This market doesn’t read beyond the headline.
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If they read past the headline they will find a template Both Sides pile of horseshit. “Some observers comment that this could signal the beginning of an economic turnaround, while their critics suggest that the figures reflect only a temporary boost from census activity. Who’s to say what is a fact, from our perfectly independent Ivory Tower all assertions look the same!”
The media almost never has any idea why stocks go up or down, the entire industry is worthless.
So as of five minutes ago, stocks are down, GLD is down, FXE is down, TIP is down. Panic setting in again?
Hopefully. Huge tank to get these asshats back go the table.
Stock market crash in the next two months would be great for Biden, right?
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NASDAQ down another 5%, LOL TESLA down another 7%.
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Man, wallstreetbets is hilarious. Stocks have been churning along for months and these guys manage to go busto on one red day.
Bitcoin dropping, too. All the meme investments getting hammered.
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The S&P is about 7% above where I called bubble and bailed, QQQ still about 10% above. Trying to start figuring out if I should adjust my reentry point up a bit from where I originally planned. I’m thinking maybe I start moving it in at S&P ~2850.
I do actually think some of the worst case scenarios for our economy are now off the table, so I don’t think the floor is as low.
They would blame the drop on the market realizing Biden might win. And say if he does win it will be a further bloodbath. They only know how to take credit for positive things and place blame for negative things. The buck stops everywhere else under this administration.
Of course that’s what they say, but not everyone will believe him.
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Well then I guess he needs to find a way to blame it on the Mexicans.
Soft Bank just havin’ fun out there
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Just came here to post this, absolutely amazing. So they completely shit the bed with WeWork and then have been joining WSB in tech YOLOs and now are getting fucked again. You love to see it
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Lol soft brain bank more like! amirite guys?
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TSLA positive
I feel compelled to put my financial statement analysis teacher hat on and comment here, using Apple as an example. A couple of points:
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Whether a stock is a good or bad value at current levels is completely independent of its prior returns. Looking at recent changes in price doesn’t tell you whether the current price is appropriate.
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Apple is obviously a large company that isn’t going to be experiencing insane growth in revenues/earnings going forward. So it seems reasonable to use its P/E ratio as a super noisy short-hand measure of valuation. Current market cap is about $2.03 trillion and its most recent annual earnings were $55.26 billion, which would give you a P/E ratio of 36.8. That seems high!
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There are a couple of factors that make it seem not-so-high:
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Their fiscal year ends in September each year. So that annual earnings number is pretty stale, and will increase in about a month. Their trailing 4 quarter income is $58.4 billion, so I’d say a better real-time estimate of P/E is 34.8.
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Apple has an insane amount of cash and marketable securities on its Balance Sheet - almost $200 billion. They could immediately distribute a large percentage of that balance without harming their earnings stream at all. In situations like this, I’d subtract part of that from the market cap to get something closer to enterprise value. In this case, I’d drop off about half of that amount.
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If you look at the TTM earnings and account for the excess cash/investments, you end up with a P/E ratio of about 33.1 Is that high? Yes, compared to historical.
But P/E ratios get super weird in a world of super-low long-term interest rates. If you think about a basic model of earnings growth, you can say that Price=Current period earnings (dividends, really, but whatever since I’m just bullshitting right now)/(discount rate minus growth rate).
In a normal world, you’d have a discount rate of like 10% for a mature company, consisting of a 3-4% risk-free rate plus a risk premium. Assuming a 3% perpetual growth rate in earnings, that would give you a P/E ratio of (1/(10%-3.5%)) = 15.4, which I think people would say looks like a historically normal P/E ratio for a mature firm.
But in a world with a 1% risk-free rate, the same risk premium, and the same growth rate, you’d have a P/E ratio of (1/(7%-3%)) = 25. And if you bump up the growth rate to 3.5%, you get a P/E ratio of 28.6. That makes it seem like a fantastically-profitable and still growing company like Apple maybe isn’t insanely overvalued.
Now, I’m not actually defending Apple’s valuation at this level - I’m over-invested in Berkshire Hathaway and have had to stop myself from shorting out its extremely large Apple position. But I’d encourage people to ignore prior price movements in determining whether a stock is over/under valued, and to recognize that appropriate valuation levels in low-discount rate environments will look completely outrageous when you compare them to historical levels.
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You can’t spell “STONKS” without K
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