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Are tech stocks now good value?

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Re: Are tech stocks now good value?

#61

Post by bgirard »

WillPostForFood wrote: post #46
jfengel wrote: post #32

Earlier quoted context omitted.

It is true that market timing is always dubious. But that also means that there's never a wrong time to invest in the market as a whole. Individual stocks when crashing are dangerous if you can't outsmart the reason they are crashing, but in aggregate stocks will go up by a modest amount on decade long scales. I felt weird about that advice a few months ago, when the market seemed genuinely overpriced as a whole and…

in aggregate stocks will go up by a modest amount on decade long scales. There is some truth here, but it isn't entirely true. People who get in the market at their peaks, often see multi decade long negative returns (adjusted for inflation). If you bought the market in 1928, you were negative until the mid-50s. If you bought in the late 60's you were negative until the mid-90s. If you bought in the late 90's, you we…

Here's a relevant example that timing isn't that important in the long term: https://www.cnbc.com/2015/08/27/the-inspiring-story-of-the-w...

Re: Are tech stocks now good value?

#62

Post by jfengel »

nyokodo wrote: post #52
jfengel wrote: post #32

Earlier quoted context omitted.

It is true that market timing is always dubious. But that also means that there's never a wrong time to invest in the market as a whole. Individual stocks when crashing are dangerous if you can't outsmart the reason they are crashing, but in aggregate stocks will go up by a modest amount on decade long scales. I felt weird about that advice a few months ago, when the market seemed genuinely overpriced as a whole and…

> but in aggregate stocks will go up by a modest amount on decade long scales. They have, but why must they? We’re heading into a decades long period of hyper-aging in much of the world and the commensurate rise in capital costs, an energy crisis in Europe that is far from over, the decline of East Asian mass manufacturing and associated inflation, a labor shortage in the US right when it has to massively increase do…

It isn't absolutely certain, but it is true that technology has a way of moving forward at a remarkably consistent rate. That is the ultimate driver of real growth.

That does seem like it should flatten eventually, and maybe that's now. But I can't anticipate a radical change and can only guess that tomorrow will be more or less like yesterday. That is potentially fraught but the best I can do.

Re: Are tech stocks now good value?

#63

Post by time_to_smile »

psadri wrote: post #31

The main question - when, if ever, will we return to a near zero interest world.

Near zero interest is completely unsustainable and clear evidence of problems in the market. They have lead to unimaginable asset bubbles that we still haven't seen pop.

There's been some research [0] that the last decade has seen the lowest interest rates in 5,000 years.

We have been continually increasing solving market problems by just creating more credit but eventually you have to pay your debts.

We're headed for trouble potentially bigger than anything we've seen before if we continue on this path.

0. https://www.wiley.com/en-us/A+History+of+Interest+Rates%2C+4...

Re: Are tech stocks now good value?

#64

Post by time_to_smile »

stcredzero wrote: post #21
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.…

Literally all of finance boils down to trying to correctly price assets and financial instruments in regards to future performance. Anyone who can consistently and correctly price any asset at any point in the future will be incredibly wealthy.

The best we can do mathematically is to say that at small time scales, right now, things are priced what the market believes they should be price and that's as "correct" as possible.

Everything else is speculation.

Re: Are tech stocks now good value?

#65

Post by twawaaay »

npkarnik wrote: post #29

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 cons…

Whether a given investment is highest return option for your investment does not change with interest rate. So it does not matter how high interest rates will go.

One thing you might be looking at, though, is if high interest rates somehow affect a given business. If a business relies on being able to get a lot of debt readily and cheaply they might be worse option than one that does not.

Re: Are tech stocks now good value?

#66

Post by bryanlarsen »

WillPostForFood wrote: post #46
jfengel wrote: post #32

Earlier quoted context omitted.

It is true that market timing is always dubious. But that also means that there's never a wrong time to invest in the market as a whole. Individual stocks when crashing are dangerous if you can't outsmart the reason they are crashing, but in aggregate stocks will go up by a modest amount on decade long scales. I felt weird about that advice a few months ago, when the market seemed genuinely overpriced as a whole and…

in aggregate stocks will go up by a modest amount on decade long scales. There is some truth here, but it isn't entirely true. People who get in the market at their peaks, often see multi decade long negative returns (adjusted for inflation). If you bought the market in 1928, you were negative until the mid-50s. If you bought in the late 60's you were negative until the mid-90s. If you bought in the late 90's, you we…

Investers in the 1914 German stock exchange were negative for 100 years.

Re: Are tech stocks now good value?

#67

Post by bmitc »

WillPostForFood wrote: post #46
jfengel wrote: post #32

Earlier quoted context omitted.

It is true that market timing is always dubious. But that also means that there's never a wrong time to invest in the market as a whole. Individual stocks when crashing are dangerous if you can't outsmart the reason they are crashing, but in aggregate stocks will go up by a modest amount on decade long scales. I felt weird about that advice a few months ago, when the market seemed genuinely overpriced as a whole and…

in aggregate stocks will go up by a modest amount on decade long scales. There is some truth here, but it isn't entirely true. People who get in the market at their peaks, often see multi decade long negative returns (adjusted for inflation). If you bought the market in 1928, you were negative until the mid-50s. If you bought in the late 60's you were negative until the mid-90s. If you bought in the late 90's, you we…

Someone investing over three decades doesn’t invest on a single day or year at the beginning of that time period.

Most people put money in stocks via ETFs inside 401k, IRA, and brokerage accounts periodically (usually monthly) over decades.

Re: Are tech stocks now good value?

#68

Post by [deleted] »

scarface74 wrote: post #35
burkaman wrote: post #18

Earlier quoted context omitted.

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.

The majority of money is in passively managed index funds. individual investors don’t move the market for the most part outside of the meme stock craze.

[deleted]

Re: Are tech stocks now good value?

#69

Post by medvezhenok »

bgirard wrote: post #61
WillPostForFood wrote: post #46

Earlier quoted context omitted.

in aggregate stocks will go up by a modest amount on decade long scales. There is some truth here, but it isn't entirely true. People who get in the market at their peaks, often see multi decade long negative returns (adjusted for inflation). If you bought the market in 1928, you were negative until the mid-50s. If you bought in the late 60's you were negative until the mid-90s. If you bought in the late 90's, you we…

Here's a relevant example that timing isn't that important in the long term: https://www.cnbc.com/2015/08/27/the-inspiring-story-of-the-w...

Timing is quite important in the longterm. This article is saying that you can still make a profit despite bad timing (assuming the stock market does well), not that timing is not important.

It also only analyzes a single time period (1970s - 2015), which happens to be quite a good one for stocks, and then makes an implication about markets in general which is quite speculative.

Re: Are tech stocks now good value?

#70

Post by medvezhenok »

graeme wrote: post #30
burkaman wrote: post #18

Earlier quoted context omitted.

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 2…

March 2009 was not a "natural bottom", it was more of a bailout bottom - we now know it happened because of a change in the mark to market rules on bad assets that made possibility of more bankruptcies much less likely and stemmed contagion. Similarly in 2018 (FED pivot) and 2020 (QE infinity).

You'd have to go back to 2002 possibly to find a more "natural", exhaustive bottom where sellers got tired.

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