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When buying the dip doesn’t work: An analysis of the dot-com crash

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Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#101

Post by RaRic »

refurb wrote: post #33
pdevr wrote: post #28

Index investing will work, if you live for a long time. The problems are, we do not live infinitely, and the average person does not have the stomach to see their investment going down for years, unless that investment is small enough to tolerate (in which case it is not enough to make a big difference, for most people). What I think will work - not claiming that it will actually work - based on history: Invest in co…

Your strategy sounds like "pick winning stocks"? A strategy which has been show to produce (on average) worse returns than index investing. Index investing has produced a ~200% return in the past 15 years (from 2007 peak to now). Not sure what you mean by "a chance of seeing a profit in your lifetime".

No, it sounds like picking winning businesses. Big difference. Warren Buffet has said that he's a business picker, not a stock picker.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#102

Post by VirusNewbie »

01100011 wrote: post #43

SNL skit from the dot-com era: https://twitter.com/WallStreetSilv/status/152279877872567500... Does anyone have a solid understanding of how QE affects the economy? From what I've read, QE basically stays locked in the financial system as interbank cash. I think this can affect short term interest rates, and therefore affect lending(and money creation by the big banks), but otherwise that money doesn't really drive i…

>money creation by the big banks)

How could this not cause inflation?

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#103

Post by auggierose »

chii wrote: post #66
tsimionescu wrote: post #58

Earlier quoted context omitted.

Given that global warming will cause the global economy to contract one way or another within the next 100 years (either we willingly contract to soften the blow, or keep going and producing more greenhouse gases until a massive crash), I really don't think this is the right time to think in these terms.

Why can't technological advancement stave off climate change damage? Why cant renewables replace fossil fuels, and continue human expansion? Why can't space exploration and settlement be where the future growth occurs?

Because there are still too many people using Windows.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#104

Post by adam_arthur »

If interest rates continue to increase, the market is in for a very rough time.

COST is about 40 PE right now which implies 2.5% trailing yield. You can get 3.1% on a 10y treasury risk free right now.

Of course equities have growth potential, but also risk, typically the spread between risk free rate and equity yields is much higher.

Plenty of 30-40 PE companies at index level with close to 0 growth. Companies like NET still at 30x sales.

If inflation persists and the 10y runs to even 3.5-4%, could be looking at close to 50% downside. However there are signs that the consumer is likely to collapse within the next 6 months, which should lead to disinflation, but also likely an earnings recession

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#105

Post by landemva »

kmonsen wrote: post #51
refurb wrote: post #40

Earlier quoted context omitted.

They blamed inflation in the 1970's on supply side issues as well. Sure, the oil embargo contributed to price increases, but looking back, it was pretty clear it was fed monetary policy that drove most of it. And monetary policy by Volker that fixed it. No different today. Massively expand the money supply and you (eventually) get inflation. Add in a few supply issues and you amplify the problem. But I agree with you…

That’s the problem, in bad times you pour money into the market either directly or with interest rates. Then I’m good times the opposite is supposed to happen. But this time the good times never arrived and now we are trying to fix it in the middle of a war, pandemic and massive supply shock, including for energy. It’s too easy to get it wrong and make the problem bigger.

>>> the good times never arrived

First two years of Trump were economically pretty good. Low unemployment - particularly for minorities. The Fed was raising rates!

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#106

Post by pdevr »

RaRic wrote: post #101
refurb wrote: post #33

Earlier quoted context omitted.

Your strategy sounds like "pick winning stocks"? A strategy which has been show to produce (on average) worse returns than index investing. Index investing has produced a ~200% return in the past 15 years (from 2007 peak to now). Not sure what you mean by "a chance of seeing a profit in your lifetime".

No, it sounds like picking winning businesses. Big difference. Warren Buffet has said that he's a business picker, not a stock picker.

Yes, that is it essentially. You are looking at businesses which have cash flow and the other criteria mentioned above.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#107

Post by pdevr »

john_moscow wrote: post #67
refurb wrote: post #33

Earlier quoted context omitted.

Your strategy sounds like "pick winning stocks"? A strategy which has been show to produce (on average) worse returns than index investing. Index investing has produced a ~200% return in the past 15 years (from 2007 peak to now). Not sure what you mean by "a chance of seeing a profit in your lifetime".

There's a third strategy of "index minus bullshit stocks" where you would include both INTC and AMD stocks for risk hedging, but would leave out things with questionable sustainability like Uber and Netflix that otherwise made it into the index due to the speculative value.

More or less. Of course, I am advocating to leave out any company where it does not fit this criteria: " are generating a lot of cash and a lot of profits, have a moat/USP/technology advantage, and are at the forefront of where the world is headed in terms of trends, or at least are following a sustainable trend".

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#108

Post by kmonsen »

landemva wrote: post #105
kmonsen wrote: post #51

Earlier quoted context omitted.

That’s the problem, in bad times you pour money into the market either directly or with interest rates. Then I’m good times the opposite is supposed to happen. But this time the good times never arrived and now we are trying to fix it in the middle of a war, pandemic and massive supply shock, including for energy. It’s too easy to get it wrong and make the problem bigger.

>>> the good times never arrived First two years of Trump were economically pretty good. Low unemployment - particularly for minorities. The Fed was raising rates!

Mostly we spent it on tax cuts for the rich instead. You don't cut taxes in good times, that more than offset the minor rate hikes.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#109

Post by kmonsen »

hammock wrote: post #61
kmonsen wrote: post #8

Earlier quoted context omitted.

The problem is of course we don’t know how long bull or bear market will last. If I was a betting man I would short everything I guess, but I’m not. I’m also sure there are others with way more knowledge on when it’s going to turn around.

> If I was a betting man I would short everything On a long enough timeline, the survival rate for everyone drops to zero

But then surely it doesn't matter. To short everything you have to hope it gets worse, but not nuclear war worse. Like just so bad that you can earn a ton of money, but not so bad that the money is useless. Or so bad that the fed decides to intervene as well.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#110

Post by _uy6i »

While I appreciate many of the arguments being made - and there are countless similar situations (nifty 50 anyone) - that nasdaq is not the stock market it’s like 1/3rd of it… pop over to yahoo finance and look at the chart of the Russell 3000 Vs the nasdaq, this is why people recommend diversification…
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