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

Post by pc86 » Thu, Oct 15, 2020, 6:49 PM UTC

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…

Post by ethbr0 » Thu, Oct 15, 2020, 6:58 PM UTC

dustingetz wrote: post #55

ethbr0 wrote: post #12

I said this in another thread, and I think it's apt here. If you have high growth, you can lose a lot of money and still have a good story. If you make some money, but don't have high growth, then you can't tell nearly as compelling of a story. Effectively, investors are assuming eventual profitability is inevitable , and measuring growth. The 90s showed that's fair... sometimes. But definitely lets pathological corp…

Name a high growth company that grew to scale but didn't turn profitable? Uber? That still worked out

Post by TuringNYC » Thu, Oct 15, 2020, 7:19 PM UTC

coldcode wrote: post #42

TuringNYC wrote: post #9

Unprofitable can be good or bad or unknown: Bad: they dont have product market fit and cannot price at a level that is profitable Unknown: they do have product market fit and can likely price at a level that is profitable, but choose to underprice to capture market share and grow Good: They are actually profitable but are re-investing all their profits into internal investment to become even more profitable in the fu…

But by definition if you invest profits forever you never make any; maybe if you wait long enough you own the entire market and can charge whatever you like then. Is that really actionable though? One stumble and your stock is almost worthless.

Post by dustingetz » Thu, Oct 15, 2020, 8:28 PM UTC

dustingetz wrote: post #55

ethbr0 wrote: post #12

I said this in another thread, and I think it's apt here. If you have high growth, you can lose a lot of money and still have a good story. If you make some money, but don't have high growth, then you can't tell nearly as compelling of a story. Effectively, investors are assuming eventual profitability is inevitable , and measuring growth. The 90s showed that's fair... sometimes. But definitely lets pathological corp…

Name a high growth company that grew to scale but didn't turn profitable? Uber? That still worked out

Post by panopticon » Thu, Oct 15, 2020, 8:45 PM UTC

ip26 wrote: post #99

baron_harkonnen wrote: post #86

Earlier quoted context omitted.

> 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…

I see it as a hedge against inflation. In boom times with soaring markets, there is (usually) considerable inflation. If you ride the market, you probably won't see outsize returns but you won't lose purchasing power to inflation either. For this reason I frequently wonder whether I should invest HSA funds exclusively in medical stocks. If healthcare gets more expensive, my HSA has probably grown. If healthcare gets…