OT"markets can remain irrational longer than you can remain solvent"
The stock market is sooooo overpriced right now - specifically Nasdaq/Tech. Some of these companies (TSLA, SHOP,AAPL, SEDG,AMD,MSFT....) are trading at multiples that if they grew 20 percent every year for the next 15 years, then in 15 years they would be trading at a PE of 10. It is amazing the multiples that some of these tech stocks are trading at.
Especially the electric vehicle sector. Just a couple weeks ago, a small solar panel installer trading at 1.03 (ticker:SPI) announced that they were going to get into the electric vehicle business. The next day the stock shot up over 46 bucks for an intra-day high. Thats like 2 carpenters who specialize in remodeling bathrooms announcing they are going to get into the electric vehicle business, and becoming instant millionaires the next day because of the investments that pour in. TSLA, NIO, XPEV, LI, NKLA, WKHS - and all the new ones that are merging with existing shells to cut costs and time to market instead of IPO'ing - they are all so overpriced. Its like the .com burst all over again. An absolute frenzy trading on emotion and unreachable speculation.
We are in for another tech correction. There HAS to be one. This is too wild. Million dollar question is - when?
Im up about 80% YTD and i only had about 60% of my cash invested for most of the time. I now am down to about 30 percent invested and am looking to be all cash very soon. Ironically, right now i view the airlines and the cruises as probably the best investments, as they are the only sectors undervalued based on when the economy opens again. But the risk -can they stay afloat until everything opens?
October 5th, 2020 at 4:45 PM ^
Apology accepted.
I'm not basing this on 12 months. I'm basing it on 40 years, using AAPL and MO. After 40 years, I'll have more money at the end of the day. Also, I'm allowing you to cherrypick the time period AND the securities. A better way to look at this is to look at the index. Russell 1000 Growth vs Russell 1000 Value
Using a 40 year horizon R1G has outperformed the R1V by over 700% cumulatively (7,140% vs 6,430).
I'm not saying value investing isn't useful. What I'm saying is that the growth cycle of stocks has extended far beyond what we've ever seen historically. 40 years ago, high growth companies such as AAPL, AMZN, MSFT, FB and GOOGL would have migrated to value within 5 years. That is simply not happening now, because like my initial argument stated, we are in the midst of a new economy where companies are making money in new ways. Mean reversion may happen, but I'm almost certain that it will be a new mean.
And I'm there with you, there is no one size fit all strategy. People in different life cycles will invest differently. My observations are on the market in general and why it's different now compared to the tech bubble.
October 5th, 2020 at 2:39 PM ^
You're up 80% YTD? Who's your broker?
October 5th, 2020 at 2:40 PM ^
Nice humblebrag bru
October 5th, 2020 at 2:53 PM ^
Pump and dump post?
October 5th, 2020 at 2:58 PM ^
When comes the correction? My prediction is $%^&*! My hope is 2070.
October 5th, 2020 at 3:09 PM ^
Trying to time the market in any direction if you will need that money in retirement is stupid. Put it in a mutual fund and move on.
If it is funny money to play with because you are interested in it and well off that is great.
October 5th, 2020 at 6:03 PM ^
You should take some time to educate yourself
October 5th, 2020 at 3:24 PM ^
holiday inn express continues to thrive.
October 5th, 2020 at 3:32 PM ^
Man I want to pull out. Way too much tech in my portfolio focused on 4 stocks in particular:
- Etsy
- Fiverr
- XLK
- JD
They just keep going up lol I feel like Michael Corleone in Godfather 3 when he wants to get out but he just can’t.
October 5th, 2020 at 3:38 PM ^
There's no crime in taking gains...... Pigs get fat, hogs get slaughtered.
October 5th, 2020 at 3:57 PM ^
Meh, as someone who sold Netflix, Amazon, Apple years ago, there ain't any hogs getting slaughtered.
October 5th, 2020 at 3:55 PM ^
I wouldn't over think things. The US has injected $6T into the "economy" this year. That money has to end up somewhere, and gold is out of fashion.
October 5th, 2020 at 4:27 PM ^
Co-sign. This is an economy on meth. With interest rates perma-low, asset price inflation has to happen because there's simply no where else for money to flow but equities and real estate. Pump, pump, pump that bubble... we've seen this movie before so many times.
October 5th, 2020 at 4:07 PM ^
I read this article last week and tend to agree with the authors basic premise that financial history matters but history doesn’t repeat itself , it “rhymes”. I also think he’s right that great businesses don’t always make great investments and valuations do matter especially if the investment horizon is less than 10 years
https://seekingalpha.com/article/4375617-lessons-from-history-1966
October 5th, 2020 at 4:36 PM ^
Greater Fool Theory at work.
October 5th, 2020 at 4:55 PM ^
Airlines (-Southwest) and Cruise lines are too far under. It will take decades for them to potentially be profitable.
Tech is overpriced, but what you have to take into account is that in a recession like this the little guys are just going to get further and further behind. The total size of the pie will be smaller over the next few years but the slices for the big guys will get bigger.
October 5th, 2020 at 5:00 PM ^
If we can get a little bit of a run during the holidays out of the Airlines and Cruises, I could see a good chance to take some "quick" profits...
October 5th, 2020 at 6:12 PM ^
There will be no cruises in 2020.
Southwest just cancelled a ton of winter flights citing slower than expected recovery. That's on top of them still not filling center seats. Their fares are still dirt cheap too. I don't know the details of other airlines but Southwest is the only one worth investing in anyway.
October 5th, 2020 at 4:57 PM ^
Sold my tech stocks a couple weeks ago. AAPL is still interesting to me though and seems that it is at a dang good deal right now. I have spread out shares to Nike, Lowes, Walmart, Beyond Meats, Carnival and Southwest. We shall see how this goes to close out the year....fingers crossed!
October 5th, 2020 at 5:10 PM ^
Irrationality often lasts longer than solvency.
October 5th, 2020 at 5:48 PM ^
100% cash this close to all time highs is way too conservative. You’ve had a good year, so I get you want to protect it. No chance I’m all cash where the market is now.
October 5th, 2020 at 5:54 PM ^
Ironically, right now i view the airlines and the cruises as probably the best investments, as they are the only sectors undervalued based on when the economy opens again. But the risk -can they stay aloft and afloat until everything opens?
FIFY :)
October 5th, 2020 at 7:00 PM ^
I think you have a grab-bag of stocks, some of which fit your narrative and some of which don't.
For example, AAPL and MSFT have P/Es of around 36, which isn't hugely inflated for software and service companies. MSFT has always been one of these, and AAPL, while still selling a great deal of hardware, is diversifying in that direction.
TSLA on the other hand has a P/E that exceeds 1000, which is ridiculous by any measure. There's no way it is fairly valued, and I think it's likely that a massive correction will occur. When? No idea.
We've had irrational exuberance in different sectors multiple times since the dot com crash (crypto, blockchain, etc.), and corrections to these areas have occurred without causing significant damage across the market.
I do think there may be a much broader correction this time, but because of broader economic issues (COVID), not because of the exuberance in electric vehicle stocks. I also think, as others have mentioned, economic damage may come in the form of inflation, in which case stocks will actually be a much better place to store money than cash.
October 5th, 2020 at 7:53 PM ^
I'm getting into electric vehicles.
October 5th, 2020 at 10:02 PM ^
I don’t see myself making it to retirement. There will be a civil war that will rip this country apart in the next few years. Might even be in November.
October 6th, 2020 at 10:15 PM ^
You don’t know shit. The thing is, no one does.