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Ask HN: Are we in tech-stock bubble?

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Re: Ask HN: Are we in tech-stock bubble?

#51

Post by stopChanging »

maxharris wrote: post #27
rainyMammoth wrote: post #19

Earlier quoted context omitted.

At this point, pretending that TSLA has anything to do with the company Tesla is grotesque. I applause the length to which you go to justify yourself. TSLA is a meme stock that operates on a narrative that "TSLA always goes up". It's pure speculation and that bubble is going to pop very badly. And it might take the whole economy with it now that it is in the SP500 with a ridiculous valuation.

I'm sorry you missed out on one of the best investments of the decade, but there is a lot of room left for this to run. Tesla's coming FSD and robotaxis still haven't been priced in. https://www.youtube.com/watch?v=hx7BXih7zx8

That's not two things, it's one, and I just don't see Tesla self driving panning out anytime soon. They've made wild claims about it for years now, but the actual product has progressed slowly. There have been far more failures than successes in that field over the past decade, and it's perpetually been given a "just a couple more years" timeline.

Re: Ask HN: Are we in tech-stock bubble?

#52

Post by seibelj »

rat9988 wrote: post #30
seibelj wrote: post #16

Earlier quoted context omitted.

True capitalists do not applaud the crony capitalism common throughout the entire world. Japan’s government now owns sizable percentages or even outright majorities of all major corporations. The endless appetite for debt-fueled stimulus has led to crazy malinvestment that will be an extremely difficult pill to swallow when the bill finally comes due. Why even tax us anymore? If it’s so easy to print new money just s…

> Japan’s government now owns sizable percentages or even outright majorities of all major corporations Is it a positive or negative thing? (honest question, I don't have much knowledge in this area)

The government is not good at creating and sustaining businesses despite their nearly unlimited resources and centuries of attempts. When the government owns large stakes in businesses then the business operations become political, as the government is elected and the government owns the business, so the business is now answerable to voters. The business will be encouraged to make malinvestments in politically important projects and regions, allow unproductive employees to remain, and lead to general stagnation.

Some socialists have openly stated that the end goal of democratically run companies can be attained by funneling government money directly into buying equity stakes in businesses, growing over time. This would be an extremely terrible outcome for anyone that likes productivity and efficiency.

Re: Ask HN: Are we in tech-stock bubble?

#53

Post by rainyMammoth »

michaeljohansen wrote: post #26
rainyMammoth wrote: post #19

Earlier quoted context omitted.

At this point, pretending that TSLA has anything to do with the company Tesla is grotesque. I applause the length to which you go to justify yourself. TSLA is a meme stock that operates on a narrative that "TSLA always goes up". It's pure speculation and that bubble is going to pop very badly. And it might take the whole economy with it now that it is in the SP500 with a ridiculous valuation.

S&P500 has a total market cap of $31T. Tesla's current piece of that index is ~2%. A bubble pop would be unlikely to "take the whole economy with it" (thankfully).

When Tesla pops, it will potentially lose 80 or 90% of its values over a couple days/weeks. Even though that's only 2% of the SP500, it will trigger a panic sell for related companies in the same industry, and it might eventually become a macro indicator.

Re: Ask HN: Are we in tech-stock bubble?

#54

Post by WheelsAtLarge »

I think we are at an inflection point. We are about to see an increase in productivity and innovation due to the technologies (AKA tools) that have been created in the last few decades. That has sparked the buying euphoria that has driven many stocks to extra ordinary levels. Is it a bubble? Maybe, we really won't know until after the fact.

I believe that if it is, it's only the start. We will be seeing higher highs for at least a few more years. The euphoria has just started. I believe it so much that I think we will see the 1st Trillionaire with in the next 15 years.

These innovations plus our positive progressive social views will improve the standard of living for many and that in effect will help many others.

Good days are in our future.

Re: Ask HN: Are we in tech-stock bubble?

#55

Post by cwwc »

voodootrucker wrote: post #32
cwwc wrote: post #6

Earlier quoted context omitted.

There is a secret sauce: pairing a company (Amazon.com) with heavy net operating losses (NoLs) with a very profitable company (AWS). The result? Amazon pays zero taxes and can continually expand. The NoLs offset the profits, and every time Amazon has a division that becomes profitable they offset it by entering a promising but loss-inducing new sector. Then, when that division becomes profitable - rinse and repeat. T…

> This is Bezos’ genius. His genius is gaming a readily game-able tax system for personal gain and public loss? I do agree it's what he's good at, but I disagree about it being "genius" and question whether it's worthy of praise.

Concurred.

Re: Ask HN: Are we in tech-stock bubble?

#56

Post by cwwc »

thewarrior wrote: post #31
cwwc wrote: post #6

Earlier quoted context omitted.

There is a secret sauce: pairing a company (Amazon.com) with heavy net operating losses (NoLs) with a very profitable company (AWS). The result? Amazon pays zero taxes and can continually expand. The NoLs offset the profits, and every time Amazon has a division that becomes profitable they offset it by entering a promising but loss-inducing new sector. Then, when that division becomes profitable - rinse and repeat. T…

Are taxes such a serious constraint on company growth when funding is so easily available ?

Hm. Not sure, that’s an excellent point. It may not be a constraint, but I think it is a massive incentive.

Re: Ask HN: Are we in tech-stock bubble?

#57

Post by nknealk »

There are a variety of comments saying that discount rates are going to 0 because of fed actions which therefore justifies high asset prices. Another version of this story is “the fed printed cash and it has to go somewhere”. While it is true that discount rates are being suppressed by fed action, risk free rates are only one portion of what flows into the discount rate of a DCF. Market risk premium is another component that seems to be completely ignored this HN thread.

The google search term to get your feet wet is “CAPM”. I personally think that risk free rates being 0 is not sufficient to justify some of the valuations we’re seeing in the technology sector.

Re: Ask HN: Are we in tech-stock bubble?

#58

Post by cwwc »

CyanLite4 wrote: post #43
cwwc wrote: post #4

TSLA? Not justifiable from a pure numbers standpoint. But - other tech stocks? Arguably justifiable. Since the risk free rate (treasuries) has cratered, this has altered the DCF calculation that analysts use to value a company (the outcome is essentially this: the company is worth more, because this risk free rate is used in discounting the PV vs FV of the company’s cash flows). Thus, it makes sense to have companies…

TSLA is easily justifiable. Their entry into other markets, like home-installed batteries (PowerWall), solar roofs, HVAC, home automation, trucking, robo-taxis, etc. all make it very attractive. Even just selling their batteries at retail stores like an Energizer or Duracell would add a few billion to their revenue stream. They’re a solid 5 years ahead of competitors in terms of battery and self-driving capabilities.…

Curious, do you have a rough timeframe on when you think this will play out? Just roughly speaking - I don’t have an angle, just haven’t thought of it in this manner before.

Re: Ask HN: Are we in tech-stock bubble?

#59

Post by robjan »

ConcreteGidget wrote: post #12
winslow wrote: post #11

Earlier quoted context omitted.

If you don't mind me asking, how'd you make 80k passively? Investments, properties, or a "passive" sass/tech product?

Stock market. Coronavirus was financially beneficial for the corporate portion of the upper middle class.

You made 80k in dividends or appreciation in the value of your stocks? The latter is not usually considered as "income".

Re: Ask HN: Are we in tech-stock bubble?

#60

Post by giantg2 »

ConcreteGidget wrote: post #7
seibelj wrote: post #5

Every single person has no simple way to save money anymore. Savings accounts, CDs, and money markets - even high-yield online ones like Ally and Goldman Sachs - pay zero interest or close to it. Simultaneously the government has printed an absolutely incredible amount of money this year that has almost exclusively gone to the wealthy. This is because the fed is buying treasuries / corporate junk bonds and backstoppi…

Its pretty crazy how no one is talking about how only 18% of the stimulus bill is going to individuals. I'm by no means rich but I made 80k passively this year so I don't know which side of the wealth transfer I'm on.

If you make $80k passively, you are above average and likely border on rich.
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