Yup, my brother was one of those people. He was convinced that he was a genius. Until he wasn't.
OT: Stock and Investment Talk
- Thread starter RU-05
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Yup, my brother was one of those people. He was convinced that he was a genius. Until he wasn't.
Today's Nasdaq vs 1999 has one big difference. The leading companies on the Nasdaq today are making a TON of money and growing. In 1999, it was pure speculation, most companies were not close to turning a profit.
Lots of apples and oranges here. But yes, never think you are smarting than the market, you will eventually use.
Buying three months ago at 17K was the greatest opportunity we will have seen in our lifetime. So happy to have taken full advantage of it.
Cool. Happy I refrained from posting a certain photo in my reply. :)
+1
Remarkable buying opportunity! Made so much money by sticking to the plan and not panicking.
Not exactly true. In early 2000, the top 10 NASDAQ companies included Microsoft, Oracle, Cisco, Intel, Dell, Sun Micro, Qualcomm and Yahoo. At that time, those were real, profitable and growing businesses today, you have Amazon, MSFT, Google, Facebook, but also Tesla and Netflix.
Should be noted that if I buy land, it will be an eventual landing spot. I'm not buying with the idea of selling after inflation has kicked in.
It's more of a taking an advantage of the situation and doing something I wanted to do anyway, as opposed to it being strictly an investment.
Nailed it, I am an absolute whiz at this.
I know your not talking about me, cause I am indeed a whiz. See the above. :WideSmile:
But seriously what does it mean when you say people think they know more then the market? The market is up. The market might be wrong right now, but it's not like the market is saying one thing while investors are saying another.
But don't you think, as a whole, (or even at the top for that matter) the companies in the Nasdaq are significantly more established now then they were then?
I think we are all aware a pull back is possible, and to some extent even likely, but comparing this run to the 2000 bubble? I don't think that is very accurate.
My comment was in response to the notion that the top companies in the NASDAQ in 1999-2000 were not real enterprises. That notion is false.
I would characterize the level of overvaluation today to be extreme, and perhaps second only to the dot com era. However, investor psychology is very similar to that time period. Look no further than this thread for evidence, not a lot of caution or fear of loss.
Agreed. The NASDAQ was well established by 1999-2000 (especially compared to the OTC as it was referred to when I had summer jobs on Wall St. from 1969-72) but the components of the tech bubble were not. An important difference.
1)I am responding to you, but I'm also responding to the general idea that this is the second coming of the 2000 bubble. It's not. If the market is over reaching, so are those making the above comparison.
2)There are some evaluations which are way out there. Some not so much. I mentioned Intel recently. I've mentioned RGA. The banks have big head winds but could be undervalued right now. Then someone like EHTH which is a little expensive, but certainly nothing like the tech bubble stocks, AND is likely to see it's earnings grow very rapidly.
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You are welcome to believe what you like, and pick data to make yourself feel comfortable. Comparing today to 1999 is instructive, even if the level of overvaluation isn’t as extreme. You don’t need to have a 1999 style collapse to have meaningful pain and subpar returns from this point through the next 5-7 years.
The same arguments you offer about the FAANG stocks were made about large, profitable and growing companies in 1999.. They were also made about certain “can’t miss” stocks during the Nifty Fifty era. Point is, your arguments aren’t new. It’s not the first time people have declared that today’s batch of market leading businesses are truly unique and worthy of their exorbitant valuations. You are, in essence, saying “this time it’s different.” Maybe you’re right. It’s not the way I’d bet, though. It seems that each new generation must learn the dangers of speculative stocks purchases on their own, rather than learn from the fairly well documented examples of the past.
The arguments claiming a fall is imminent aren't new either.
AAPL is trading at 33 x's p/e with an eps of 13x. Is that really exorbitant?
And again, I think a pull back of some sort is likely at some point(though you do have to factor in the fed's involvement so ). It's the comparison to the dot.com bubble that I am arguing against. Could you pull some details which are similar? Sure, does that make the overall situation similar? No.
I also own some IBM with a P/E of 14x and a EPS of 9.
Another value tech stock.
FRO is an oil tanker company that is very well positioned in the current market and trades at a P/E of 6x. (also currently paying out a ridiculous 34% dividend)
I think those looking at the current market through a bearish lens, want to focus on those posts in this thread which discuss high flying stocks, but there is plenty more talk then just that.
Another value tech stock.
FRO is an oil tanker company that is very well positioned in the current market and trades at a P/E of 6x. (also currently paying out a ridiculous 34% dividend)
I think those looking at the current market through a bearish lens, want to focus on those posts in this thread which discuss high flying stocks, but there is plenty more talk then just that.
To be clear, I’ve not offered any view on timing of a correction, or when this extreme level of overvaluation will cease to be supported. I’ve no idea when overvalued stocks will correct, or when undervalued stocks will appreciate. Timing has nothing to do with it. As an investor, you buy when shares are cheap, and sell when dear. There is no better way to manage risk. Holding on in an overvalued market with the idea you’ll exit before the eventual sell off is, to paraphrase Buffett, like saying Cinderella will leave to ball shortly before midnight so as not to miss any of the fun (only the ballroom contains no clocks).
Most of the time, shares (and all asset classes) are somewhere in the range of fair value. That is not the case today. We are in a bubble, and the record of bubbles is they burst. We are in the top 10% of historical valuations while in the bottom 10% of economic conditions. So, when you say that the arguments offered that the bubble will burst are the same as the arguments in the past, you are correct. And the reason you are correct is because that is precisely what has happened, and will happen again.
it is the realization of where you stand in the valuation continuum that is important. And overvalued shares always do revert to the mean.
They do, if the business continues to grow, but the multiple contraction on those earnings will lead to poor share price performance for a period of time proportional to the degree of overvaluation. Look at MSFT, for example, post 2000. The business continued to grow, but it took the better part of a decade for the shares to catch up.
I’m not sure what your Tesla trade has to do with any of this discussion, unless you think that one lucky trade refutes, well, anything.
With that, I wish you luck.
Aight so that is much different then overvalued stocks always revert to the mean.
So isn't that the game right now, judging which companies can grow into their current valuations?
I think TDOC is an interesting example. A business that seems poised for significant future growth, but currently doesn't turn a profit. Was recently trading at $250, merged with Livongo(which should only increase it's market reach) and has since fallen and currently sits at $183.
Certainly a company that is poised for growth, valuation definitely looked rich two weeks ago, but is it now a good price on that dip?
I think the point is you can get in an out of position and make money in a rapidly increasing market.
Maybe the better point is not to stay in too long.
No, it is not. Successful business performance is not sufficient to generate good returns for investors. If you pay too high a price for any asset, your returns will suffer. The MSFT example is a case in point. Shoot, the entire NASDAQ illustrates the same point over that time period.
And that presumes you know that the market will continue to rapidly increase before you sell, which you don’t. Many, many people ascribe to skill what is really no more than good luck. Timing a stock price or market move is simply luck.
So maybe the difference in our viewpoints is trading vs investing?
You mentioned MSFT, I mentioned TSLA.
Then again, you could have invested in AMZN years ago, despite overvalution and you'd be rich right now.
So you are not into the technicals?
I also think buying into the market in April was pretty obvious. Maybe I didn't expect 30% returns in 4 months, and I wouldn't call it a skill, but I don't think it was a lucky move either.
Technicals are voodoo. Purchasing equities in April was not a technical decision. It was supported by valuation. Stocks, on a normalized earnings basis, were attractively priced. Today, they are not. Timing and technicals, again, have nothing to do with those assessments and actions.
Interesting, I'm still getting the feel for them myself, and I've definitely seen graph guys predict moves in stock which never really materialized, but, and I do not know the #'s here, let's say they can accurately predict the move of a stock 55% of the time. Isn't that something?
I also wonder if there is not a self fulfilling prophecy element involved. IE, all the traders wait till the stock price hit a certain level, buy or trade accordingly and the subsequent move is just as predicted.
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