Investments, stocks, shares

[Tommy G]

49 minutes ago, Paninistickers said:

Yeah, I'm wondering if it's it. That will be an absolute bummer 

It’s an absolute joke of a tax and looks like it could be finally abolished at the budget next month - it’s unfair and administrative. Same goes for the 30 hours free childcare “tax” 

[CheeseHead]

Nvidia earnings on Wednesday. The results could have a big effect on the AI hype, though the consensus seems to be that they'll be posting similar if not better results than Q3 2023.

[Guest BlueBrett]

The "Buffett indicator" - the ratio of the market value of the entire stock market to GDP, has historically averaged around 65%. The ratio peaked at 88.3 prior to the 1929 crash. At the peak of the http://dot.com bubble the ratio was 136.9%. Currently the ratio is 185%.

[Guest BlueBrett]

probably because of the unprecedented innovation and productivity we are seeing, low energy prices, the favourable macroeconomic environment, low debt and geopolitical situation that is currently optimally conducive to sustainable economic growth and prosperity right?

 

Oh no wait, none of that shit is real...

 

hmmm

[CheeseHead]

1 hour ago, BlueBrett said:

The "Buffett indicator" - the ratio of the market value of the entire stock market to GDP, has historically averaged around 65%. The ratio peaked at 88.3 prior to the 1929 crash. At the peak of the http://dot.com bubble the ratio was 136.9%. Currently the ratio is 185%.

There is a natural trend upwards of this indicator because of new technologies and the global reach of US companies. The market value of these companies is naturally increasing compared to the US GDP figure. So probably unfair to directly compare it to previous values. The stock market is still somewhat overvalued though, the Schiller PE ratio is currently at about 33. It was at 44 before the .com crash.

 

I take it you are 100% cash then?

[Guest BlueBrett]

1 hour ago, CheeseHead said:

There is a natural trend upwards of this indicator because of new technologies and the global reach of US companies. The market value of these companies is naturally increasing compared to the US GDP figure. So probably unfair to directly compare it to previous values. The stock market is still somewhat overvalued though, the Schiller PE ratio is currently at about 33. It was at 44 before the .com crash.

 

I take it you are 100% cash then?

Why should the valuation be naturally increasing? It has to be based on something tangible surely? I can't see how its reasonable at all for tech stocks in particular to be trading at these insane multiples of revenue. 

 

It looks even worse when you scratch the surface and realise that most of them are investing heavily in their own customers and thereby artificially inflating demand for their products. 

 

Is that the ratio for the NASDAQ or S&P? Either way I'd suggest it's a bit misleading as there are certain sectors trading at really low P/Es - miners, energy etc which drag the average down while the P/Es of tech companies shoot for the moon and these stocks obviously have a disproportionate impact on the market as a whole. 

 

I don't think the market is somewhat overvalued. I think it is grossly overvalued, maybe to the tune of 100-150%

 

I do hold a few equities, mostly DIV stocks in the sectors I mentioned. Saving in cash is not really an option given the state of inflation and the level of national debt that means the inflation is here to stay and likely to get worse. The vast majority of my savings go into Bitcoin. 

 

 

 

I think sometimes it's worth just taking a step back. Forget detailed analysis and take in the big picture.

We can all see the world is going to shit right? Yet the stock market is at all time highs. Something has got to give.

Edited 20 February by BlueBrett

[CheeseHead]

3 minutes ago, BlueBrett said:

Why should the valuation be naturally increasing? It has to be based on something tangible surely? I can't see how its reasonable at all for tech stocks in particular to be trading at these insane multiples of revenue. 

 

It looks even worse when you scratch the surface and realise that most of them are investing heavily in their own customers and thereby artificially inflating demand for their products. 

 

Is that the ratio for the NASDAQ or SNP? Either way I'd suggest it's a bit misleading as there are certain sectors trading at really low P/Es - miners, energy etc which drag the average down while the P/Es of tech companies shoot for the moon and these stocks obviously have a disproportionate impact on the market as a whole. 

 

I don't think the market is somewhat overvalued. I think it is grossly overvalued, maybe to the tune of 100-150%

 

I do hold a few equities, mostly DIV stocks in the sectors I mentioned. Saving in cash is not really an option given the state of inflation and the level of national debt that means the inflation is here to stay and likely to get worse. The vast majority of my savings go into Bitcoin. 

 

GDP includes exports but would not include sales that some huge companies make in other countries. The best example I can find is that a company like Amazon makes a lot of money from fulfillment centres and sellers in Asia. This profit would be priced into the Amazon share price but has no impact on US GDP. This globalisation aspect (especially of the mega cap companies) has increased gradually over time, so that particular ratio will naturally increase. I believe Warren Buffet himself may have stated something similar - or at least stated that we cannot rely on one single measure over a long period of time.

[CheeseHead]

On 20/02/2024 at 13:05, BlueBrett said:

 

I think sometimes it's worth just taking a step back. Forget detailed analysis and take in the big picture.

We can all see the world is going to shit right? Yet the stock market is at all time highs. Something has got to give.

Is this the default view of the nigh-all-in crypto investor? 

 

As far as I can remember the world has been going to shit since the 80's!

 

Wrt your previous comments, most of the S&P 500 has performed poorly over the last couple of years, its only the few mega-caps that have dragged it upward. So maybe it is just those big tech stocks that are over-priced and need correction? Won't help an index investor if they crash of course, as they are so heavily weighted in the index.

 

At the end of the day we live and die by our own investment choices!

 

[Zear0]

Nvidia revenue up 265% since last quarter...

[CheeseHead]

3 minutes ago, Zear0 said:

Nvidia revenue up 265% since last quarter...

Not true. Q3 2023 $18B, Q4 2023 $22B

[Zear0]

6 minutes ago, CheeseHead said:

Not true. Q3 2023 $18B, Q4 2023 $22B

Compared to last year I should have said. Tweaked, still not bad.

[weller54]

Rolls Royce!!..

Their SP has rocketed over the past 12 months....

More upside to come too IMO.

[Raj]

9 hours ago, weller54 said:

Rolls Royce!!..

Their SP has rocketed over the past 12 months....

More upside to come too IMO.

Ive made 200% profit so far😎

 

Wont tell you about most of my others which plummet as soon as I buy them though🤣

[Tommy G]

13 hours ago, weller54 said:

Rolls Royce!!..

Their SP has rocketed over the past 12 months....

More upside to come too IMO.

Got a decent CEO in place now who knows how to return money to investors. Got my own views on the way RR works which I'll keep to myself. 

[Guest BlueBrett]

On 21/02/2024 at 23:44, Zear0 said:

Compared to last year I should have said. Tweaked, still not bad.

The stock price is up around 400 percent so even with revenues up by 265 you are paying more for each unit of revenue increase than you are getting.

 

[CheeseHead]

1 hour ago, BlueBrett said:

The stock price is up around 400 percent so even with revenues up by 265 you are paying more for each unit of revenue increase than you are getting.

 

Theoretically, at the fixed one-off price you pay today, you are paying for multiple years of the increased revenue so you cannot compare 1-year stock price percentage increase to 1-year revenue percentage increase.

 

It's fairly easy to do a DCF (discounted cash flow) analysis on a company for say the next 10 years, though some guess work is required when estimating growth rate per year. This will indicate how fair the share price is today, and what effective P/E ratio you will be getting after 10 years if you buy at today's price. Basically the longer you hold a stock, the more you are forgiven for paying a premium in the first place.

 

In any case..

1. No one here is really advocating buying the shares at the current price (FOMO-ing in)

2. At some point the demand will probably slow down and the share price will drop accordingly, so this needs to be taken into account if buying.

 

As stated elsewhere in this thread, if you are a long term investor you just need to do your homework, keep an eye on things, follow the earnings calls, listen to future guidance etc.

[Guest BlueBrett]

5 hours ago, CheeseHead said:

Theoretically, at the fixed one-off price you pay today, you are paying for multiple years of the increased revenue so you cannot compare 1-year stock price percentage increase to 1-year revenue percentage increase.

 

It's fairly easy to do a DCF (discounted cash flow) analysis on a company for say the next 10 years, though some guess work is required when estimating growth rate per year. This will indicate how fair the share price is today, and what effective P/E ratio you will be getting after 10 years if you buy at today's price. Basically the longer you hold a stock, the more you are forgiven for paying a premium in the first place.

 

In any case..

1. No one here is really advocating buying the shares at the current price (FOMO-ing in)

2. At some point the demand will probably slow down and the share price will drop accordingly, so this needs to be taken into account if buying.

 

As stated elsewhere in this thread, if you are a long term investor you just need to do your homework, keep an eye on things, follow the earnings calls, listen to future guidance etc.

Yeah of course.

 

It's also only a matter of time until competitors emerge. You think the Chinese haven't already begun the espionage? 

 

Well somebody out there is clearly still buying it. God bless them haha. 

[Izzy]

On 24/02/2024 at 16:41, BlueBrett said:

Yeah of course.

 

[Steve_Guppy_Left_Foot]

Think this would be the right place for it. I’m looking at setting up a savings account for the first time and done a little research and finding it all a bit overwhelming. I’m looking at saving 250-350 a month, I don’t want/need to gain access to it, just something I want to grow over the years, do I want an isa? A certain type of savings account? What’s got the best interest? Are certain stocks worth looking at that are really low risk but deliver over standard interest rates? Any advice appreciated, cheers.

[Otis]

I'd look at Stocks and Shares ISA tracker fund 70-80% US with the rest split UK, EU & Worldwide.

Investing in individual stocks is a risk that I'd generally avoid. 

[Tommy G]

24 minutes ago, Otis said:

I'd look at Stocks and Shares ISA tracker fund 70-80% US with the rest split UK, EU & Worldwide.

Investing in individual stocks is a risk that I'd generally avoid. 

I’d agree here. My vanguard is up +22% at the min…..crazy 

[Tommy G]

Presume everyone’s investments, pensions etc are flying at the min?

[lcfcsnow]

I've never understood any of it, all I've risked over the years is a cash isa as I won't lose money or have to pay tax on it 🤔

[Otis]

19 minutes ago, Tommy G said:

I’d agree here. My vanguard is up +22% at the min…..crazy 

Yep. I have 2 split, one is up 14%  and the other 29%

[Otis]

3 hours ago, lcfcsnow said:

I've never understood any of it, all I've risked over the years is a cash isa as I won't lose money or have to pay tax on it 🤔

It's a safe approach that suits your appetite to risk.

You can invest up to 20K PA tax free with a stocks & Shares ISA.

Edited 24 March by Otis