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CNN Money's Daniel Shane just put out a doozy.
Just take a look at this Oct. 5 headline: "China's Tech Stocks Are Partying Like It's 1999."
"Shares in China's biggest internet companies are on a tear this year," Shane went on to write, "but some investors think things have gone too far."
The guy didn't even have the guts to make this argument himself. Instead, he leaned on "some investors."
To me, this is just the latest rehash of the half-decade-old effort – among "some investors" – to prove that a Silicon Valley "tech bubble" was about to burst.
This time, there's a slight twist. The bears' latest "bubble" is across the Pacific Ocean, among Chinese web firms.
The idea at work here is that China's entire e-commerce sector is about to go the way of the "dot-com" crash that slaughtered the Nasdaq Composite more than 17 years ago.
Here's the thing. Shane's entire premise is based on a false analysis. I think "some investors" may have led him astray.
Today, I'll show you, with math, that the opposite is true.
I'll prove that China's web leaders are not in a bubble – and that they offer tech investors like you huge long-term upside.
Plus, we'll investigate a great way to ride this trend for maximum profits – the kind of profits that keep beating the market year after year after year…
Do the Math
The best class I ever took in college was advanced statistics. I have burnished that education over the years by regularly working on my skills in ratio analysis.
What that means is you compare one set of numbers against another, often a benchmark like the return of an overall index against that of a specific stock.
Let me explain why this is important. See, the CNN Money piece made the bold claim that China's web firms are overpriced based on a simple metric. Shane noted that some of the firms trade at high multiples of forward price to earnings (forward P/E).
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Be he failed to turn up even a single piece of empirical data.
Folks, this is something that's in my DNA. I do these kinds of comparative analyses all day long as I hunt for profitable tech plays.
I do all this math because I'm a growth investor. And so even if I've found what I believe is a breakout stock with huge earnings upside, I still want to know how much of a premium I'm paying.
So let's drill down and get specific. The Nasdaq 100 index trades at 21.3 times next year's earnings. This gives us a good benchmark to compare how much of a premium we are paying for the enormous growth that defines China's web sector.
About the Author
Michael A. Robinson is Defense and Tech Specialist for Money Map Press. He is a 36-year Silicon Valley veteran and one of the top technology financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
Michael is 100% independent and receives absolutely no compensation from companies he writes about. His ideas are completely his own.
So, it probably goes without saying that you won't ever be left in the dark about breaking innovations, ahead-of-their-time technologies, and breakout companies on the cusp of changing the world once you join this world.