So PetroChina (NYSE:PTR) went public in Shanghai to great fanfare and now the company has a market-cap of over $1 trillion. This gives the company a valuation greater than that of both General Electric (NYSE: GE) and Exxon Mobil (NYSE: XOM) combined. Not bad considering the company has revenues of just 1/4 that of Exxon. With all due respect to the growth of the Chinese economy, this is a bit ridiculous. Can we even believe the numbers they are reporting? We all talk about the lack of transparency in U.S. corporate earnings (see financial stocks of late); it's 100 times worse in China.
The Chinese stock market has had an amazing run, but what comes up must come down. With all the recent IPO's that have skyrocketed, it sure has the feel of NASDAQ 2000 all over again. Then people used to invest if the ticker symbol had 4 letters. Now people will throw money at anything that has to do with China. Irrational exuberance? You bet!
Will the communist government of China allow the stock market to fall before the 2008 Olympics in Beijing? Probably not, but a bubble has been created and investors should better be forewarned.
This brings us to the next bubble. In an interview with USA Today, former Walt Disney (NYSE: DIS) CEO Michael Eisner said that he has big plans for Bazooka Joe:
"Bazooka Joe could be the next big hero," Eisner, 65, says. "I'm not saying it's going to be Raiders of the Lost Ark," which he oversaw as CEO of Paramount Pictures. "But that would be the goal. Bazooka Joe is my new Mickey Mouse."
Pop. Splat. remember the feeling when you got that perfect bubble and then your little brother popped it and it splattered all over your face? That's the feeling I get when I hear that Bazooka Joe is the next Mickey Mouse. For one thing, after about two minutes and two bubbles bazooka gum turns really hard, not the kind of soft and squeezable image projected by Mickey. As for a superhero, what's Bazooka Joe's gimmick gonna be? Throwing a wad of used, hard gum at the criminal?
As I said, two bubbles about to burst.
Disclosure: Author holds no positions in any stock mentioned as of 11/6/07.Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com.
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