Thursday, March 20, 2014

Chipotle Is Discounting Nearly 100 Years Of Free Cash Flow

Earlier this week I highlighted Chipotle’s enlightened video series.  Today, let’s look at Chipotle’s stock.   The company’s stock is a favorite of the financial fraudsters.   In the last five years the company has grown revenue 100%.   Not bad.  Not sustainable but a recognition of the principles its founders embrace.  But in the past five years its stock is up 1,200% thanks to Ben Bernanke and Barack Obama.  Talk about earnings expansion better known as centrally-planned asset inflation.  Central planning that simply creates a temporary mirage of faux wealth.   You know, like countless bubbles over the last 30 years that are increasing in rapidity and size as this control system becomes more and more unstable.  As noted on here many times, money is not wealth and the world is going to get a lesson in that greater truth courtesy of the fraudulent capitalist aristocracy and the enablers, central banks.  By the way, money should not be wealth either.  Something I have written of ad nauseam unlike those who incorrectly espouse we use gold as money.      

Chipotle is discounting close to 100 years of free cash flow.   But rather than Chipotle being an outlier, there are thousands of companies with this level of absurd valuation. 

This is typical of financial fraud to a degree that we have only seen a few times in U.S. history.   Yet this is far and  away the most egregious financial/political corruption in our nation’s history.   Far, far worse than 1929.  Far, far worse than under Reagan’s cronyism and deregulation of financial fraudsters.  Far, far worse than under Andrew Jackson’s war on private banksters.  Far, far worse than under Bill Clinton.  Far, far worse than the long depression of 1873.   And, as a result, the valuation of the equity market bubble is far, far worse.  As I have noted many times over the years, far, far worse than captured by earnings, cash flow, intrinsic value, book value, Tobin’s Q, valuation to GDP or any other metric.  Far, far worse.  Did I mention far, far worse?  There is no precedence to even compare today’s valuations.  I’ll share much more detail on my endless tirades on the size of this financial bubble and asset valuations in coming months.

For now, let’s stick with generally-available data.  I wonder how many Chipotle restaurants there will be in 100 years for investors to realize their investment at today’s prices?  How many restaurants in the U.S. have been around for 100 years?  Maybe a few hundred?  How many are publicly traded corporations?  Zero.  More importantly, how many restaurant chains have been around for 100 years?   Zilch.  Publicly-traded restaurant chains?  Zilcho.    The myth of cash flow growing into this absurd valuation is a rationalization that has no basis in reality.  It is a fraud unto itself.  This is going to end very, very badly for the fraudsters, central bankers and the political class who are their enablers.   

Remember, a long-time thesis on here is that the investor class is going to be obliterated.  They certainly are living large today.


posted by TimingLogic at 8:37 PM