The stock market

[Mike Sixel]

At this rate, I'm going to owe money for every share I own! 

[glunn]

Another very tough day. 

 

I was holding REITs as a hedge against stock market risk, which has turned out very badly. On the other hand I expect them to come back. 

[Mike Sixel]

I read the other day there was a fund that existed that went up when the market was not volatile.....it lost 90% of its value, and no longer exists. Ouch.

 

If you were a magician, and could predict these swings, you'd be rich!

[Brock Beauchamp]

I thought about getting back into the market after this happened - I have about $15k to play with right now - but decided I'm going to wait this out.

 

I don't think things are going to improve over the next few years. We've been bullish for 8-9 years now, things have to retract at some point. People simply do not have the money to keep feeding this economy.

 

Maybe I'm wrong and in 2-3 years, I look like an ass as the Dow crushes 32,000... but I just don't see how that will happen.

[glunn]

 

I thought about getting back into the market after this happened - I have about $15k to play with right now - but decided I'm going to wait this out.

 

I don't think things are going to improve over the next few years. We've been bullish for 8-9 years now, things have to retract at some point. People simply do not have the money to keep feeding this economy.

 

Maybe I'm wrong and in 2-3 years, I look like an ass as the Dow crushes 32,000... but I just don't see how that will happen.

I have been getting killed since the date of your post.

[Badsmerf]

Anybody planning to buy spotify? I could see them expanding their content into tv and sports if they wanted. Once they go public they'll have enough power to get into any type of streaming they want.

[Mike Sixel]

Spotify checks all the boxes the Oracle of Omaha would tell us to check.... So probably.

[gunnarthor]

So who had a good stock day today? No one? Thought so.

[Mike Sixel]

I did and didn't. I have some money in my IRA....so I've been "day trading" with it this week. Just buying AMZN when it drops, and then selling it. Worked today, not quite as well as earlier in the week.

 

Oh, but the rest? crying emoji

[gunnarthor]

So Trump has vocally hammered Amazon, which I'm sure his kids shorted beforehand. Trade war with China is increasing and the Dow has dropped 5% in less than a month.  Probably not the economy the GOP wants going into election season.

[Brock Beauchamp]

 

So Trump has vocally hammered Amazon, which I'm sure his kids shorted beforehand. Trade war with China is increasing and the Dow has dropped 5% in less than a month.  Probably not the economy the GOP wants going into election season.

I've been saying this for awhile now (which I why I sold) but I think we're in for a bumpy ride. Trump isn't helping things with his persistent trade war talk but I think stocks, tech stocks in particular, are primed to retract in a big way the first time we see a flat quarter or two (which is inevitable after the ~8 years of growth we've seen).

 

Way too many stocks out there are obscenely over-leveraged.

[glunn]

Arguably China will be rational and try to work out a compromise that reduces our trade deficit. If that happens, I expect a big run up.

[gunnarthor]

 

Arguably China will be rational and try to work out a compromise that reduces our trade deficit. If that happens, I expect a big run up.

We'll see. The stupidity of a trade war is mind boggling to me. That and I hold a lot of Wells Fargo (already in trouble) has meant my portfolio has been in free fall. Ugh. Fortunately, I don't need the money right now but ...

 

 

[Brock Beauchamp]

 

Arguably China will be rational and try to work out a compromise that reduces our trade deficit. If that happens, I expect a big run up.

Eh, China has a ton of leverage here. Their US exports are only a small percentage of their total GDP.

 

Never mind that China is a large reason why the US debt isn't *really* an issue, and Trump (and frankly, his idiotic tax plan) doubled down on that this year.

 

China, unlike the US, is monolithic. Their government can literally dictate anything that happens within their borders: whether workers are paid, how much they're paid, where their banks lend money and to whom, how pretty much anything is handled.

 

That's a massive leverage point for them when it comes to negotiations. Trump is likely playing a losing hand here, one that may net mild rewards with China (simply out of irritation) but will lose considerable traction with the rest of the world.

[glunn]

 

Eh, China has a ton of leverage here. Their US exports are only a small percentage of their total GDP.

 

Never mind that China is a large reason why the US debt isn't *really* an issue, and Trump (and frankly, his idiotic tax plan) doubled down on that this year.

 

China, unlike the US, is monolithic. Their government can literally dictate anything that happens within their borders: whether workers are paid, how much they're paid, where their banks lend money and to whom, how pretty much anything is handled.

 

That's a massive leverage point for them when it comes to negotiations. Trump is likely playing a losing hand here, one that may net mild rewards with China (simply out of irritation) but will lose considerable traction with the rest of the world.

I am not a Trump fan. On the other hand, I think that the fact that he acts like a crazy person might work to our advantage here. Sometimes a rational player will yield to a crazy player when the game is "chicken." I think that this might also work with North Korea.

 

I also believe that China needs to stop stealing our IP. I have read that this is costing our country as much as $600 BILLION per year. That would be enough to make a big dent in the trade deficit.  https://www.nytimes.com/2017/08/15/opinion/china-us-intellectual-property-trump.html

[Mike Sixel]

For those of you who want an idea.... Shopify has plummeted the last few days. I'd consider it on sale..... Not that this is advice....

[gunnarthor]

 

For those of you who want an idea.... Shopify has plummeted the last few days. I'd consider it on sale..... Not that this is advice....

Yeah, I almost sold last week but decided to hang onto it through this. Hope I made the right decision but it's certainly a fun stock to own.

 

My wife and I have some cash on-hand right now but we're sitting it out for a bit. Not sure what/where to buy in this economy.

[Mike Sixel]

 

Yeah, I almost sold last week but decided to hang onto it through this. Hope I made the right decision but it's certainly a fun stock to own.

 

My wife and I have some cash on-hand right now but we're sitting it out for a bit. Not sure what/where to buy in this economy.

 

heh, I put some back in last week....not worried, I don't need it right now (that's actually cash in my self directed IRA....).

 

and, that stock will bounce back, just wouldn't bet on anything making money short term right now....though with the volatility, if you guess right, it's money!

[Vanimal46]

Look into Roku.... The stock has been going up lately and forecasting a 15% increase over the next year.

 

I bought in a couple of months ago.

Edited July 3, 2018 by Vanimal46

[gunnarthor]

Anyone have thoughts on Tesla?

[Mike Sixel]

 

Anyone have thoughts on Tesla?

 

I've gone in and out.....really don't know what to do there. So, no? Sort of? It's a hard one to pin down for me. 

[gunnarthor]

 

I've gone in and out.....really don't know what to do there. So, no? Sort of? It's a hard one to pin down for me. 

Yeah, that's my feeling too. I have some friends who own it and love it - they're almost cultish on it - but ...

[Brock Beauchamp]

 

Yeah, that's my feeling too. I have some friends who own it and love it - they're almost cultish on it - but ...

I think they'll do okay in the long run.

 

But only okay, at least in the auto business. I think their real potential is in battery tech on a larger scale than automotive.

 

So, that would put me pretty down on them given their current valuation, which is absurd (along with most other new tech companies, which is why I stepped out of the market last year).

 

If Tesla's stock was $100-150 a share, I'd be a lot more positive about them in the long run. But, like so many other tech stocks, someone will have to pay the piper sooner or later. Either their profits catch up to their valuations while their stock stays flat (possible), or their valuations decline over time to match their profits (IMO, more likely).

 

Either way, long term investors lose, comparatively speaking. And things can go to hell in a hurry if the economy stumbles and everyone realizes that a company can no longer be rationally valued at 4-5x their reasonable cap in a market where their profits have zero chance of increasing over the mid-term. A company like Tesla could see their stocks drop enormously overnight were that to happen because, unlike companies like Facebook who can weather a bad market because they're actually making money, an economic lull would basically ensure that Tesla had zero chance of turning a profit in the foreseeable future.

[Mike Sixel]

 

I think they'll do okay in the long run.

 

But only okay, at least in the auto business. I think their real potential is in battery tech on a larger scale than automotive.

 

So, that would put me pretty down on them given their current valuation, which is absurd (along with most other new tech companies, which is why I stepped out of the market last year).

 

If Tesla's stock was $100-150 a share, I'd be a lot more positive about them in the long run. But, like so many other tech stocks, someone will have to pay the piper sooner or later. Either their profits catch up to their valuations while their stock stays flat (possible), or their valuations decline over time to match their profits (IMO, more likely).

 

Either way, long term investors lose, comparatively speaking. And things can go to hell in a hurry if the economy stumbles and everyone realizes that a company can no longer be rationally valued at 4-5x their reasonable cap in a market where their profits have zero chance of increasing over the mid-term. A company like Tesla could see their stocks drop enormously overnight were that to happen because, unlike companies like Facebook who can weather a bad market because they're actually making money, an economic lull would basically ensure that Tesla had zero chance of turning a profit in the foreseeable future.

 

I'm not sure we should rely on valuations at this point.....its what kept people out of FB and AMZN and others.......I get your point, but I'm not sure I agree.

[Brock Beauchamp]

 

I'm not sure we should rely on valuations at this point.....its what kept people out of FB and AMZN and others.......I get your point, but I'm not sure I agree.

And that's a fair stance to take.

 

But Amazon and Facebook are pretty bad examples to use to defend tech valuations. Facebook had its **** together from day one and Amazon basically reinvented itself every year for a decade to become a behemoth no one expected or saw coming, at least in its present form.

 

Most companies are pretty predictable, even Facebook was pretty predictable (in a mostly good way). Amazon was wild west-ing it out there for years and making it up as they went along. If you take the average tech company (which is probably massively overvalued for no exceptional reason), those expectations aren't repeatable.

[Mike Sixel]

 

And that's a fair stance to take.

 

But Amazon and Facebook are pretty bad examples to use to defend tech valuations. Facebook had its **** together from day one and Amazon basically reinvented itself every year for a decade to become a behemoth no one expected or saw coming, at least in its present form.

 

Most companies are pretty predictable, even Facebook was pretty predictable (in a mostly good way). Amazon was wild west-ing it out there for years and making it up as they went along. If you take the average tech company (which is probably massively overvalued for no exceptional reason), those expectations aren't repeatable.

 

just examples.....I can name a lot more.

 

Tesla may or may not be a disrupter, that's really the key question at this point, to me.

 

I'm out, I was in, but i'm out now. but, I get why some people (a lot) are in. 

[Brock Beauchamp]

 

just examples.....I can name a lot more.

 

Tesla may or may not be a disrupter, that's really the key question at this point, to me.

 

I'm out, I was in, but i'm out now. but, I get why some people (a lot) are in. 

Oh, Tesla is *definitely* one of those companies with the potential to disrupt.

 

I simply don't know if their ultimate disruption will be to the automotive market, especially given their massive, repeated manufacturing failures and delays. In the face of what GM is doing, I think Tesla can be marginalized pretty easily unless they get their **** together in a big way, immediately.

[Mike Sixel]

 

Oh, Tesla is *definitely* one of those companies with the potential to disrupt.

 

I simply don't know if their ultimate disruption will be to the automotive market, especially given their massive, repeated manufacturing failures and delays. In the face of what GM is doing, I think Tesla can be marginalized pretty easily unless they get their **** together in a big way, immediately.

 

If they could make cars.....but I agree, someday someone will figure out how to make an electric car I want, and can afford, and actually deliver it......and I don't have any confidence it is Tesla.

[Brock Beauchamp]

 

If they could make cars.....but I agree, someday someone will figure out how to make an electric car I want, and can afford, and actually deliver it......and I don't have any confidence it is Tesla.

I'll be disappointed if it's not GM. They have the Bolt platform, which was designed to be modular. If GM doesn't have a 300 mile range, sleek Buick on showroom floors within the next 24 months (preferably 12-18 months), they have failed.

 

The Bolt was a good starting point to get your feet under you and serve the market with an affordable offering at production scale. Now they need to expand upon that and they need to move quickly.

[Badsmerf]

Musk sounds like he is considering opening a manufacturing plant in China. If Tesla builds a battery facility and a car factory in Asia they will be a force to be reckoned with in the automotive and electricity storage sectors. If course, they risk losing intellectual property with type of expansion, but I'm not sure it will matter.

 

My colleague works with Tesla, and they are getting better, but they still are a **** show internally.