Daily General Discussion and Advice Thread - January 24, 2022 Investing |
- Daily General Discussion and Advice Thread - January 24, 2022
- WashPo Breaks Out the "C" Word
- Number of Mid-Large Caps with P/S over 30
- Some perspective on the state of the market
- Long term boring investor question - FXAIX vs VTI
- Recommendations for email alerts regarding Quarterly Earnings?
- Robert Prechter - 230 Year Grand Super Cycle Peak 2022
- Evaluating financial health of companies
- Are you okay with your stocks being borrowed to intiate short sales?
- Leveraged S&P 500 - Really good option for risk tolerant people?
- Any experience with real estate crowdfunding?
- There is 2 types of investors
- I Hope That My Generation, The Millennial Investors, Will Not Draw The Wrong Lessons From This Correction Lesson
- Is the stock market pure mathematics?
- NFTs as an investment opportunity along with some information.
| Daily General Discussion and Advice Thread - January 24, 2022 Posted: 24 Jan 2022 02:01 AM PST Have a general question? Want to offer some commentary on markets? Maybe you would just like to throw out a neat fact that doesn't warrant a self post? Feel free to post here! If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following:
Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq And our side bar also has useful resources. Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions! [link] [comments] |
| WashPo Breaks Out the "C" Word Posted: 24 Jan 2022 07:57 AM PST Many of you have read my comments/posts here over the past year and know my position on the current state of markets. I've long been a value investor and repeatedly emphasized that overpriced securities tend to revert to the mean given some kind of catalyst—e.g. shifts in monetary policy (BIS/Central Banking, Fed Funds Rate, etc.). With the last week culminating in a 20% after-hours drop on Netflix adjusting its 2022 forecast, and portfolio managers from Blackrock, Fidelity, Vanguard, JP Morgan, and Morningstar Investment Management projecting significantly lower returns in their long-term forecast than the decade prior, and with the Cyclically-Adjusted PE (CAPE) Ratio of the S&P crossing the 40 threshold in January for the first time since 2000, and Market-to-GDP peaking above 200% recently, Washington Post is characterizing the continued decline using one of our two least favorite "C" words... "Correction". By mid-month, money started to flow out of growth stocks and into value, pushing Berkshire Hathaway Class B shares above fair value estimates for the first time in four years. Now, Berkshire's gains over the past two weeks have been wiped out. Even commodities futures are now in the red. The Post writes:
As U.S. markets brace for the impact of impending interest rate hikes, investors are, at this stage, widely retreating away from equities and commodities and into cash and fixed yields. [link] [comments] |
| Number of Mid-Large Caps with P/S over 30 Posted: 23 Jan 2022 07:26 PM PST Following up on this post from 15 days ago.... Here's an updated graph of the number of US traded stocks with a PS over 30 and market cap of $5 billion (as of 2022-Jan-23) https://i.imgur.com/KwHI2Bx.png There are still a fair whack of stocks with a PS over 30. But as a percentage of overall market cap, we look a lot more like 2001 (2% of market cap overpriced) vs 1999 (5-6% of market cap overpriced.) What is a P/S ratio? Price / Sales ratio. The higher the number, the more expensive the stock is compared to sales. Isn't a PS ratio over 30 justified these days? None of the FANG/MAAMA stocks ever exceeded a P/S ratio of 25. [link] [comments] |
| Some perspective on the state of the market Posted: 23 Jan 2022 09:54 AM PST I think it's kind of funny how quickly sentiment changes based on how the market performs in the last couple of weeks If SPY had gradually gone up from January 2021 to where we are now, everyone would be super bullish right now. Yet, because the last few weeks have been red, arriving at the same number going down from ATH and sentiment is completely different I understand that the market is not completely efficient, but it's not so inefficient that you can say last week was red, so this week will probably be the same, and so on going forward. Or it's clear we're headed down from here because of all this bad news that ironically everyone already knows about If only things were so easy [link] [comments] |
| Long term boring investor question - FXAIX vs VTI Posted: 23 Jan 2022 06:21 PM PST I browse occasionally and most people mention VTI or VTISAX for a safer/boring long term growth. Just curious to know if FXAIX would be a smart move as well? Basically I've been putting money into that before I even knew about these subreddit so wondering if I should hold what I have and begin investing moving forward in VTI, or sell FXAIX and use that to buy VTI? Or just keep DCA'ing into FXAIX? [link] [comments] |
| Recommendations for email alerts regarding Quarterly Earnings? Posted: 23 Jan 2022 06:21 PM PST Hey all, I've been looking for a simple service that can send me one email per company I choose, per quarter, with a link to their Earnings report. I've been investing for a few years now, and find the mass production of hysteric articles everywhere increasingly exhausting. All I want to know is how my holdings are doing once per quarter. Do you have any recommendations? I just registered on SeekingAlpha, put in my holdings, and disabled all email alerts apart from "News" per company. I'm afraid this might be spammy, but will give it a shot. Any other suggestions are wholeheartedly welcomed! Thanks. [link] [comments] |
| Robert Prechter - 230 Year Grand Super Cycle Peak 2022 Posted: 24 Jan 2022 09:21 AM PST Robert Prechter, known for developing a theory of social causality called socionomics, for developing a new theory of finance and for his long career applying and enhancing R.N. Elliott's model of financial pricing called the Wave Principle. He is also a NYT best seller, co-author and author of 14 books, founder of Elliot wave theorists, ex Merrill Lynch technician & served on the board of CMT association. He is a well decorated technician. I have been following him for a few months now and he believes we just topped (impressively charted it in real time as it was happening) a 230 year long grand supercycle & we are due for a very severe crash. Something comparative to the south sea bubble or Great Depression crash. Although highly speculative claim, it is interesting to think about. What would this look like? A crash back to the 08 lows? Maybe a bit lower if he considers that the end of wave 4. Perhaps, it would look like S&P near ~500? This would be the most spectacular crash of our life time. I found this YouTube video interview/podcast with him if you would like to hear him out yourself: https://m.youtube.com/watch?v=mPo0pt6wkdQ To those of you unaware of Elliot wave theory. It is a very speculative & unproven (although hardly studied) charting technique. Most Elliot wave forecast are done by complete amateurs and can be chalked up to be noise. However, Robert Prechter is IMO the Michael Jordan of this practice. If this theory does have any predictive power, he is the one I'd trust to chart it. [link] [comments] |
| Evaluating financial health of companies Posted: 23 Jan 2022 02:01 PM PST Hoping someone here can explain what this stuff actually means. Looking at the Q3 2021 financials for FB, AMZN, AAPL, NFLX and GOOGL, all of them have a negative net cash flow and operating expenses exceeding net sales and gross profit. At the same time, several are reporting positive earnings. How can a company losing money on paper have positive earnings? On top of this, these companies have a significant amount of debt. AMZN is 68.5% debt-to-assets. NFLX is 64.2%, AAPL is a whopping 82%. What am I missing here? How is a company that would require 82% of its assets be liquidated to pay off it's debt, with a net cash flow of -$3.6B/quarter a good company to invest in? Edit: This is the snapshot of financial info for FB. The source is Fidelity. Q3 (9/30/2021) https://imgur.com/a/klcCFGc (USD MM) Total Assets: 169,585 Total Liabilities: 36,225 Debt to Assets: 21.4% Net Sales: 29,010 Gross Profit: 25,234 Operating (cash flow): 39,579 Net cash flow: (2,806) [link] [comments] |
| Are you okay with your stocks being borrowed to intiate short sales? Posted: 23 Jan 2022 02:41 PM PST Do you think it's just apart of market process or do you think it shouldn't be allowed If you have a mixed opinion on it how would you want shorting to be regulated? Edit: Ex. Should Investors must be notified, Financially benefit etc. [link] [comments] |
| Leveraged S&P 500 - Really good option for risk tolerant people? Posted: 23 Jan 2022 01:05 PM PST According to the Capital Asset Pricing Model, Sp500 (Market Portfolio) should give you the best returns for a given level of volatility. We have really low interest rates. Why not leverage? Or to put it another way, why do we always decide our leverage to be 1.00. Seems a bit unimaginative. Even when people talk about taking risk, they talk about buying small cap stocks or options, even though a leveraged market portfolio can offer a higher expected return for the same level of volatility. What's your strongest arguments against leveraged Sp500 besides "I don't like risk" or "look much it went down last week, imagine if you had leveraged" or do you agree? [link] [comments] |
| Any experience with real estate crowdfunding? Posted: 23 Jan 2022 10:12 AM PST I have a couple rent houses, and I like real estate as an asset class. But it's a big cost barrier to jump into multi-family, commercial and/or industrial property. So I've been looking at platforms like Equity Multiple, Crowd Street, Yield Street, and First National Realty Partners where I can invest in specific properties and projects (not REITs). Has anyone actually used these platforms? Have they achieved expected returns, made timely payments, exited on time, etc.? I'm currently looking at putting about $75k into four projects (2 multi-family, one commercial, and one industrial) on three different platforms with IRRs about 20% and timelines of 3-5 years. Online reviews for these platforms read like people who have looked at the websites but haven't actually invested with them, so I'm looking for any first hand experience. [link] [comments] |
| Posted: 23 Jan 2022 01:48 PM PST There are two types of investors who evaluate a company: Those who evaluate a company by the numbers and those who evaluate a company by its history. Investors who only look at the numbers will tend to undervalue a company relative to its potential and miss out on extraordinary companies. Investors who only look at the story tend to overpay for companies based on nothing concrete and get sucked into speculative bubbles. In truth, the two methods must essentially be used in synergy to arrive at a fair price. An investor who values all companies with a pre-determined formula simply has no understanding of what it means to find a company's intrinsic value. An investor who believes that an extraordinary company that will change the world justifies any price has simply never opened a business book. simply never opened a history book. From the outset of a numbers-based valuation, he tion based on the numbers, it is important to remember that all investors have a bias (either bullish or bearish) towards a company. The danger is that even with numbers that are supposed to be objective, you can make them say whatever you want. By changing a simple % growth here, a simple discount rate there, I can give a stock the valuation I want. When I started investing in the stock market, I bought companies without knowing how to value them. When I learned how to do valuations, I went through all the TSX companies one by one. I realized that strangely enough the companies I owned were all undervalued and the ones I didn't own were either fairly priced or overvalued. It didn't make sense, either I was incredibly lucky to have picked the only 10 undervalued companies on the TSX, or my calculations were completely off, the 2nd option made more sense. History-based evaluation also has its problems. Creativity is impossible to quantify. This company makes the best electric cars and its founder is a genius! This company must be worth 20 trillion dollars! Unfortunately, just because the product is Unfortunately, just because the product is great doesn't necessarily make it a good investment if you're paying $20 trillion for a company that's only going to produce $2 trillion in profits in today's terms over its lifetime. If a company made the discovery of the century, a cure for all cancers, would you invest in it? The quick answer would be yes! And now if I tell you that its discovery is that eating a few dandelion flowers available in unlimited quantities on just about any piece of land cures them all? The fact that a discovery is extraordinary, does not necessarily mean that the company would be able to enrich the investor with it. The story of a company is what gives soul to the number and the numbers are what give life to the story. Assessing the value of a company is an art, relatively easy to do, but much more difficult to master and even after years, one never stops evolving. [link] [comments] |
| Posted: 23 Jan 2022 01:06 PM PST Looking at broad market index funds, no equity has been safe in this correction. And if I have to guess, I'd say there is about 70/30 chance of a bit more pain to come between now and June 2022. Heck, even BRK.B has pulled back 6% from its recent ATH. (I am not in the Jeremy Grantham's camp of 50% more crash from here, at least not yet) But I think a few lessons can be drawn at this point. First, you need a broader investment universe in your toolbox, not just tech, and certainly not just household names like TSLA. That does not mean that you have to stay invested in all of them, but knowing about other sectors is half the battle. If your first instinct to a tech correction is to do the revenge trade of buying puts or shorting those tech plays that you were previously longed on, your investment universe is too narrow. Second, educate yourself on the cyclicality of equity and other macro factors. I find it misleading that Buffet humbly claim that he is not knowledgeable about the macro conditions during his talks. The guy knows (and has known since 1950s) a crazy amount about the interplay between macro conditions and equity. If nothing else, your knowledge allows you to understand and act/do nothing during market swings. Third, stay skeptical and humble during bull/bear markets. Even though I am also a millennial, I was very lucky for not fomoing into these growth tech trade during the entirety of 2020 and 2021. Part of that was because I was a value investor by nature but also because I was taught by my upbringing to listen to the elders. So naturally I read up on the older investors, who tend to be value. Some people of my generation will stop investing in equity for the rest of their lives due to this correction, some more will stop picking stocks altogether in favor of index funds, and many more will forswear growth tech forever and ever. I submit that none of those are reasonable reactions to this still-unfolding episode. What has been your lesson during this correction, if any? [link] [comments] |
| Is the stock market pure mathematics? Posted: 23 Jan 2022 10:48 AM PST How emotionally investors react to rising and falling prices has become clear again in the last few weeks. as long as prices rise, buy the dip applies and profits increase over time. With rising stock prices and trend movements establishing, greed also arises! Every market participant wants to get their piece of the cake. This increasing demand is driving stock prices higher and higher. In the final phase of such a trend movement, "euphoria" can often even be observed, even if the last market participant is buying. "The bull market feeds the bull market"! "The trend is your friend"! A "rational" market behavior gives rise to an emotional "irrational" behavior, which can also have strange consequences. there is no denying that we had a long, very pronounced bull market. Whether and how much he corrects is the big question! you can only look at what phases a bull market usually goes through. Scheme for a typical bullish trend behavior! If more and more stockbrokers own shares, then fewer and fewer investors are willing or able to continue buying. Demand falls, the price begins to stagnate and the first profit-taking sets in. A euphoric mood, in which many market participants are heavily invested, quickly deteriorates and turns into the opposite. Fear of falling prices and disproportionate losses arises. Dwindling profits or real losses prompt traders to sell as soon as possible. The fear of loss is getting stronger, especially with credit-financed transactions, and panic sets in. Panic selling sets in, volatility rises and the media promises "doomsday"! Do we already have a correction, or is it yet to come, or will everything be atypical this time? No one can answer that question for sure, but looking at the posts of the last few weeks, you can see more and more fear of an end to the days when investing was so easy and you just had to buy on setbacks to be among the winners. in the long term, the stock market will rise, but if you have linked your performance to that of an index, you have to be able to live with the ups and downs of the index. If you have problems with corrections because your investment is performing worse than others, you should check the composition of your portfolio. (also the S&P 500, as diversified as it is, has a stronger presence in some markets and technologies) The faster and further an investment has risen, the faster and lower the price can have fallen. Anyone who is sitting on disproportionate profits should ask themselves why the prices were able to rise so much and whether it can continue like this. comments like: "Stop chasing quick bucks and focus on long-term success. Apple (for example) had a 500% return over five years. Slow and steady." what does a "slow and steady correction" look like then? and should one just sit it out or is it appropriate to shift one's portfolio to less risk or even to take profits, be it something to be able to sleep more soundly or to be able to react better to volatile market behavior? in a few months we will know what would have been better! [link] [comments] |
| NFTs as an investment opportunity along with some information. Posted: 23 Jan 2022 01:42 PM PST Will the NFT market soon witness a flood of investors? Here's why I think so, and why you may want to Research if you want to stay "ahead of the curve," in the realm of technology, or invest. Followed by Information, Tips, and a few Warnings. • Microsoft Bets Big on the Metaverse with $68.7B Deal for Activision Blizzard. Plans to integrate NFTs • Walmart Files 7 US Patents Examining Potential Monetization of NFTs • Coinbase Teams with Mastercard to Make Buying NFTs Easy, over 1 million have signed up for the Coinbase NFT marketplace waitlist • Meta Will Incorporate NFTs Into Ambitious Metaverse Plans • Twitter Integrates NFTs With New Profile-Picture Feature (Hexagon shaped PFP) • Netflix asks followers what they think about NFTs in a recent tweet Source for the above information: Blockworks(dot)co (not .com) 101 - With all this Hype surrounding NFTs recently, it goes to show that significant value could lie within Non-Fungible Tokens (NFTs). A few things to consider to be ready to invest are... Getting a wallet. I'd recommend MetaMask and also signing up for Coinbase followed by proving your identity to pass their KYC (know your customer) screening. Also Be aware of how there are various Networks that you can send from and receive on, with it being difficult if the transaction needs to cross a bridge to a different Network. along with the difference between a custodial wallet like Coinbase Marketplace where they hold the keys to the wallet your money lies within, and a private wallet like MetaMask or Coinbase wallet where you hold the key-phrase with the phrase being unchangeable or recoverable and therefore the only thing making you the owner of the contents in the wallet. 411 - NFTs are more than just Digital Art. Think of it as transferrable and irreplaceable data in the form of a Crypto token. permanently stored and verifiable on a blockchain network via the tokens smart contract address. the difference being each one is different/unique unlike a crypto token, even if they were to look the same. Although in some cases the creator can choose to mint copies making them Limited and not a 1of1. The most popular Network to purchase NFTs on would be Ethereum via the OpenSea Marketplace. Along with also having the most expensive and popular collections such as BAYC and CryptoPunks. Which both are PFP (ProFilePicture) NFT collections of 10,000 similar but unique artwork/image tokens. Twitters integration is likely to fuel this popularity of using NFTs as ones Online social identity Aswell as celebrity influence which is seen in both collections... Other uses could be... a NFT standing for ownership of music, items within a video game, event tickets, publishers rights, proof of Invention. and anything else digitally transferable that two separate parties could agree stands as proof of ownership. Although some may disagree due to uncertainty when it comes down to Law. 911 - Due to the anonymous nature of blockchain networking. Don't listen to Strangers, don't invest more than you can afford to lose, and always Keep up to date on Scams and what to watch out for, its truly a Wild Wild West Crypto-Goldrush out there, the last thing you want to do is rush onto the block, alone with a Blindfold on and a Crypto wallet/purse loaded with shiny coins; eager to learn, spend, and make new friends. I'd strongly recommend taking your time learning without asking strangers unless it's in a large Reddit community out in the open, or someone you really trust and know in the Real World. I've found it Ideal, at least until I acquired some knowledge, to remain Quiet, Observant, and Evasive. like it's Halloween night and you're out there Dealing Narcotics in a busy city amongst mostly Gangbangers and Police officers along with a lot of people in need of help, with less people out there helping compared to the amount of people out there Robbing. My Favorite NFT collection? For many reasons is, "The Claylings" although I can no longer afford to buy one... I currently hold several crypto currency's as of typing this, which are Fantom, Ethereum, and Matic. Also, I hold no stocks and have very little knowledge on the topic. Sorry if I offend anyone who may be tired of hearing about crypto related topics, I didn't see anything against it but also didn't notice anything about it as an investment either. I decided to post this here because I feel it could be helpful information for many in the future possibly making it more of an investment than a Gamble. Stocks Have been shown to be an Ideal way to invest and I'm not telling you to choose an alternative or saying that there's a better investment. I'm simply throwing some info out there just in case you end up exploring the idea or so much as have a conversation with someone regarding the topic and would prefer to sound knowledgeable of the now trending topic. However, there's a bit more to learn but I feel there's only so much one can absorb without feeling overwhelmed. Goodluck with your investments and have a Marvelous Night! (Or day) [link] [comments] |
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