LinkedIn Stock Gets What It Deserves

On October 30th, I discussed my analysis of The Global X Social Media ETF (SOCL), comparing it to a modern-day incarnation of the tech stock excess during the late 1990s. Even though the historical data shows that seemingly underwhelming things like GlaxoSmithKline at $40 and Conoco at $33 will go on to outperform the collection of stocks that make up the Global X Social Media ETF because the valuation differentials are now extreme, it can be difficult to be persuasive in real time when the value stocks keep going down and the trendy social media/tech stocks keep going up.

The thing about investing is that, at some point, the valuations always come down to bear a relationship to the cash flows generated from the business. I don’t have the capability of predicting specifically when this will happen, but I can identify stocks where the valuation has become so extreme that … Read the rest of this article!