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Are tech stocks now good value?

economist.com

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Re: Are tech stocks now good value?

#71

Post by medvezhenok »

Cupertino95014 wrote: post #56
graeme wrote: post #30

Earlier quoted context omitted.

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…

Exactly right. The bull market begins when the last seller has bailed out. So, has that happened yet?

Common quote, doesn't have much to do with reality. Last 3 bottoms (2009, 2018, 2020) were manufactured because of regulatory changes.

Re: Are tech stocks now good value?

#72

Post by medvezhenok »

purpleblue wrote: post #55
lotsofpulp wrote: post #48

Earlier quoted context omitted.

Have you considered opening up your own hedge fund?

No, I'm not that good. I enjoy trading very much for myself and trading with other people's money would be too stressful.

Market timing both works and is bad advice for the average person by definition (it takes being way better than average to be a successful market timer).

Also you're competing with people who have access to insider information (even though they're "not supposed to"), so it's kind of tilted against the average person; though not impossible to still come out ahead.

It's similar to poker. For the average person playing poker is a -EV game because of rake, but if you're skilled, poker can be very much +EV.

Re: Are tech stocks now good value?

#73

Post by ywain »

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…

The Portfolio Charts[0] site has heat maps showing how long it takes for a given portfolio to have a positive ROI. The charts only go as far back as 1970, but they're interesting nonetheless.

Indeed, for the Total Stock Market portfolio[1], if you had invested a lump sum in 2000 you would have needed to wait until 2014 to see a positive ROI. A more conservative 60% stock / 40% bonds portfolio[2] would have recovered (though not by much) by 2010.

That said, as another commented pointed out, this is not very reflective of the reality of most retail investors: most people will invest over long periods of time rather than all at once.

[0] https://portfoliocharts.com/

[1] https://portfoliocharts.com/portfolio/total-stock-market/

[2] https://portfoliocharts.com/portfolio/classic-60-40/

Re: Are tech stocks now good value?

#74

Post by leereeves »

bryanlarsen wrote: post #66
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…

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

But was there a better alternative? Sometimes the current is so strong that no lifeboat can stay above water.

Re: Are tech stocks now good value?

#75

Post by sumedh »

purpleblue wrote: post #44
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.

I 100% believe in market timing. I usually do extremely well during market crashes, and average during market rises. I missed the dotcom crash because I didn't want to invest at all, but caught all of the 2008-2009 crash and went long on the bottom in March 2009, but was mostly average after the crash. I caught the entire pandemic drop in March 2020 and also got long at the bottom, but again was only average for the…

Have you compared your performance with the index?

Re: Are tech stocks now good value?

#76

Post by Cupertino95014 »

leereeves wrote: post #74
bryanlarsen wrote: post #66

Earlier quoted context omitted.

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

But was there a better alternative? Sometimes the current is so strong that no lifeboat can stay above water.

They could have invested outside of Germany, but maybe that wasn't legal.

Of course, lots of money found its way to Switzerland anyway over the decades, and those bankers were very close-mouthed.

Re: Are tech stocks now good value?

#77

Post by Cupertino95014 »

medvezhenok wrote: post #71
Cupertino95014 wrote: post #56

Earlier quoted context omitted.

Exactly right. The bull market begins when the last seller has bailed out. So, has that happened yet?

Common quote, doesn't have much to do with reality. Last 3 bottoms (2009, 2018, 2020) were manufactured because of regulatory changes.

right, politics is one thing that really drives the market, because (usually) you can't predict it. If you could, it would already be reflected in the prices.

Re: Are tech stocks now good value?

#78

Post by Cupertino95014 »

whatshisface wrote: post #49
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…

That doesn't represent the situation most investors are in: large lumps of cash don't come people's way very often, most of us are paid on a monthly basis.

True, and regular investing does pay off. Others have pointed that out.

However, these evergreen articles (i.e. just dust off the one from the last market crash) are suggesting that you should particularly invest in tech right now, not that you should regularly invest in it. Possibly even with money that was going to be on the sidelines otherwise.

Re: Are tech stocks now good value?

#79

Post by moistly »

TheRealPomax wrote: post #45

This feels like thinly veiled propaganda to trick people into buying crashing stock, not a tech article. Curious to see it upvoted so much it hit the front page...

It’s written for retail investors. Of course it’s attempting to get them to lose money. The owners of this media are not retail investors: they stand to gain as retail investors lose.

Re: Are tech stocks now good value?

#80

Post by 988747 »

medvezhenok wrote: post #69
bgirard wrote: post #61

Earlier quoted context omitted.

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.

Yes, but the point is: even with the worst possible timing you still get ahead of inflation ($1.1M from $184k invested). With regular investments you could double the profits. Also, 1970-2015 period includes three big crises, with crashes of around 50% (1972, 2000, 2007), and a bit milder crash of 1987 (34%), calling it "quite a good one for stocks" is kind of a stretch.
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