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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?

#101

Post by ac29 »

baron_harkonnen wrote: post #86
sharkweek wrote: post #11

I don’t know much about the stock market outside of throwing any savings I can muster into a vanguard fund, but articles like this remind me of the scene from Silicon Valley where the Pied Piper team is talking about finding a revenue stream. Their investor, the Mark Cuban caricature, Russ Hanneman butts in and yells at them about the dangers of showing revenue and how it proves you might only be a 2x-er. "It's not a…

> 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…

Leverage does have a specific meaning in investing: it means using debt to amplify returns. This means if the market increases by X%, your investments return >X%, and the same in the negative direction. Having the same returns as the market is not leverage.

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

#102

Post by kgwgk »

polote wrote: post #13
bumby wrote: post #7

Earlier quoted context omitted.

> companies reinvest profit There central company to the article’s point (Snowflake) has no profit to reinvest

it does actually, when you reinvest profit you don't make any profit. They reinvest the money before it could become profit, mostly by hiring more sales

Depends on what do you mean by "reinvest". If you have $1b in profits and build a $1bn factory you still have to pay almost the same taxes.

If you increase payroll in the current year by $1bn you won't make a profit and you won't pay taxes... but it may not be as good an investment.

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

#103

Post by DebtDeflation »

mdorazio wrote: post #10

"Almost one in five of these money-losing companies is up 100% or more this year. There are some huge gainers on this list including companies like Overstock.com (+1055%), Tesla (+429%), Peloton (+348%) and Moderna (+285%). But there are also plenty of big losers of these money-losing firms. More than one-quarter of these stocks are down 10% or more this year while almost 50 names have fallen 30% or more in 2020." So…

>Overstock.com (+1055%), Tesla (+429%), Peloton (+348%) and Moderna (+285%)

One of these is not like the others.

I honestly don't understand how a retailer of surplus/returned merchandise that's been around for 21 years is viewed as some sort of growth company. They had one great quarter after a couple years of dismal performance, so what.

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

#104

Post by kgwgk »

abfan1127 wrote: post #5
m1117 wrote: post #2

It's psychology-fueled. Also, a lot of companies reinvest profit so they don't have to pay taxes.

is it fair to say that investors see more return through reinvestment rather than distributions? Reinvestment sees 100% of the capital, but distributions are at best 75%? Assumptions are that the reinvestment creates value fairly quickly and drives the stock price up.

The company could also distribute profits to investors repurchasing shares.

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

#105

Post by hitpointdrew »

polote wrote: post #59
hitpointdrew wrote: post #46

The stock market price != value of the company. Stock market price == PERCEIVED value of a company. All the stock market does is try and find a equilibrium between parties that want to sell a stock and parties that want to buy a stock. That is it. It doesn't do anything more. You could have a company that is bleeding money month-after-month, is foretasted to never make a profit ever, but if there are more parties (fo…

> The stock market does price != value of the company. Stock market price == PERCEIVED value of a company. No it is not, it is the price some investors are willing to buy at, which when the market is rational and there is no bubble is probably the perceived value

You are arguing over semantics...we are saying the same thing. The price some investors are willing to buy it at, or you could say, the price some investors perceive to be valuable.

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

#106

Post by majormajor »

baron_harkonnen wrote: post #86
sharkweek wrote: post #11

I don’t know much about the stock market outside of throwing any savings I can muster into a vanguard fund, but articles like this remind me of the scene from Silicon Valley where the Pied Piper team is talking about finding a revenue stream. Their investor, the Mark Cuban caricature, Russ Hanneman butts in and yells at them about the dangers of showing revenue and how it proves you might only be a 2x-er. "It's not a…

> 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…

> If the market is doing fantastic, then it's not as important to have savings

This makes no sense to me in the context of retirement savings.

You've retired. You aren't capturing part of that market anymore.

The standard wisdom is "switch to lower risk investments as retirement gets closer" which is specifically because the market may turn. But if you're never in the market, you're gonna miss out on a lot of gains before then, unless you're expecting decades straight of poor performance.

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

#107

Post by ac29 »

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/...

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

#108

Post by ebiester »

DebtDeflation wrote: post #103
mdorazio wrote: post #10

"Almost one in five of these money-losing companies is up 100% or more this year. There are some huge gainers on this list including companies like Overstock.com (+1055%), Tesla (+429%), Peloton (+348%) and Moderna (+285%). But there are also plenty of big losers of these money-losing firms. More than one-quarter of these stocks are down 10% or more this year while almost 50 names have fallen 30% or more in 2020." So…

>Overstock.com (+1055%), Tesla (+429%), Peloton (+348%) and Moderna (+285%) One of these is not like the others. I honestly don't understand how a retailer of surplus/returned merchandise that's been around for 21 years is viewed as some sort of growth company. They had one great quarter after a couple years of dismal performance, so what.

Tesla and Peloton are similiar-ish. But Moderna is very different from them all as well.

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

#109

Post by autokad »

baron_harkonnen wrote: post #86
sharkweek wrote: post #11

I don’t know much about the stock market outside of throwing any savings I can muster into a vanguard fund, but articles like this remind me of the scene from Silicon Valley where the Pied Piper team is talking about finding a revenue stream. Their investor, the Mark Cuban caricature, Russ Hanneman butts in and yells at them about the dangers of showing revenue and how it proves you might only be a 2x-er. "It's not a…

> 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…

its neither a hedge nor leverage. It's a place to put your long term money to grow, probably the best place. if by 'Wallstreet' you mean financial advisors, they recommend a mix of assets, not a single asset class in stocks. most people have a mix of stocks, bonds, and real estate.

it use to be 10%, in the late 2000s it got revised to 7%, though many today think it's realistically 5%.

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

#110

Post by closeparen »

baron_harkonnen wrote: post #86
sharkweek wrote: post #11

I don’t know much about the stock market outside of throwing any savings I can muster into a vanguard fund, but articles like this remind me of the scene from Silicon Valley where the Pied Piper team is talking about finding a revenue stream. Their investor, the Mark Cuban caricature, Russ Hanneman butts in and yells at them about the dangers of showing revenue and how it proves you might only be a 2x-er. "It's not a…

> 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."
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