrading.com/2015/05/revealed-accurate-predictions-for-the-sti-direction-where-will-this-drop-end/

I always hear investors talk about the “right price” to buy, but I seldom hear them talk about the “right time”.

To me, the price is right when the time is right. 😀

 

straits times index sti 290615 synapse network

straits times index sti 290615

sgx sea of red 290615