I’m never right about stonks which is why all my tax advantaged accounts I haven’t even looked at this year and rarely do. If you had inversed my stonks gambling over the past couple months you would have made a fortune. I’m not happy with myself for losing as much as I have but in the grand scheme of life it isn’t that much so oh well. I’ve lost that in one weekend in Vegas multiple times because I am a moron when it comes to gambling.
So in short I have made way more than I have lost because the majority of my $$$ in the market I am not being dumb and trying to time the market. The dumb part of me looks on in amazement at what is happening and foolishly tries to make money on it.
I don’t know if anyone followed the silver thread in BFI back during the silver bubble, but I’m hoping we get a reboot of it, that was an amazing thread that should be taught in college econ textbooks.
I’m with you that some individual stocks are obviously mispriced, though. Uber reported a $1,800,000,000 loss today and it’s stock went up 5% (market cap of $60 billion). It has never turned a profit and literally has no plan to do so.
This is a little wonky, but it basically looks at how you can decompose changes in prices into changes in expected cash flows vs. changes in discount rates. I think this is super fascinating, but I recognize I have pretty idiosyncratic tastes:
Because it’s not supposed to be a graph of rich people’s feelings. It’s supposed to be a graph of the total valuations of the companies within a given index.
If i were inclined to make random one-off bets, I would be trying to find a way to bet against auto lenders (especially subprime auto lenders). Credit quality in this market has quietly eroded over the past several years and a huge number of borrowers have no reserves with which to make payments.
That doesn’t sound like something that could happen in America. Because the market is so efficient, lenders are too smart to extend loans to people that cant pay them back.
How effective is the collateral mechanism in limiting auto lenders’ losses? (This was not meant to be socratic. I have absolutely no idea how effective it is to recapture and sell the car.)
On that note, one thing we may not be realizing yet is that a lot of the contraction may be in the spending of the upper middle class. UI+CARES gets people to around $50K a year. I wouldn’t be surprised if a lot of the missed payments and reduced spending are from people who were clearing more than that, spending all their income, and now are living off of UI+CARES, having just lost CARES. I read that in Philly, luxury apartments are hardest hit.
I literally have no idea what financial shape these auto lenders are in. I’m just pointing out that if you want to bet against them, it’s not enough that people stop payments on these loans, because the cars can be repossessed and sold. And it doesn’t particularly matter if they flood the market with these repossessed cars because they don’t have to sell them for anything close to “fair” market value - they just have to recover their investment in the loan.
The people who really lose in this scenario are the car owners who have built up equity in their cars via their payments, but then lose that equity entirely when the car is repossessed and sold.
