OT: Stock and Investment Talk
- Thread starter RU-05
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Most are the ones I normally trade, AAPL, MSFT, FB, UNH, HD, AMD, EMR, WBA and GS. I have too much AMZN, I also have to add ADBE.
Because their prices got stretched well beyond historical valuations (price to earnings multiples)
Agree, this has been an orderly downturn. No sign of capitulation.
Also, all the talk of emotional trading is comical since 90% of the trading is done by algos.
Capitulation normally occurs on Monday when people can think about their positions. I use to say I take advantage of other people emotions in the stock market. The markets swing too far up and too far down.
Those valuations are not that off from their history, nor are they unreasonable for their performance (rev, profit, and growth).
MSFT will be an opportunity when a scramble begins to sell SP500 index funds, next week perhaps. What's your buy-in price?
Haven't set any GTC orders, but will be watching Monday morning closely. Looking to add to ADBE and my other 6 plays. I keep going back and forth with PYPL. It's been wrecked, but this one isn't going anywhere. I bet it will continue to increase offerings and try to become the one stop app for many users.
$282 but I have an option at 295 that probably hits this week.
PYPL might be riskiest. It really is getting beaten. I did look at this one.
That's not going to happen. Most people have buying S&P500 index funds on autopilot with their 401ks. And the vast, vast majority of people don't even pay close attention to the markets.
History teaches us otherwise. They buy on autopilot but grab the controls on approach of landing.
I have an order for MSFT at 285 and that's where I'm starting my nibble but it could go lower.
PYPL I've mentioned 155ish area and then 120s area after that.
DIS held that 137 area yesterday I mentioned. Hit it bounced off it and then it came back down and held it at the close. Still wonder if the gap needs to close in the 115s which is making me hesitate from buyint it. Plus wonder if it needs an extra earnings flush like NFLX. It's gone down already in sympathy with NFLX, is it enough? I don't know.
My current 7 plays are GOOGL, AMZN, NDVA, MSFT, FB, ENPH, and ADBE (but need more ADBE, have been waiting for it to get below $500). Of these, only ENPH is a bit spec'y, but much less so than the typical names.
Lots of big investors/institutions are still bullish on PYPL and believe it is well positioned for the future (relative to other fintechs and normal banks trying to become fintech'y). Thinking.....
MSFT at $270 may not be unrealistic re: GTC. Yes, there's fishing, and then there's catching....
No harm setting an order, but I assume if MSFT is approaching $270 we will all know it and be paying attention! :)
Well you know for some of the big names, valuations are a little stretched and for others not too bad and probably at fair value. But the pendulum usually doesn't stop in the middle. It swings to the other side.
Separate accounts. That is the list of stocks in my new shorter term account. The 12 stocks that I bought in March/May are long holds and part of one of our retirement accounts. That includes TSLA at $570. :)
And yes, there is some overlap in the 2 stock accounts.
I buy at prices I'm comfortable owning something..no FOMO or whatever. If it doesn't come to me at a price I'm willing to pay and own so be it.
MSFT I'm okay to nibble at 285. It could go lower and I'll buy more if it does at other points where I think there is support. But I won't buy thinking oh man it may turn on me. Like earlier I think there were comments about MSFT and not waiting until the 200DMA etc...but I didn't act I stayed were I'm comfortable owning. It was showing some resilience even after the Activision news too. But now it looks like it's coming towards me and if it comes great and if not so be it.
MSFT will be at $400 soon, perhaps by year end, so whether you buy at $285 or $295, you will make nice returns.
I hope MSFT hits 285 for you and then rebounds immediately. MSFT PE is down to 33 which is still above the NASDAQ PE which is around 26ish now but MSFT is well below some of the “high flyers.” I went scouring the interwebs again and still couldn’t find any bad news on MSFT and it checks all the boxes for me as a stand alone stock holding (I’m basically in nothing but funds).
2022 could be a slog for most stocks as valuations are still high but MSFT should continue to be the little “monopolist” that could…saying I think I can, I think I can. Plus, a lower stock price will mean a stock buyback buys even more shares.
MSFT's valuation is low and won't be at this level for long.
If you are mostly a fund/etf holder like me, I highly recommend using Morningstar's Portfolio manager. One of its premium services is Xray and includes a stock intersection summary (which means, you can see a summary of all the stocks in your various funds).
On a different topic, will national legalization finally happen? These stocks have been crushed over the past year.
www.politico.com
Big Weed is on the brink of scoring big political wins. So where are they?
Competing agendas have stifled the effectiveness of the burgeoning industry on Capitol Hill.
www.politico.com
I'm okay with whatever it does. Like I said I'm comfortable owning it there and think worse case it will grow into its PE. If it goes down lower I'll buy more. Its PE was closer to 38ish and it's come down to the low 30s so it has gone through some compression. I think mid 20s area would be nice but then that would mean a drop to the 220-240 area where I actually do see support (there's support before that as well). But that would also mean a move of 32-37% off the highs. The last time it moved close to that was in the frenzy of the start of the pandemic. Before that you might have to go back about 10 years. Is that kind of move likely now? Maybe but I can't foresee that for sure. 285 is about 20% off the highs and has some support in this area so I don't see it as a terrible place to start nibbling on balance taking everything into account.
The only thing I question is what I mentioned above. 20% off the highs (in normal times) is usually a good place to start looking at stocks of this quality but have they been juiced so much through accommodation that that kind of metric needs to be altered a little. Maybe 25% or 30% etc..instead. I don't know. I own high quality stocks like this at much lower price and they just sit for the most part. There's a reason I usually stick with high quality names like this where it's possible it turns from a trade to a longer term own...I'm willing to own them at the prices I buy them and over the long term they often see you through.
I will be increasing my index fund investments by 20%. I buy every Monday and every other Thursday. I was buyng $5000 a month and will go to $6000
Good plan. I hiked/advanced our normal contributions as well. Still just VTI or other?
The majority. I am also contributing to a 529 for my granddaughter with some of the $6000.
Both of these accounts are really for my daughter and granddaughter. I do not anticipate using the money are all.
Nice job on the 529. We use NY's account since it offers ultra-low cost Vanguard funds. We probably over shot what we need for our daughter (4th grade now). However, we started to use $10k a year for her private K-12 school. It is doubtful we will need all of this money, so we plan to give my sister some for her little boy (my nephew). After that, maybe we will just hold onto it for the next generation.
My plan for the 529 is to contribute $100,000 and stop. Hopefully with that amount plus the gains it will cover most of her education.
If I see I need to invest more I always can.
We did the same principle and it grew to well over $200k! LOL. Not a bad problem to have.
Stocks are facing both earnings headwinds and a compression in the P/E ratio
Two factors that determine the direction of stock prices.
From the article:
Some evidence can be found just looking at the multiple of the S&P 500. The S&P is now trading at 19.6 times 2022 estimates. Historically, it has traded in the 15 to 17 range, but after the Fed began pumping huge amounts of money into the economy in 2009 the multiple slowly expanded, to almost 22 by the early part of 2018, then expanded again after the Fed pumped even more money into the economy following the Covid pandemic. It’s been coming down since that peak.
You can also look at the abnormal market returns.
Every market historian has taken note of the extraordinary run stocks have experienced in the last decade. Since 2009, the S&P 500 has averaged gains of roughly 15% a year, well above the historic returns of roughly 10% a year.
Many traders attribute that 5 percentage point yearly outperformance all or partly to the Fed.
If that is the case — and all or a good part of that excess gain is due to the Fed — than it is reasonable to expect that the Fed withdrawing liquidity and raising rates might account for a future period of sub-normal (below 10%) returns.
While the multiple on the S&P 500 contracted slightly by the end of 2021, it was an enormous rebound in earnings (up 47% for the full year) that powered the S&P’s 27% gain last year.
But expectations for 2022 are far less elevated: a gain of roughly 8%.
That is much closer to the historic earnings growth range of roughly 6%.
How far could the S&P drop? It depends on what your view on the economy, on corporate America’s ability to continue to raise prices in the face of higher costs, and on interest rates.
Maley notes that while rates are still low on an historic basis, the yield on the 10yr note was still below 1.5% in both 2012 and 2016, a time when the S&P was far more reasonably priced, trading at 13x earnings in 2012 and just above 17x in 2016.
“If today’s stock market was going to fall into the middle of that range (assuming the earnings estimates don’t fall like they usually do), the S&P is going to have to fall well below 3,500,” Maley said.
May end up hanging on to some of the Unilver stock longer than I planned. Nelson Peltz taking a stake in it. I owned and still own some of the PG stock when he was instigating change there. Sold 1/2 already, maybe sell another 1/4 if it reaches the higher targets I mentioned earlier and then let the last 1/4 ride and see what Peltz can do.
www.nytimes.com
Nelson Peltz Takes Aim at Unilever
An activist investor adds pressure as Unilever seeks a new strategic direction.
As I mentioned above, small and mid caps are at 10 year low in valuations as well. Good to see the S&P 500 coming down, but will it never get to the lows mentioned in that article due to the performance of the big boys at the top of the index. Companies like this have earned higher multiples and that's not going to change much.Stocks are facing both earnings headwinds and a compression in the P/E ratio
Two factors that determine the direction of stock prices.www.cnbc.com
From the article:
Some evidence can be found just looking at the multiple of the S&P 500. The S&P is now trading at 19.6 times 2022 estimates. Historically, it has traded in the 15 to 17 range, but after the Fed began pumping huge amounts of money into the economy in 2009 the multiple slowly expanded, to almost 22 by the early part of 2018, then expanded again after the Fed pumped even more money into the economy following the Covid pandemic. It’s been coming down since that peak.
You can also look at the abnormal market returns.
Every market historian has taken note of the extraordinary run stocks have experienced in the last decade. Since 2009, the S&P 500 has averaged gains of roughly 15% a year, well above the historic returns of roughly 10% a year.
Many traders attribute that 5 percentage point yearly outperformance all or partly to the Fed.
If that is the case — and all or a good part of that excess gain is due to the Fed — than it is reasonable to expect that the Fed withdrawing liquidity and raising rates might account for a future period of sub-normal (below 10%) returns.
While the multiple on the S&P 500 contracted slightly by the end of 2021, it was an enormous rebound in earnings (up 47% for the full year) that powered the S&P’s 27% gain last year.
But expectations for 2022 are far less elevated: a gain of roughly 8%.
That is much closer to the historic earnings growth range of roughly 6%.
How far could the S&P drop? It depends on what your view on the economy, on corporate America’s ability to continue to raise prices in the face of higher costs, and on interest rates.
Maley notes that while rates are still low on an historic basis, the yield on the 10yr note was still below 1.5% in both 2012 and 2016, a time when the S&P was far more reasonably priced, trading at 13x earnings in 2012 and just above 17x in 2016.
“If today’s stock market was going to fall into the middle of that range (assuming the earnings estimates don’t fall like they usually do), the S&P is going to have to fall well below 3,500,” Maley said.
I watch YouTube when I need to figure how to fix leaking faucet or work my iPhone. I never watch YouTube for investment advice.
