401–410 of 774 posts
A lot of these companies have very reasonable P/E ratios now. Microsoft is sitting at around 27, Apple 25, and Facebook 15. None of those strike me as "inflated". Those are normal values for the stock market (20-25). Are investors just panicking?
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This is also a central banking fail in so far that there's that much liquidity in the market that can't find a productive outlet. There's a lot of money, but also not enough concentrated in one spot to do really useful ventures like large infrastructure projects. So instead the money is distorting everything. Imagine if lending was less cheap for home owners but it was still cheap for governments or really large comp…
The central bank doesn't control policies like that though. They have scant few actual knobs to turn on their own without Congressional intervention.
Robert Hockett has written a lot about productive investments via the federal reserve banks, and how that could be used to transform the economy.
Here's one recent paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4023614
He wrote a short book about it as well: https://www.amazon.com/Financing-Green-New-Deal-Renewal/dp/3...
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> We could allocate resources When you buy/sell crypto - money changes hands. That money wasn't really "allocated" to crypto, beyond miner fees, just redistributed. That cash still exists. The resources being allocated are graphics cards, human time, and electricity AFAICT. The power usage of crypto is relatively small compared to other active human endeavors. It's power usage doesn't approach other arbitrary value s…
IIRC, the energy use for crypto as a whole is on par with the energy use of the fiat currency system, if not higher. I don't know how gold mining ranks, but it may be well below crypto mining in energy use or well above. Mining energy use depends a lot on asset price, and gold prices are comparatively low (compared to other asset classes). Silicon and other electronic parts also get dumped into this market, when the…
Gold mining and bitcoin are currently roughly on-par. But gold's energy usage isn't just mining. It's the entire supply chain from Cash 4 Gold stores, long term storage, smelting/recycling, etc. I don't have a good reference for the total cost of gold.
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>unless there is reason to expect burgeoning profits >25 makes sense for a startup with potential for explosive growth, not for an established company
They are monopolies/oligopolies with pricing power. That is the reason.
This has been a long time coming. Back in the day, there was an inherent understanding that a stock price is supposed to reflect "the fundamentals" - present value of the company + future earnings. And of course there was some amount of speculation around future earnings, but for the most part companies at least tried to be profitable. But if you look at the share price of like, Tesla - it's completely insane. There…
Tesla made more money last quarter than Ford, GM and Toyota. Toyota made 10x the number of cars as Tesla. Tesla is growing vehicle production 50% YoY, while growing profit even faster (having barely hit economies of scale yet). Tesla has a backlog of orders approaching a year in many regions. Everyone else is losing money on their EVs and can't make them in volume production, can't find the batteries for them, becaus…
Tesla could be priced at 20x PE or 100x PE and be the same company. Your returns will be vastly different between the two scenarios.
OPs point, which is pretty obviously objectively true, is that valuations far exceeded future yields by any fundamental valuation metric. Tech has been valued as if every company will be a pseudo Monopoly like the FAANG companies, which is very unlikely to be true
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It’s funny as that was my experience interviewing with companies between 1998-2000. Just insane business models but brazen confidence in themselves. I remember interviewing with a company in 2000 that had burned through like $40 in two years. This was New York and they hired IBM. I don’t remember their product but it was stupid. They had paid IBM to build their own custom app server for Java because their requirement…
$40? Did you mean $40 million?
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Wasn’t that the Soviet double ruble system? Whenever the Politburo wanted to find a mega project the money was wished into existence and things happened (just as it’s done today) yet it was illiquid and only usable in a sealed silo, separate from the normal exchange ruble. Wonder how a similar mechanism would work today
That sounds interesting. Can you link to any reference on this? I tried googling but didn't turn up much.
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That is "the market" working for you! We could allocate resources to productive assets by fiscal spending, but that is prevented by politics. Only when "the market" gets its cut can any infrastructure be built in the US. That's also true for much of the medical establishment and pension/retirement systems. If the market was efficient, we wouldn't be complaining about it. Unfortunately, a "free market" and an efficien…
What sucks is that fiscal policy, ie government spending, is also often not very efficient. Even when rampant corruption doesn’t destroy efficiency, crushing bureaucracy or just plain incompetence will. (Is the DMV a model of efficiency?) So you need a smart balance. And you need competent, honest people in both business AND government. I don’t think that government necessarily is inefficient. The DMV could be a very…
The idle rich who can't find anywhere worthwhile to play with their nearly-free money (until recently ZIRPish) are a bug in the system. Oh, but lets pretend we are captains of industry by saturating the world with sure-failures. "I wEnT tO GsB!"
And government is absolutely inefficient, which is a good thing actually. Despite the efforts of conservatives, government still has to account for many many corner cases and special needs. Ask any Agile TDD aficionado how this affects velocity.
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No they are not, though it's easy to understand the confusion. From the SF Feds website: The Board of Governors—Located in Washington, D.C., Board members are appointed by the U.S. President and confirmed by the U.S. Senate. Board members and staff are civil service employees. The 12 regional Reserve Banks—Located around the country, the 12 Federal Reserve Banks are chartered as private corporations. Employees are no…
Yes, I'm aware of the legal fiction that they are not part of the government. But they are, as they are run by people appointed by the government, and therefore serve the government.
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Rising interest rates are starting to slow the housing craziness, at least where I’m at. I was regularly seeing 20-27% over asking with limited to no inspections, new listings going in hours. Nuts. All-cash is basically the new norm. Two years ago that was an issue for regular buyers, but it’s workable now since lenders have jumped into the mix, more and more offer an all-cash option - they make the purchase and tran…
Where I'm from (EU) experts say that prices will stagnate amd the market will slow down. On one hand the high inflation pushes out lots of buyers -- they can't or don't want to pay the high interest rates. This lowers demand and prices. On the other hand global supply chain issues (which got much worse with the war) lead to material shortages and rising material costs. This pushes up housing prices. The net result is…
I think people are feeling more risk adverse cost of living etc and want to hold onto money and stay put where they are.