When Chasing The Tape—Please Mind The Lemmings

So TIF’s earnings have been dead in the water for several years now, but that’s not the half of it. Tiffany is the very embodiment of a piggyback rider on the worldwide financial bubble fueled by the central banks.

Its earnings have already stalled out due to the crackdown on luxuries in China, but that’s just the tip of the diamond. The real crackdown will come when the third great financial bubble of this century finally bursts and the top 5% ratchet back sharply on their luxury jewelry purchases as they did in 2000-2001 and 2008-2009.

At that point sales will plummet by double digits and TIF will be lucky to earn $2 per share. So the lemmings had a profitable day in the casino. Yes they did—–chasing a stock sitting at the very apex of the global luxury bubble to a valuation that would amount to 50X what the company might actually bring to the bottom line in the post-bubble world ahead.

But don’t say the lemmings are totally undiscriminating. Stampeding in the opposite direction, they marked down the stock of Shake Shack (SHAK) today by fully14%. This happened upon the news that its $50 million per unit hot dog and hamburger stands might not be suitable as “Chicken Shacks”.

But in taking down SHAK’s market cap from $3.0 to $2.7 billion, it's not as if the casino experienced an outbreak of old-fashioned price discovery. The stock closed for the day trading at a round 1,333X its $2 million of earnings recorded for the year just ended.

More importantly, the broad market made another chop upward on extremely thin volume and completely phony news about Greece. Accordingly, with each passing session the casino is getting more dangerous, but the lemmings have no clue and the narrative gets more specious.
^SPX Chart

^SPX data by YCharts

So the Nasdaq made a new all-time high, and the S&P 500 returned to its nosebleed valuation of 21X reported earnings.

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Carol W 5 years ago Contributor's comment

Mea Culpa. It was not my intention to offend. Cheers, Carol

Terrence Howard 5 years ago Member's comment

Very nice of you. By the way, I really enjoyed your last couple of articles.

Carol W 5 years ago Contributor's comment

Hi David

With all due respect there's something unnerving about talking like you're always the smartest guy in the room.

A little humility from you might help make you a better read. It's one thing to have an opinion..quite another to have this AGENDA of what's wrong with the world. Your "Johnny-one -note- itis" can get pretty tiring to listen to.

Tell us what you like!

Cheers Carol

ps. Hey send me a little blue box -I won't say no!


Kurt Benson 5 years ago Member's comment

I reported abuse on your comment. One thing I love about this site is the comments tend to be much more respectful and civil than on other sites where they tend to devolve into insults and anarchy. I would hate to see that happen here!

And I noticed that you are a contributor too! Shocked that you would attack a fellow contributor like that. Mature individuals know how agree to disagree and/or have a respectful discourse on their differences without resorting to derision!

Terrence Howard 5 years ago Member's comment

Nicely said!

Angry Old Lady 5 years ago Member's comment

Wow, how rude! My mother always told me if you don't have something nice to say about someone.... keep it to yourself. This isn't stocktwits or Yahoo Finance, insulting others is not a good way to pick up new followers or friends.

Jared Green 5 years ago Member's comment

Ouch, give the guy some credit - he often is the smartest guy in the room. And even when not, there's a nicer way to say it.