B. Comm. (Hons.) new math

Don’t ask

In an era where [M2 money supply growth] > [any previous money supply growth in recorded Fed history] the value of B. Comm. (Hons.) has not only depreciated but appears to be negative. That Dean’s Honour list is looking very tarnished. Analysis of any form will cost you money it seems. We saw this earlier in the week when the market value of NKLA > CMI. It does not matter that sales in CMI of $22B actually generated income of $2B (NKLA does not have sales yet). Analysis as it used to be will be further depreciated when/if the market value of TSLA > TM (which seems imminent: indeed, some have ascribed a $170B market cap to TM while finviz says $208B so it is not clear if TSLA at over $180B market cap is greater than TM—but it is close).

Why stop there? Why not have the market value of ZM > MSFT (currently $58B to $1,442B so a ways to go), BYND > MCD ($9B to $148B) and SHOP > AMZN ($80B to $1,285B). TSLA sales of $26B are only 10 times less than TM sales of $274B. As prices are no longer connected to fundamentals, comparisons don’t matter either. 

ZM sales of $800M vs MSFT sales of $138B are only 172 times less (keep in mind MSFT is only 25 times more valuable). After all, once you have NKLA (zero sales) exceeding CMI ($22B sales) anything is possible. BYND sales of $354M vs MCD sales of $20B are only off by 56 times (MCD is only 16 times more valuable). SHOP sales of $1.7B versus AMZN sales of $297B are only 174 times less (AMZN is only 16 times more valuable). If 10 times sales is not a factor, why worry about 100 times or 175 times? M2 conquers all. Sustainable competitive advantages are obsolete: the only thing that matters is end of quarter sales. It does not even matter if your market is unprofitable or niche and can never grow to the size projected by “analysts.” As long as there is enough hand waving, prices can rise. Customer demand? Old fashioned. Debt? Old school. Declining markets? Literally nothing matters. If the current market is too small, just ascribe billions in future value to new potential markets. No problem.

The only surprise is that markets overall were down today. Why should prices ever fall when M2 goes to infinity? It is odd that NKLA is –17% today instead of up 50% or more. After all, BE rose 22% today (no news, of course). That is fine. I am happy to close out my small long positions when these huge jumps occur. It just means I am getting pushed out of everything.

But yesterday’s break in pattern of FANG leading the market repeated today. FANG was up but the market again did not follow. Hydrogen economy names were up 15% and more today, which is curious given NKLA’s –17% fall, but otherwise the spectacle was in TSLA and ZM again. Now the question is how long can the market go down while FANG and other Robinhood names go up.

Another problem might be that infinite debt means ever increasing fragility. Time to guarantee that nothing can ever go bankrupt (not that bankruptcy is necessarily a bar to higher stock prices). With an economy filled with zombies unable to generate positive economic return what could possibility go wrong?