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Are tech stocks now good value?

economist.com

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Re: Are tech stocks now good value?

#81

Post by 988747 »

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…

As long as technology and human society progresses, then yes, GDP is guaranteed to rise, and stocks are guaranteed to rise a bit more than GDP, because they represent the best, most innovative part of the economy (mom and pop's grocery stores are not traded on Wall Street, technological startups are)

Re: Are tech stocks now good value?

#82

Post by thoughtstheseus »

logisticpeach wrote: post #60
psadri wrote: post #31

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

Disclaimer: UK centric thoughts (because that's where I live) Some projections are signalling deflation on the horizon. Given the brutal cost of living crisis, I suspect the government and BoE have grossly underestimated how hard things are getting (and how much harder they'll eventually get) for a giant slice of the population. I'm an absolute lay person here, but surely maintaining (relatively) higher interest rate…

Lower interest rates will create more inflation. The UK economy is overly “financialized”. It needs more workers, low cost energy, productivity improvements, and an overall improvement in its ability to supply goods and services.

Re: Are tech stocks now good value?

#83

Post by V__ »

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…

How do you reason whether a crash is near or has bottomed out?

Re: Are tech stocks now good value?

#84

Post by nyokodo »

988747 wrote: post #81
nyokodo wrote: post #52

Earlier quoted context omitted.

> 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…

As long as technology and human society progresses, then yes, GDP is guaranteed to rise, and stocks are guaranteed to rise a bit more than GDP, because they represent the best, most innovative part of the economy (mom and pop's grocery stores are not traded on Wall Street, technological startups are)

> As long as technology and human society progresses, then yes, GDP is guaranteed to rise

My whole point is that it looks like human society globally is going to decline rapidly and, in some regions, catastrophically. Old populations don't consume as much, once they get old enough they don't produce as much, how would GDP grow then? Well that is the looming reality for Europe, China, Russia, Japan, Canada etc. The USA is relatively ok there but it's just a matter of time before we get there too unless birthrates veer sharply towards at least replacement level.

Re: Are tech stocks now good value?

#85

Post by deepzn »

If you google the chart of the S&P 500. It's tripled in the last 15 years. And more than than from the bottom of 2008. Also, it is only 16% down from it's ATH's in 2021. Things don't just go up forever. There are and always have been cycles.

What goes up, must come down.

Re: Are tech stocks now good value?

#86

Post by deepzn »

deepzn wrote: post #85

If you google the chart of the S&P 500. It's tripled in the last 15 years. And more than than from the bottom of 2008. Also, it is only 16% down from it's ATH's in 2021. Things don't just go up forever. There are and always have been cycles. What goes up, must come down.

But, also still surprises me the amazing wonder that is Compound Interest. https://www.nerdwallet.com/banking/calculator/compound-inter...

Best time to buy is if you have a long-term horizon is when there is widespread fear. This cycle might bust, and there might just be that, or a period of high inflation. It's not yet imo. Also, hard to time the market, and also to stock pick, even for very professional investors, it's hard, extremely hard to beat the market. Just buy the S&P 500 ETF and let it work in the background.

Also, those new to investing, Morgan Housel's The Psychology of Money is a great read!

Re: Are tech stocks now good value?

#87

Post by rektide »

There's been a ~20% recovery from the low & I feel like we are months away from a lot more shitty bad news about the future that sends us to a worse low. The world economy & consumerism outran itself: the demand side now has a billion more buyers (good), the supply has a more middle-class work force (good), but this adds up to one first big crunch we have never invested or prioritized essential sustainability to surive/endure throuhh, and every political situation outside rare rare exceptions is vastly far to the right & toting individualism like crazy, keeping us from making wider wins to success. in heady high times maybe that made sense, worked but there's no band together, no practice left of optimizing & figuring out where strategically to make important wins. the social can-do has beem dymamited.

Some of this is deserved, inflated valuations, but wow, when stuff is going bad generally, the profit:earnings isnt that relevant, everything everywhere goes to shit together.

Re: Are tech stocks now good value?

#88

Post by medvezhenok »

988747 wrote: post #80
medvezhenok wrote: post #69

Earlier quoted context omitted.

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.

The U.K. stock market peaked [inflation adjusted] in 1899 and never hit that mark in real terms again:

https://fredblog.stlouisfed.org/2019/12/how-has-the-u-k-stoc...

Notably ~1917 is when global power shifted from the U.K. to the U.S., cemented in 1945.

(not sure if they included dividends - would probably change the calculations, but for sure you see that 1815-1900 was a ~85 year general bull market in U.K. stocks, followed by ~75 years of real-term declines from 1900-1975).

-----

Also, the U.K. stock market went nowhere from 1874 to 1952 in pound terms, a whopping ~70 years!

Re: Are tech stocks now good value?

#89

Post by nyokodo »

jfengel wrote: post #62
nyokodo wrote: post #52

Earlier quoted context omitted.

> 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.

> technology has a way of moving forward at a remarkably consistent rate

For centuries the general pattern has been improving technology, followed by better nutrition and healthcare, followed by greater populations and productivity, followed by greater capital to invest in technology and on and on. Over more recent decades this was put into hyperdrive with the boomer population bubble in the west spurring massive consumption and then massive capital investment, and as developing nations tapped into global trade this lead to a massive rise in the standards of living and cheap mass manufacturing. However the meteoric industrialization of developing nations has lead to record drops in fertility and so the likes of China are already reaching hyper-aging. We may have already hit peak global population or will soon as hyper-aged communities start to predominate around the globe and increased death rates follow. Better technology can't induce increased consumption in the aged right when we have fewer younger people to develop and less capital to fund that development.

TLDR: that seems like a recipe for less technological development, lower GDP, and therefore possibly a decades long depression in stock prices.

Re: Are tech stocks now good value?

#90

Post by tabtab »

kman82 wrote: post #17
tabtab wrote: post #14

I'd like to see longer-term revenue reports to make sure their P/E ratios (or similar) are decent. The staff reductions etc. have yet to fully play out in terms of costs and results.

If you wait for that then it’ll be too late and you’ll find yourself in the midst of the next tech bubble. Now is the time to buy if you’re going to.

I thought I spotted the bottom of crypto stocks to buy, but was very wrong. Bottom-detection is a tricky art.
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