NEW YORK, NY - AUGUST 15: Traders work on the floor of the New York Stock Exchange (NYSE) ahead of the closing bell on August 15, 2018 in New York City. U.S. stocks fight to avoid a hard beat in global markets due to fears of economic chaos. There are some worries that Turkey should join into emerging markets denting global growth.   Eduardo Munoz Alvarez/Getty Images/AFP
From a chartist's perspective major US markets have put in a classic double-top formation this year. AFP

Time to take profits on US tech stock double-bubble

Buying low and selling high only ever made investors rich.

It’s a simple maxim. But even the most intelligent of investors get this wrong and sometimes badly so.

However, you don’t often see this happening so clearly as you do now in US stock markets where those hanging on for even higher prices in markets close again to record highs are risking a great deal more in losses to the downside than any remaining upside profits.

From a chartist's perspective the major US markets have put in a classic double-top formation this year after a record long bull run. After this kind of chart pattern the next step is usually a classic deep correction.

US stock valuations also look way over the top even by the world-class standards of American share promoters.

Consider the long term Cyclically Adjusted Profits to Earnings (Cape) ratio, a well-adjusted guide to market valuations. It’s long-term average for the S&P 500 is 18. Today is it 33.

For individual stocks their Cape ratio is off the charts. Take Amazon checking in at 215-times, or Netflix at 264-times earnings.

Then again you could look at the so-called Buffett indicator favoured by the eponymous investor that compares total US stock market capitalisation to GDP.


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It now stands at 138 per cent versus only 105 per cent in 2007 before the last crash, and 137 per cent in 2000 before the dot-com crash.

You might say, "Ah but S&P 500 profit margins of 11.7 per cent in the second half off 2018 were the second highest in history."

Okay, so companies have also now maxed-out on profits, throwing everything but the kitchen sink above the line.

How long can such peak of cycle profits continue? Tax cuts and profit repatriations have pushed company profits as high as they are going to go. Few analysts argue otherwise.

This exponential profit growth is most evident in the top six tech stocks - Apple, Amazon, Google, Microsoft, Facebook and Netflix - with a stunning 289 per cent combined profit spike in the first half of 2018.

Is it sensible or rational to think an already huge company like Netflix - its market capitalisation bigger than the whole beleaguered Turkish stock market - could possibly be worth 264 times its peak profits?

How could this happen you might well ask? True it is not just investor exuberance at work here.

These six tech giants have accumulated total debt of an eye-watering $588 billion largely from share buyback schemes to take advantage of cheap debt to boost their stock prices.

That’s a bubble on a bubble, a double-bubble. If you have got this far with the tech share boom perhaps now is the time to consider taking your profits and running for the hills.

The obvious time-bomb ticking in the corner is rising US interest rates and the Federal Reserve’s declared aim to get them higher to counter rising inflation and give savers a return on their money.

American investors seem to have forgotten that "Don’t fight the Fed" is a rule that also applies when the Fed changes direction.

For it has been the continuation of ultra-low interest policies for the past decade that has brought stock market investors their current bonanza, and a totally contrary force is now present as interest rates increase.

At the end of last year the Federal Reserve switched from easing to tightening its monetary policy. But it is doing so gradually and the real impact has not been felt yet.

Still on some estimates by the end of 2018 there will be $900bn less in central bank liquidity from the Fed and European Central Bank than in 2017, and the squeeze will continue into next year.

Dial back to the past two examples of stock market crashes from such extremely overvalued levels and you get an idea of what is to come next.

In 2000-2 the S&P 500 lost 51 per cent of its value; in 2007-9 it dived 58 per cent. Of course, the more overvalued individual stocks lost a great deal more value.

Do you want to be left like the guys who bought Bitcoin at the end of last year who are now sitting on huge losses.

To be fair, companies like Apple will not see their value go to zero like a thousand crypto-currencies this year. But you could still be able to buy back Apple at half-price and that might be a bargain.

It is not as though interest rate rises are the only steamrollers coming down the road. US President Donald Trump’s trade war with China and anybody else who annoys him is hardly good for global business.

Look how Turkey got smashed earlier this month by a sudden rise in tariffs that threw its already shaky economy badly off course.

Turkey might only be 1 per cent of the global economy. But in terms of global banking exposure it is similar in scale to Lehman Brothers whose collapse precipitated the last global financial crisis.

The main argument for holding US stocks is that valuations have pushed higher and higher and it is impossible to know exactly when and where this process will stop.

However, this summer feels very much to me like the summer of 2007 when it was still possible to cash out before the global financial crisis struck but the first warning signs were already evident.

For current anxieties about Turkey perhaps think more the 2007 troubles of Bear Stearns or Northern Rock as a comparison than Lehman Brothers; these early tremors of the approaching global crash were worrying but dealt with effectively.

If you had calmly folded your hands and cashed out in the summer of 2007 and sat out the crash in cash, treasuries and gold then you would have still been standing to pick up the bargain "devil’s bottom" of 666 in the S&P 500 in March 2009.

Maybe this is you today, and you have more than quadrupled your money since that time. If so then it could be time to consider repeating a winning formula.

Peter Cooper has been writing about Arabian Gulf finance for two decades

Past winners of the Abu Dhabi Grand Prix

2016 Lewis Hamilton (Mercedes-GP)

2015 Nico Rosberg (Mercedes-GP)

2014 Lewis Hamilton (Mercedes-GP)

2013 Sebastian Vettel (Red Bull Racing)

2012 Kimi Raikkonen (Lotus)

2011 Lewis Hamilton (McLaren)

2010 Sebastian Vettel (Red Bull Racing)

2009 Sebastian Vettel (Red Bull Racing)



Director: Sudha Kongara Prasad

Starring: Akshay Kumar, Radhika Madan, Paresh Rawal

Rating: 2/5


Company name: Revibe
Started: 2022
Founders: Hamza Iraqui and Abdessamad Ben Zakour
Based: UAE
Industry: Refurbished electronics
Funds raised so far: $10m
Investors: Flat6Labs, Resonance and various others

Tori Amos
Native Invader


Company name: Klipit

Started: 2022

Founders: Venkat Reddy, Mohammed Al Bulooki, Bilal Merchant, Asif Ahmed, Ovais Merchant

Based: Dubai, UAE

Industry: Digital receipts, finance, blockchain

Funding: $4 million

Investors: Privately/self-funded


Company name: Almouneer
Started: 2017
Founders: Dr Noha Khater and Rania Kadry
Based: Egypt
Number of staff: 120
Investment: Bootstrapped, with support from Insead and Egyptian government, seed round of
$3.6 million led by Global Ventures

One in nine do not have enough to eat

Created in 1961, the World Food Programme is pledged to fight hunger worldwide as well as providing emergency food assistance in a crisis.

One of the organisation’s goals is the Zero Hunger Pledge, adopted by the international community in 2015 as one of the 17 Sustainable Goals for Sustainable Development, to end world hunger by 2030.

The WFP, a branch of the United Nations, is funded by voluntary donations from governments, businesses and private donations.

Almost two thirds of its operations currently take place in conflict zones, where it is calculated that people are more than three times likely to suffer from malnutrition than in peaceful countries.

It is currently estimated that one in nine people globally do not have enough to eat.

On any one day, the WFP estimates that it has 5,000 lorries, 20 ships and 70 aircraft on the move.

Outside emergencies, the WFP provides school meals to up to 25 million children in 63 countries, while working with communities to improve nutrition. Where possible, it buys supplies from developing countries to cut down transport cost and boost local economies.


UAE currency: the story behind the money in your pockets

Director: Khalid Fahad

Starring: Shaima Al Tayeb, Wafa Muhamad, Hamss Bandar

Rating: 3/5

Zakat definitions

Zakat: an Arabic word meaning ‘to cleanse’ or ‘purification’.

Nisab: the minimum amount that a Muslim must have before being obliged to pay zakat. Traditionally, the nisab threshold was 87.48 grams of gold, or 612.36 grams of silver. The monetary value of the nisab therefore varies by current prices and currencies.

Zakat Al Mal: the ‘cleansing’ of wealth, as one of the five pillars of Islam; a spiritual duty for all Muslims meeting the ‘nisab’ wealth criteria in a lunar year, to pay 2.5 per cent of their wealth in alms to the deserving and needy.

Zakat Al Fitr: a donation to charity given during Ramadan, before Eid Al Fitr, in the form of food. Every adult Muslim who possesses food in excess of the needs of themselves and their family must pay two qadahs (an old measure just over 2 kilograms) of flour, wheat, barley or rice from each person in a household, as a minimum.

How to turn your property into a holiday home
  1. Ensure decoration and styling – and portal photography – quality is high to achieve maximum rates.
  2. Research equivalent Airbnb homes in your location to ensure competitiveness.
  3. Post on all relevant platforms to reach the widest audience; whether you let personally or via an agency know your potential guest profile – aiming for the wrong demographic may leave your property empty.
  4. Factor in costs when working out if holiday letting is beneficial. The annual DCTM fee runs from Dh370 for a one-bedroom flat to Dh1,200. Tourism tax is Dh10-15 per bedroom, per night.
  5. Check your management company has a physical office, a valid DTCM licence and is licencing your property and paying tourism taxes. For transparency, regularly view your booking calendar.

Louis Tomlinson

3 out of 5 stars

(Syco Music/Arista Records)

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Transmission: Two-speed auto (rear axle); single-speed auto (front)
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The specs: 2018 Nissan 370Z Nismo

The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
​​​​​​​Fuel consumption, combined: 10.5L / 100km


Edinburgh: November 4 (unchanged)

Bahrain: November 15 (from September 15); second daily service from January 1

Kuwait: November 15 (from September 16)

Mumbai: January 1 (from October 27)

Ahmedabad: January 1 (from October 27)

Colombo: January 2 (from January 1)

Muscat: March 1 (from December 1)

Lyon: March 1 (from December 1)

Bologna: March 1 (from December 1)

Source: Emirates

Tips for used car buyers
  • Choose cars with GCC specifications
  • Get a service history for cars less than five years old
  • Don’t go cheap on the inspection
  • Check for oil leaks
  • Do a Google search on the standard problems for your car model
  • Do your due diligence. Get a transfer of ownership done at an official RTA centre
  • Check the vehicle’s condition. You don’t want to buy a car that’s a good deal but ends up costing you Dh10,000 in repairs every month
  • Validate warranty and service contracts with the relevant agency and and make sure they are valid when ownership is transferred
  • If you are planning to sell the car soon, buy one with a good resale value. The two most popular cars in the UAE are black or white in colour and other colours are harder to sell

Tarek Kabrit, chief executive of Seez, and Imad Hammad, chief executive and co-founder of

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