The Four Horsemen Of The Coming Apocalypse: Baidu, RIMM, Apple and Google

It seems Google, RIMM, Baidu and Apple, four of the biggest bubbles in U.S. equity markets are not too happy today. Each is down six to eleven percent. Now paparazzi, momentum morons and clueless media types will tell you it's just one day and these stocks have made many wealthy. They are indeed right on both accounts. And, maybe they could go higher but I seriously doubt it given the macro environment. If they can do this in just one day, how many "just one days" does it take to drop 50-90%? Five? Six? Seven? As I wrote quite a while ago, my target for Apple was in the thirties. I've been wrong so far by underestimating the extent of momentum lunacy but the end state this cycle will not be a pleasant one. Apple in the mid thirties is a very generous valuation target which takes into account a great management team and superior product. Longer term it could drop further if fundamentals change significantly. While it seems unbelievable, Apple could eventually fall well below $20 and still be richly valued. Ditto with similar drops in the other names. These stocks are so overvalued that I'd rather take a cyanide pill than put my money in these companies as long term investments. I could buy half of the equity markets in Asia or emerging Europe for the valuations these companies have. But, I've beat that drum quite a few times on Google and Apple. We just have to watch and wait to re-evaluate as events unfold. Enjoy the volatility.

By the way, gotta love that "open" consortium Google put together for a portable device operating system. Open as long as they use Google's operating system. Yeah, those types of consortiums have a high success rate from a historical perspective. NOT! Now, Google is entering a realm where they have zero proven experience or competency and tremendous risk. Microsoft must be salivating because this is their core competency and Google will likely get smashed or taught some serious lessons before it is all said and done. Hubris breeds a feeling of invincibility and leads to ultimate disappointment or worse.