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Why are so many unprofitable companies the best performing stocks this year?

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Re: Why are so many unprofitable companies the best performing stocks this year?

#131

Post by stunt »

dustingetz wrote: post #70
ComputerGuru wrote: post #57

Earlier quoted context omitted.

What will they do, put a gun to consumers’ heads to force them to buy exercise bikes and the latest iPhone models?

USA will negotiate ever more blatantly slanted Trade Agreements backed by sanctions (Russia), regime destabilization (Middle East) etc

You got down-voted, but it's naive to think that's not true.

US and UK did orchestrate a coup to overthrow the democratically elected Prime Minister of Iran in 1953. (Operation Ajax)

The Prime Minister was a lawyer and politician that took control of Iran's oil resources from British Anglo-Iranian Oil Company (What we know as BP today), and he was going to take more actions to take control over their resources.

https://en.wikipedia.org/wiki/1953_Iranian_coup_d%27%C3%A9ta...

Re: Why are so many unprofitable companies the best performing stocks this year?

#132

Post by pashamur »

bumby wrote: post #112
trixie_ wrote: post #90

Everyone thinks the stock market is crazy. The government is crazy - printing trillions of dollars this year, plans to print trillions more. The currency is will be devalued, inflation will happen. Investors see that and are getting out of cash and into stocks/crypto/property. So is the market really up, or is it just the outlook on the dollar is down?

I'm not sure the recent evidence bears out this point. If you look at the strength of the dollar, it's actually UP since the ultra-low interest rates that started after the financial crises. Rampant inflation hasn't happened either. I'm not smart enough to know if this is just a looming bow-wave or that the previous assumptions don't hold.

Up compared to what? That's the key. The money printing is roughly synced between central banks (Europe is actually printing more), so the dollar is up relative to other currencies (since other countries have external debts in dollars and have a need for dollars).

If you look at dollars versus assets, gold, bitcoin, real estate - it's pretty clear that the dollar has lost significantly (it's just not obvious because all physical currency has depreciated in tandem)

The inflation that is happening is not happening in daily commodities - it's happening in the capital markets instead.

Re: Why are so many unprofitable companies the best performing stocks this year?

#133

Post by pashamur »

ac29 wrote: post #107
wtracy wrote: post #98

I'm surprised that Overstock is simultaneously still running at a loss and is seeing rising share values. Every time I've tried to shop there, I've found a terrible selection, middling prices, and a mediocre UI. (To be fair, every e-commerce giant has a mediocre UI.) I see them casually mentioned in lists of "Amazon alternatives", but I've never once had someone recommend Overstock for a specific purchase. I don't th…

Overstock is not running at a loss (anymore). They doubled their revenue year over year and went from losing money to making money. I imagine that is why their stock is up, though I couldn't comment on why its up by 1000%. https://www.marketwatch.com/investing/stock/ostk/financials/...

They've also heavily pivoted into tech in the past several years I think:

https://money.cnn.com/2018/08/10/technology/overstock-blockc...

Re: Why are so many unprofitable companies the best performing stocks this year?

#134

Post by ip26 »

panopticon wrote: post #129
ip26 wrote: post #99

Earlier quoted context omitted.

I see it as a hedge against inflation. In boom times with soaring markets, there is (usually) considerable inflation. If you ride the market, you probably won't see outsize returns but you won't lose purchasing power to inflation either. For this reason I frequently wonder whether I should invest HSA funds exclusively in medical stocks. If healthcare gets more expensive, my HSA has probably grown. If healthcare gets…

> If healthcare gets cheaper, my HSA might shrink, but that's fine because healthcare is cheap. Isn't the conventional min/max strategy to not use your HSA for any medical expenses? That is, you just treat your HSA as a traditional IRA and don't touch it until 65+.

The funds in the HSA are to be withdrawn to cover medical expenses.

So, you do leave it in the HSA as long as possible- but ultimately it's all going towards medical expenses eventually, otherwise you lose the tax advantage.

Re: Why are so many unprofitable companies the best performing stocks this year?

#135

Post by bumby »

pashamur wrote: post #132
bumby wrote: post #112

Earlier quoted context omitted.

I'm not sure the recent evidence bears out this point. If you look at the strength of the dollar, it's actually UP since the ultra-low interest rates that started after the financial crises. Rampant inflation hasn't happened either. I'm not smart enough to know if this is just a looming bow-wave or that the previous assumptions don't hold.

Up compared to what? That's the key. The money printing is roughly synced between central banks (Europe is actually printing more), so the dollar is up relative to other currencies (since other countries have external debts in dollars and have a need for dollars). If you look at dollars versus assets, gold, bitcoin, real estate - it's pretty clear that the dollar has lost significantly (it's just not obvious because…

Yes, good point. It was implied that the dollar is up compared to other currencies.

I'm not sure gold, bitcoin, and real estate are great comparisons because they are too volatile to use as a real currency benchmark. Real-estate and gold have intrinsic value, I'm not sure how to divorce that for an apples-to-apples comparison to fiat currency.

>The inflation that is happening is not happening in daily commodities - it's happening in the capital markets instead.

I'm curious on your perspective with this. I was under the (maybe wrong) assumption that central banks are more concerned with controlling inflation for commodities...i.e., those things in the CPI rather than stocks. Do you think it should matter to them if capital markets are inflated? Real instability happens when people can't buy bread not when they can't buy $AAPL

Re: Why are so many unprofitable companies the best performing stocks this year?

#136

Post by panopticon »

ip26 wrote: post #134
panopticon wrote: post #129

Earlier quoted context omitted.

> If healthcare gets cheaper, my HSA might shrink, but that's fine because healthcare is cheap. Isn't the conventional min/max strategy to not use your HSA for any medical expenses? That is, you just treat your HSA as a traditional IRA and don't touch it until 65+.

The funds in the HSA are to be withdrawn to cover medical expenses. So, you do leave it in the HSA as long as possible- but ultimately it's all going towards medical expenses eventually, otherwise you lose the tax advantage.

After 65+ you can withdraw the funds for any reason without penalty. The so "prevailing wisdom" seems to be to not use the HSA for medical expenses and cover those with after-tax money so your HSA can continue to grow.

Of course, this is predicated on being able to cover medical expenses without your HSA.

Re: Why are so many unprofitable companies the best performing stocks this year?

#137

Post by ip26 »

panopticon wrote: post #136
ip26 wrote: post #134

Earlier quoted context omitted.

The funds in the HSA are to be withdrawn to cover medical expenses. So, you do leave it in the HSA as long as possible- but ultimately it's all going towards medical expenses eventually, otherwise you lose the tax advantage.

After 65+ you can withdraw the funds for any reason without penalty. The so "prevailing wisdom" seems to be to not use the HSA for medical expenses and cover those with after-tax money so your HSA can continue to grow. Of course, this is predicated on being able to cover medical expenses without your HSA.

At age 65, you can take penalty-free distributions from the HSA for any reason. However, in order to be both tax-free and penalty-free the distribution must be for a qualified medical expense. Withdrawals made for other purposes will be subject to ordinary income taxes. -- https://www.wellesley.edu/sites/default/files/assets/departm...

You don't have to withdraw funds from the HSA at time of billing, however. If you spend $1,000 at the ER today, you can take those $1,000 out twenty years from now.

Re: Why are so many unprofitable companies the best performing stocks this year?

#138

Post by panopticon »

ip26 wrote: post #137
panopticon wrote: post #136

Earlier quoted context omitted.

After 65+ you can withdraw the funds for any reason without penalty. The so "prevailing wisdom" seems to be to not use the HSA for medical expenses and cover those with after-tax money so your HSA can continue to grow. Of course, this is predicated on being able to cover medical expenses without your HSA.

At age 65, you can take penalty-free distributions from the HSA for any reason. However, in order to be both tax-free and penalty-free the distribution must be for a qualified medical expense. Withdrawals made for other purposes will be subject to ordinary income taxes. -- https://www.wellesley.edu/sites/default/files/assets/departm... You don't have to withdraw funds from the HSA at time of billing, however. If you…

I was responding specifically to your "otherwise you lose the tax advantage" bit, which is still false. The money still grows with the same tax-advantage as a traditional IRA/401k.

Spending the money on medical expenses at 65 will maximize the value (this actually isn't universally true because IRA/401ks have required minimum distributions which can make holding onto the HSA more valuable), but you still get tax benefits by not covering medical expenses with it as long as you wait until 65+.

I also realized that I meant to say "not use your HSA for any medical expenses pre age 65" in my original comment. Sorry for any confusion.

Re: Why are so many unprofitable companies the best performing stocks this year?

#139

Post by lokedhs »

closeparen wrote: post #110
baron_harkonnen wrote: post #86

Earlier quoted context omitted.

> outside of throwing any savings I can muster into a vanguard fund, I know the popular advice for the last decade has been "stock market always goes up! 8% a year!" but do you really believe it's wise to align your future investment strategy with the general well being of the economic. I'm not saying don't have a 401k (well if you really press me, I will say that), but if all of your savings are directly tied to the…

The sane form of this advice drops the "always" and adds "over sufficiently long time horizons."

That's the key. If you are looking at a horizon of 10 years or more, the stock market has always (with some rare exceptions) gone up. That is to say that if you take a random point in time, and look at the stock market 10 years later, you will have a very hard time finding a point where it didn't go up more than inflation.

If you do this exercise with shorter and shorter time frames, more and more points in time will show a negative return.

This was just a long-winded way of saying that I agree with you. Stock markets are good investments, but your horizon has to be long, and that means at least 10 years.

Re: Why are so many unprofitable companies the best performing stocks this year?

#140

Post by candiodari »

snarf21 wrote: post #29

It is very simple. There are two things happening here. One: the Fed has invested trillions buying everything under the sun (not just t-bills) to prop up the markets and make it look the economy is fine. Two: interest rates are being held artificially low by the Fed and have been for a while. So people are desperate for returns and the only place to get it is equities. It is a pyramid scheme and must pop someday. Rea…

> One: the Fed has invested trillions buying everything under the sun (not just t-bills) to prop up the markets and make it look the economy is fine.

And ... the predicted response (dollar collapse) has not happened so one can make 2 arguments:

1) if the result you like is the economy working then: Well Done! If the result you want is maximizing the value of dollars then: Bad Fed! Very very bad!

2) given that this hasn't collapsed the value of the dollar, why haven't they done this earlier and given the money to our government to spend on infrastructure ? Clearly we're still in the zone where more loans make the economy go smoother.

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