Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Are tech stocks now good value?

economist.com

Post reply on HN
Print view View original

21–30 of 90 posts

Re: Are tech stocks now good value?

#21

Post by stcredzero »

tebbers wrote: post #13

I think so. I've started buying shares every month in Cloudflare and Shopify - use their products and think they have fantastic momentum and great teams working on industry-defining tech. Disclaimer - I don't work/have never worked at either

This is the way to do it, IMO.

    - Do a proper valuation of the company
    - If the price is right, start Dollar Cost Averaging 
        into a position during a downturn
No one can perfectly time the market. However, we certainly can approximate the proper value of solid companies, and we generally can tell when sentiments and market conditions are biasing low.

(Disclaimer: I am not a financial advisor. Do your own research, etc.)

Re: Are tech stocks now good value?

#22

Post by nequo »

whatshisface wrote: post #11
Cupertino95014 wrote: post #8

They have a term for this kind of article on Wall Street: Trying to catch a falling knife " stocks have been beaten up. It's time to buy now!" Like clockwork, you can count on those stories appearing after a crash.

They have a much better term that really captures this stuff it is, "a martingale." Edit: Just to clarify, a martingale is a bet that's equally likely to go either way and has zero expected value.

If stock prices were martingales, you would not be able to predict whether they will continue to drop or rebound after a crash.

Re: Are tech stocks now good value?

#23

Post by kmlx »

tebbers wrote: post #13

I think so. I've started buying shares every month in Cloudflare and Shopify - use their products and think they have fantastic momentum and great teams working on industry-defining tech. Disclaimer - I don't work/have never worked at either

considering how many companies are preparing for a recession, and since i’m reading recession next year in a lot of places, i think this is a bit premature. but time will tell.

Re: Are tech stocks now good value?

#24

Post by adam_arthur »

They are if the fundamentals say they are. So yes, many are. GOOG seems fairly valued if you assume antitrust doesn’t crack down hard in the near future

Many are also still egregiously overvalued at 10x or more sales. NET, DDOG and NVDA come to mind.

It’s not hard to look at growth rate relative to current value to separate the two. Seems most investors lost any sense of fundamentals in the ZIRP world though

You can treat earnings/FCF multiple as the yield you get today. So a PE of 20 implies a 5% yield this year, while the 10y is at 4% ish. Then use various growth projections and future discount rate projections to determine if that multiple is justified.

Personally I’ve only been buying companies at around 10% current year yields, and only higher if they have sufficient growth to justify it

Re: Are tech stocks now good value?

#25

Post by icedchai »

I'd say start averaging into solid names, like Google and Amazon. We may not be at the bottom, but by the time we've figured out what that bottom was, we'll have missed it. Time in the market beats timing the market, etc.

Re: Are tech stocks now good value?

#27

Post by mlpar »

evv wrote: post #12
bogota wrote: post #6

Earlier quoted context omitted.

Is this sarcasm?

Definitely sarcastic. Amazon didn't only survive the .com crash, but they ultimately thrived because a huge number of competitors were culled.

Back then (around 2005) they had a gorgeous, fast and clean website where everything you bought was actually from Amazon.

Now the website is slow, chaotic and full of sketchy vendors. I suppose they are forced to use AWS internally, which is also chaotic and underdocumented.

From the outside it seems that all of Amazon is a gigantic bowl of spaghetti code.

Re: Are tech stocks now good value?

#28

Post by swyx »

kmlx wrote: post #23
tebbers wrote: post #13

I think so. I've started buying shares every month in Cloudflare and Shopify - use their products and think they have fantastic momentum and great teams working on industry-defining tech. Disclaimer - I don't work/have never worked at either

considering how many companies are preparing for a recession, and since i’m reading recession next year in a lot of places, i think this is a bit premature. but time will tell.

the thing about buying the lows is that expectations have to be low for that to happen :) by the time its obvious the stocks will have already recovered.

the difficult question to ask is - how much worse could things get relative to current expectation.

Re: Are tech stocks now good value?

#29

Post by npkarnik »

No one knows how high interest rates will go. Interest rates are approximately the floor of what a very low risk return on capital looks like, especially for an average citizen. If they approach 7% and stay there as some think is possible, I would expect stocks to keep selling off, especially if public co revenues don't continue to grow rapidly as the economic "slowdown" continues (not worth arguing exactly what constitutes a recession).

Re: Are tech stocks now good value?

#30

Post by graeme »

burkaman wrote: post #18
Cupertino95014 wrote: post #8

They have a term for this kind of article on Wall Street: Trying to catch a falling knife " stocks have been beaten up. It's time to buy now!" Like clockwork, you can count on those stories appearing after a crash.

And it's sort of self-fulfilling, right? If these stories have a big enough impact, a lot of people will buy the stocks and they will actually stop falling.

Ultimately the stock prices respond to economic reality: profits and interest rates and growth levels

The funny thing about headlines though is that often the reverse happens. Once everyone is crying doom, stocks go up. When people say it is time to buy, stocks go down.

And in a bear market the bottom usually comes when no one is paying attention anymore.

As an example after the financial crisis stocks bottom March 2009, after two years of falling and a good seven months after the big crisis.

Post reply on HN