Author Topic: 1999 again?  (Read 19204 times)

maverick

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Re: 1999 again?
« Reply #10 on: June 20, 2019, 07:22:10 PM »
I would just ignore the noise and buy quality companies while looking for the occasion speculation trade.

But it's so far to find quality companies in the current environment at reasonable valuations.


RuleNumberOne

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Re: 1999 again?
« Reply #11 on: June 20, 2019, 08:14:18 PM »
I bet the market cap percentage of tech in the Wilshire 5000 + private companies is currently greater than 1999.

Though P/S, P/E ratios in 1999 were crazy, the combined market cap of the crazy companies was less than what we have now.

If we remove the top few such as GOOG, MSFT, AAPL, FB, IBM, ORCL, INTC the P/S and P/E of the remaining companies would be crazy. Those crazy companies are the ones that have been going up every week for the past few years.

RuleNumberOne

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Re: 1999 again?
« Reply #12 on: June 20, 2019, 08:18:16 PM »
The FT list from 3 months ago already looks outdated.

WayWardCloud

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Re: 1999 again?
« Reply #13 on: June 21, 2019, 12:10:52 AM »
One thing that surprises me is that we have basically all the textbook signs of a bubble: very high PE, PS, CAPE, debt load, Value under-performing growth, extreme enthusiasm for a particular group of companies (tech), old-fashioned value investors either throwing in the towel or converting (BRK bought Amazon), nonsensical public manias (Bitcoin), a plethora of unprofitable IPOs doing great, all time low unemployement........

But even though I do see some hubris here and there, I do not see euphoria or even as much as a healthy good old fashioned dose of optimism (except from Buffett but he's completely waterproof to herd psychology). Neither among investors, CEOs, journalists, on TV or among friends and family. Instead, I hear utter FEAR and a certain type of cynical resignation to the idea the whole world is soon going to hell (political polarization, climate change, fake news, education quality, pollution, nationalism, children being less well-off than parents, the end of our shared belief in truth, in science, in common decency, upcoming "unavoidable" wars...).
??? ??? ???

So who are all those optimistic people pushing the sp500 higher and investing in Beyond Meat and stuff??? Where are they hiding?
« Last Edit: June 21, 2019, 12:30:22 AM by WayWardCloud »

John Hjorth

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Re: 1999 again?
« Reply #14 on: June 21, 2019, 02:13:06 AM »
... So who are all those optimistic people pushing the sp500 higher and investing in Beyond Meat and stuff??? Where are they hiding?

WayWardCloud,

In a humble manner I will suggest that they are perhaps hard to spot because they stand behind others. If you read the last shareholder letter by Larry Fink you'll see that he is of the opinion that there is an urgent, almost desperate, endless & ever growing/expanding need for help. If you read the shareholder letter, please bear in mind what Mr. Buffett has written about helpers.

Perhaps that also leads to the conclusion that those people are not optimistic, more like "un-opinionated" [<- or something like that].
« Last Edit: June 21, 2019, 02:18:32 AM by John Hjorth »
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SHDL

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Re: 1999 again?
« Reply #15 on: June 21, 2019, 04:26:16 AM »
... So who are all those optimistic people pushing the sp500 higher and investing in Beyond Meat and stuff??? Where are they hiding?

WayWardCloud,

In a humble manner I will suggest that they are perhaps hard to spot because they stand behind others. If you read the last shareholder letter by Larry Fink you'll see that he is of the opinion that there is an urgent, almost desperate, endless & ever growing/expanding need for help. If you read the shareholder letter, please bear in mind what Mr. Buffett has written about helpers.

Perhaps that also leads to the conclusion that those people are not optimistic, more like "un-opinionated" [<- or something like that].

That’s probably right. The vast majority of people I know aren’t necessarily euphoric but they’re not paying any attention either and they have their investments on autopilot, which for many of them means they put pretty much of all their monthly savings in VOO (or an equivalent) without even thinking. Combine that with the massive, price insensitive share buybacks by the companies and throw in a few quant/momentum traders, and you have quite a group of buyers.
« Last Edit: June 21, 2019, 09:24:12 AM by SHDL »

cherzeca

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Re: 1999 again?
« Reply #16 on: June 21, 2019, 06:02:50 AM »
I see overvaluation, but many such companies are really quite exceptional ignoring valuation:  slack zoom and bynd offer real good products and services.  I expect bynd in particular to lose its first mover attractiveness, and so there will be tears I suspect for bynd high entry price shareholders, but I dont see this translating into a market bubble. same with wework; that should end badly for many shareholder but their insight that the leasing businesss is leasing office space, not just space for offices, has had a salutary effect generally.  same for tsla; great for the car industry but eventually tears for tsla bulls.

my point is that pointing out overvaluations in particular stocks doesn't make a bubble.  further, I would conjecture that many of the companies getting these overvaluations currently are good for the industries in which they compete.  a very good beef alternative will become ubiquitous even if bynd at some point crashes...this is my idea of a vibrant capitalist economy, not a bubble economy
« Last Edit: June 21, 2019, 06:10:18 AM by cherzeca »

RuleNumberOne

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Re: 1999 again?
« Reply #17 on: June 21, 2019, 07:18:52 AM »
These companies are very very unexceptional in every respect. They all make losses, and will never make profits to justify their market caps. The only thing that distinguishes them from their neighbors in Silicon Valley is their IPO date.

Consider Crowdstrike - IPO'ed last week and trades at 60 times trailing sales, market cap $15 billion. From where I sit in Silicon Valley, I see only such companies and their investors.

This IPO market shows there is no fear in the stock market. There was no way you could get such valuations at any time since 2000.

And the interesting thing is, there is no way a big tech company will buyout these IPO'ed companies at such crazy valuations either.

RuleNumberOne

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Re: 1999 again?
« Reply #18 on: June 21, 2019, 07:47:57 AM »
Just a few months ago, people snickered that the stock market would never allow crazy unicorn valuations. They were so wrong.

I can think of many private companies with revenue in the $100-$300 million range right now. Their venture capital valuations range from 10-25x sales.

But the public market for such enterprise companies is right now 60x sales.

stahleyp

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Re: 1999 again?
« Reply #19 on: June 21, 2019, 07:59:33 AM »
For the folks who think this is 1999 all over, were you investing in 1999?

I can tell you, this is no where near as euphoric as then. Will the market crash? No idea but we are not in euphoria.
Paul