May 4, 2016

Talking heads cheerleading of Facebook is beginning to sound like Apple in 2012

It is disturbing how so many who readily are given a media platform so quickly forget and discard discussions in the stocks or in the arguments that no longer conform to their point of view or outlook. They just seem to move on with a changing narrative.

In the iconic Cocoa Puffs commercial, Sonny the Cuckoo Bird attempts to concentrate on a normal task and ends up coming across some reference to Cocoa Puffs (usually described by the adjectives "munchy, crunchy, chocolatey") and bursts with enthusiasm, exclaiming, "I'm cuckoo for Cocoa Puffs!"

Today, talking heads are cuckoo for Facebook (FB) , but they conveniently ignore or reference their "yesterday's Facebooks." Facebook's shares have risen by nearly tenfold from a few years ago, and the sound of today's enthusiasm (as if you almost can't lose) is eerily reminiscent of the chorus that we heard regarding Apple in September 2012 and again 15 months ago in early 2015.

In "You Cant Be Serious, Man," I wrote:

And for every great earnings report from the likes of Facebook, we're seeing multiple negative releases -- from Apple, Coca-Cola, Netflix, Procter & Gamble, Starbucks, etc.

Are they serious, man? And who do they think they are kidding?

Beware of changing narratives and the loss of memory.

George Soros once told me that all stocks are like soap -- you take a shower with them and they ultimately dissolve.

I do know one thing for certain -- the reward versus risk for Facebook is far worse than it was back in 2013, and investors should not forget The Law of Large Numbers and that success creates the largest headwind, and Schumpeter's gale of Creative Destruction as it relates to the last Facebook, Apple.

Post script: As I write this column, Carl Icahn has just announced that he has sold his entire Apple position. Which seems to prove my point. Sic transit Gloria ... and caveat emptor.

Icahn tweet from August 2013 
Tweet from Jan 2014