Starting to feel like the late 1990s?

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SlowMovingInvestor
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Re: Starting to feel like the late 1990s?

Post by SlowMovingInvestor » Sun Jan 28, 2018 1:13 pm

investorpeter wrote:
Sun Jan 28, 2018 12:59 pm
As to feeling like the late 90’s, the bitcoin saga has felt almost exactly like the late 90’s + 2001 compressed into a short time frame. The Kodakcoin episode was taken directly from the same .com era playbook. I would say, right now with the FANG stock valuations, it feels more like mid 90’s or mid 00’s, so there is room to run. Keep in mind though that the FANGs are still all essentially tech stocks, so we on a larger scale we are have been in an overall tech bullrun since the 90s.
Fair enough, but it's worth remembering that many of the stocks from the late 90s bull run took a long time to get back to their 2000 numbers. My recollection is that Cisco, Juniper etc. are still below their highs. Yahoo, Netscape, AOL, all gone. Many new Telcos and ISPs gone.

AMZN is the only one to really remain a standout from the previous book, and even it took 8 years to reach its highs.

Particularly instructive is MSFT. It took nearly 14 years to reach it's highs, and it was under a totally different management (twice removed). It's notable that MSFT was considered totally dominant in the tech industry circa 2000, and it was projected it would take over the world if the DoJ would let it. Even AAPL had to get some handouts from MSFT to survive.

I guess my point is that I'm very skeptical of AMZN's stock price. It does not seem be anywhere near as dominant in all the fields it plays in as MSFT was in 2000, but ultimately MSFT couldn't keep it's dominant position.

MindBogler
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Re: Starting to feel like the late 1990s?

Post by MindBogler » Sun Jan 28, 2018 1:25 pm

nedsaid wrote:
Sun Jan 28, 2018 12:53 pm
I think it is important to read pieces written by people that you disagree with. I would read Paul Krugman if his articles were more objective and frankly more humble. I am sure he is a thoughtful and intelligent guy but he has gotten to the point where he just dismisses those who disagree with him.
I agree. I believe Krugman has reached the point where he talks at his audience. This is the epitome of what has gone wrong in societal discourse. Everyone is talking louder and louder while their fingers are in their ears and eyes closed. :beer

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JoMoney
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Re: Starting to feel like the late 1990s?

Post by JoMoney » Sun Jan 28, 2018 1:37 pm

MindBogler wrote:
Sun Jan 28, 2018 1:25 pm
nedsaid wrote:
Sun Jan 28, 2018 12:53 pm
I think it is important to read pieces written by people that you disagree with. I would read Paul Krugman if his articles were more objective and frankly more humble. I am sure he is a thoughtful and intelligent guy but he has gotten to the point where he just dismisses those who disagree with him.
I agree. I believe Krugman has reached the point where he talks at his audience. This is the epitome of what has gone wrong in societal discourse. Everyone is talking louder and louder while their fingers are in their ears and eyes closed. :beer
Strange times. You might think a failure of someones presuppositions to predict the outcome might cause them to reconsider their beliefs, or try to determine why their model was wrong. But that doesn't seem to be the way people work, instead we cling to the beliefs we're invested in, and fight to try and force reality to match what we expect. Be careful about becoming to invested in ideology, and don't believe everything you believe.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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nedsaid
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Re: Starting to feel like the late 1990s?

Post by nedsaid » Sun Jan 28, 2018 1:39 pm

SlowMovingInvestor wrote:
Sun Jan 28, 2018 1:13 pm
investorpeter wrote:
Sun Jan 28, 2018 12:59 pm
As to feeling like the late 90’s, the bitcoin saga has felt almost exactly like the late 90’s + 2001 compressed into a short time frame. The Kodakcoin episode was taken directly from the same .com era playbook. I would say, right now with the FANG stock valuations, it feels more like mid 90’s or mid 00’s, so there is room to run. Keep in mind though that the FANGs are still all essentially tech stocks, so we on a larger scale we are have been in an overall tech bullrun since the 90s.
Fair enough, but it's worth remembering that many of the stocks from the late 90s bull run took a long time to get back to their 2000 numbers. My recollection is that Cisco, Juniper etc. are still below their highs. Yahoo, Netscape, AOL, all gone. Many new Telcos and ISPs gone.

AMZN is the only one to really remain a standout from the previous book, and even it took 8 years to reach its highs.

Particularly instructive is MSFT. It took nearly 14 years to reach it's highs, and it was under a totally different management (twice removed). It's notable that MSFT was considered totally dominant in the tech industry circa 2000, and it was projected it would take over the world if the DoJ would let it. Even AAPL had to get some handouts from MSFT to survive.

I guess my point is that I'm very skeptical of AMZN's stock price. It does not seem be anywhere near as dominant in all the fields it plays in as MSFT was in 2000, but ultimately MSFT couldn't keep it's dominant position.
This is a very important point, that is expectations can get so high that it can take many years for earnings to catch up. In the case of the internet/high-tech mania of the late 1990's, many companies just went out of existence. Those that are still with us took years to achieve new highs. It goes to show that valuations really do matter, investors ignore them at their peril.
A fool and his money are good for business.

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Tycoon
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Re: Starting to feel like the late 1990s?

Post by Tycoon » Sun Jan 28, 2018 1:50 pm

Valuethinker wrote:
Sun Jan 28, 2018 12:26 pm
Especially the Nobel Prize Committee (the Bank of Sweden Economics Prize in Honour of Alfred Nobel to be precise)? They are not reputable?

He's one of the world's leading economists. In particular seminal contributions on Trade Theory, on Regional Economics, and on the Theory of Financial Crises. He was also a tenured professor at 3 of America's top graduate schools in economics for over 30 years (MIT, Stanford and Princeton, from memory) and had his Phd from what was undoubtedly America's top graduate school in economics (Chicago would have been the other)-- MIT. BTW that would mean his Phd was from the top graduate school of economics in the *world* at that time, and a professor at one of the top graduate schools in economics in the world. You do find Cambridge/ LSE/ Oxford in the top 25, but I am not sure if there are any non Anglo-Saxon schools in the list.
It just goes to show that multiple letters behind one's name, and prestigious awards, don't enable one to predict the future.

Arguing that he was less wrong because other economists were wrong is a fallacy. They are mostly all wrong most of the time :P. Apologies to the economists on this board.

(My views aren't shaped by politics. My views are shaped by the fact that because this man has a bunch of letters behind his name, and a fancy medal, people will act on his recommendations; and often it's the wrong thing to do. Now, I will say that his views are shaped by politics - I think the evidence supports that. He should know better since he is very well educated.)

I believe a person is better off buying the market and holding on. (I only have four letters behind my name and no medals :( )
Appeal to Pity:When pity is envoked to support a statement | Appeal to Popular Sentiment:Appealing to unrelated prejudices and attitudes | Hasty Generalization:Too little evidence to support the conclusion

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nedsaid
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Re: Starting to feel like the late 1990s?

Post by nedsaid » Sun Jan 28, 2018 1:52 pm

JoMoney wrote:
Sun Jan 28, 2018 1:37 pm
MindBogler wrote:
Sun Jan 28, 2018 1:25 pm
nedsaid wrote:
Sun Jan 28, 2018 12:53 pm
I think it is important to read pieces written by people that you disagree with. I would read Paul Krugman if his articles were more objective and frankly more humble. I am sure he is a thoughtful and intelligent guy but he has gotten to the point where he just dismisses those who disagree with him.
I agree. I believe Krugman has reached the point where he talks at his audience. This is the epitome of what has gone wrong in societal discourse. Everyone is talking louder and louder while their fingers are in their ears and eyes closed. :beer
Strange times. You might think a failure of someones presuppositions to predict the outcome might cause them to reconsider their beliefs, or try to determine why their model was wrong. But that doesn't seem to be the way people work, instead we cling to the beliefs we're invested in, and fight to try and force reality to match what we expect. Be careful about becoming to invested in ideology, and don't believe everything you believe.
Too often, people when confronted with contrary evidence will double down and not admit they were wrong. As for me, I have to admit that I am right about something only about every six months or so. A little humility goes a long way. I have eaten a lot of humble pie here on the forum.

Few people are totally right on everything they say and few people are totally wrong. Most of us are somewhere in the middle.

People who have read my posts on money creation might think that I am a Keynesian or a neo-Keynesian. Actually my views tilt conservative but I will look for good ideas wherever I can find them. The standard textbook explanations of money creation did not satisfy me and I looked for models that better explained the economy. I read Warren Mosler's articles and he caused me to consider things that I would not have otherwise considered. I then graduated to Cullen Roche, going from Modern Monetary Theory to Monetary Realism. Even Monetary Realism probably has its flaws. Too many people get into a "Yankees Fan" vs. "Red Sox Fan" type of mentality and just cannot admit that the other person might have a valid point.

I don't want people to know what I am going to post before I post. I have been willing to think aloud and also outside the box. So you will see me essentially argue with myself, you will see differences from thread to thread. I am mostly consistent but it is important to consider other ideas and points of view. So I will discuss the pros and cons of factor investing and the pros and cons of alternative investing. The thing is, when you actually see what it is that I actually do, my bark is worse than my bite.
A fool and his money are good for business.

dh
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Re: Starting to feel like the late 1990s?

Post by dh » Sun Jan 28, 2018 1:58 pm

GoldenFinch wrote:
Fri Jan 26, 2018 3:29 pm
It feels like January 2018.

We have no clue what’s next, as usual.

Make sure you’re comfortable with your asset allocation.

Happy Friday and stay the course! :beer

+1
No one knew what was next at the end of the 90s either. Those that were comfortable with their asset allocation and had a plan in place, were fine. Those who speculated, most likely got hammered in the crash. I am going to follow GoldenFinch's advice in all markets. Thanks for the words of wisdom. It sure does feel like late January 2018! :sharebeer

anoop
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Re: Starting to feel like the late 1990s?

Post by anoop » Sun Jan 28, 2018 2:19 pm

It's different this time with pension funds, sovereign funds, and, perhaps most importantly, central banks buying stocks with both hands. Not sure what the end game is, but my guess is that it's a coordinated effort to generate inflation in a somewhat controlled fashion.

In the 1990's there was a lot of speculation by retail investors. That is missing this time around. Same with the housing bubble -- loose lending and lots of speculation by retail buyers during the bubble years. I'd say bitcoin is in a bubble now, but not stocks, and definitely not housing. Overvalued? Yes. But that is different from a bubble.
Last edited by anoop on Sun Jan 28, 2018 2:41 pm, edited 1 time in total.

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Rowan Oak
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Re: Starting to feel like the late 1990s?

Post by Rowan Oak » Sun Jan 28, 2018 2:40 pm

JoMoney wrote:
Sun Jan 28, 2018 1:37 pm
MindBogler wrote:
Sun Jan 28, 2018 1:25 pm
nedsaid wrote:
Sun Jan 28, 2018 12:53 pm
I think it is important to read pieces written by people that you disagree with. I would read Paul Krugman if his articles were more objective and frankly more humble. I am sure he is a thoughtful and intelligent guy but he has gotten to the point where he just dismisses those who disagree with him.
I agree. I believe Krugman has reached the point where he talks at his audience. This is the epitome of what has gone wrong in societal discourse. Everyone is talking louder and louder while their fingers are in their ears and eyes closed. :beer
Strange times. You might think a failure of someones presuppositions to predict the outcome might cause them to reconsider their beliefs, or try to determine why their model was wrong. But that doesn't seem to be the way people work, instead we cling to the beliefs we're invested in, and fight to try and force reality to match what we expect. Be careful about becoming to invested in ideology, and don't believe everything you believe.
"What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact”
- Warren Buffett
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

SlowMovingInvestor
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Re: Starting to feel like the late 1990s?

Post by SlowMovingInvestor » Sun Jan 28, 2018 3:18 pm

anoop wrote:
Sun Jan 28, 2018 2:19 pm
In the 1990's there was a lot of speculation by retail investors. That is missing this time around. Same with the housing bubble -- loose lending and lots of speculation by retail buyers during the bubble years. I'd say bitcoin is in a bubble now, but not stocks, and definitely not housing. Overvalued? Yes. But that is different from a bubble.
I remember reading a couple of articles recently suggesting that retail investors were getting into the market in a big way in Jan, although I don't think there is actual funds flow data available yet.

SlowMovingInvestor
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Re: Starting to feel like the late 1990s?

Post by SlowMovingInvestor » Sun Jan 28, 2018 3:24 pm

Tycoon wrote:
Sun Jan 28, 2018 1:50 pm
Arguing that he was less wrong because other economists were wrong is a fallacy. They are mostly all wrong most of the time :P.
Not to beat a dead horse, but it seems to me the level of disdain directed against Krugman because of a call that he withdrew in 3 days seems to me to be wholly disproportionate to the error involved (especially when you consider how wrong many market watchers and economists have been over extended periods of time).

JBTX
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Re: Starting to feel like the late 1990s?

Post by JBTX » Sun Jan 28, 2018 3:27 pm

I will agree it is starting to feel "bubbly".

High CAPE10 PEs
Bitcoin et al.
Lots of people coming on here regretting getting out of the market years ago, and NOW wanting to get back in.

But as someone else said it may very well be 1996.

anoop
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Re: Starting to feel like the late 1990s?

Post by anoop » Sun Jan 28, 2018 3:30 pm

SlowMovingInvestor wrote:
Sun Jan 28, 2018 3:18 pm
anoop wrote:
Sun Jan 28, 2018 2:19 pm
In the 1990's there was a lot of speculation by retail investors. That is missing this time around. Same with the housing bubble -- loose lending and lots of speculation by retail buyers during the bubble years. I'd say bitcoin is in a bubble now, but not stocks, and definitely not housing. Overvalued? Yes. But that is different from a bubble.
I remember reading a couple of articles recently suggesting that retail investors were getting into the market in a big way in Jan, although I don't think there is actual funds flow data available yet.
They are getting in through funds because of FOMO and TINA not speculating on individual stocks like the dot com days.

asif408
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Re: Starting to feel like the late 1990s?

Post by asif408 » Sun Jan 28, 2018 5:08 pm

Looking at the late 90s, others mentioned how concentrated to outperformance was. I graphed the US stock market vs SCV, REITs, energy, PME, and EM, and a US value fund for about 6 years prior to the top: http://quotes.morningstar.com/chart/fun ... 0FQW%22%7D

I couldn't find a high dividend fund, but my understand is that high dividend yield funds weren't popular in the late 90s, which they are today. All the funds lagged the S&P considerably leading up to the top. We haven't really seen that (at least yet) occurring: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

SCV & REITs have only started to lag in the last year or so. Value has underperformed slightly in the US, but not as much as it did in the late 90s. And pretty much since the bottom in 2009 all the US stocks segments (with the exception of energy) have returned almost 300%. So the real opportunities do not appear to lie much inside the US borders, other than maybe energy, which has had a less than 1% annualized return in the last 10 years.

As one of the other posters mentioned a while back in this thread, if you're really worried about US stocks valuations you probably need to look outisde your borders or think about commodities. It still appears most investors are still scared to invest heavily in any of these areas. And strangely enough, even in this post, the posters appear to be fixated on US stock valuations.

And for those that are scared to invest outside their own border, remember the valuation disparity between US & foreign was similar in the late 1990s/early 2000s. Foreign stocks did fall along with the US in the bubble, so they won't necessary protect against a drop, but they recovered more quickly and returned more over the next 10 years, which to me seems to be the most important thing.

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CyclingDuo
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Re: Starting to feel like the late 1990s?

Post by CyclingDuo » Sun Jan 28, 2018 5:10 pm

nedsaid wrote:
Sun Jan 28, 2018 1:39 pm
SlowMovingInvestor wrote:
Sun Jan 28, 2018 1:13 pm
investorpeter wrote:
Sun Jan 28, 2018 12:59 pm
As to feeling like the late 90’s, the bitcoin saga has felt almost exactly like the late 90’s + 2001 compressed into a short time frame. The Kodakcoin episode was taken directly from the same .com era playbook. I would say, right now with the FANG stock valuations, it feels more like mid 90’s or mid 00’s, so there is room to run. Keep in mind though that the FANGs are still all essentially tech stocks, so we on a larger scale we are have been in an overall tech bullrun since the 90s.
Fair enough, but it's worth remembering that many of the stocks from the late 90s bull run took a long time to get back to their 2000 numbers. My recollection is that Cisco, Juniper etc. are still below their highs. Yahoo, Netscape, AOL, all gone. Many new Telcos and ISPs gone.

AMZN is the only one to really remain a standout from the previous book, and even it took 8 years to reach its highs.

Particularly instructive is MSFT. It took nearly 14 years to reach it's highs, and it was under a totally different management (twice removed). It's notable that MSFT was considered totally dominant in the tech industry circa 2000, and it was projected it would take over the world if the DoJ would let it. Even AAPL had to get some handouts from MSFT to survive.

I guess my point is that I'm very skeptical of AMZN's stock price. It does not seem be anywhere near as dominant in all the fields it plays in as MSFT was in 2000, but ultimately MSFT couldn't keep it's dominant position.
This is a very important point, that is expectations can get so high that it can take many years for earnings to catch up. In the case of the internet/high-tech mania of the late 1990's, many companies just went out of existence. Those that are still with us took years to achieve new highs. It goes to show that valuations really do matter, investors ignore them at their peril.
What is interesting, and the link is below to a video I watched this weekend (I recommend watching it), is that the top 5 S&P Technology companies (Google, Apple, Microsoft, Amazon, and Facebook) + Netflix = 14% of the S&P, but their valuations are currently the same as the bottom 250 stocks in the S&P. The premise made in the video is...

"Wouldn't you rather own the big 5/6 technology companies that are growing and not struggling like the bottom 250 stocks since the valuations are the same?"

Image

Video link to the 6 minute CNBC segment is here: https://www.cnbc.com/video/2018/01/26/f ... -week.html

Google has a lower multiple than McDonald's. It's hard to equate 2018 technology stocks valuations compared to the 1999/early 2000 time period.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

JBTX
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Re: Starting to feel like the late 1990s?

Post by JBTX » Sun Jan 28, 2018 5:46 pm

Total market cap of FANG is around 2.5 trillion.

The fang stocks are sitting on close to $500 billion in just cash and cash equivalents. So almost one fifth of their valuation is straight up cash.

https://www.investopedia.com/terms/f/faang-stocks.asp

https://www.bloomberg.com/graphics/2017 ... s-profits/

JBTX
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Re: Starting to feel like the late 1990s?

Post by JBTX » Sun Jan 28, 2018 5:51 pm

As an aside, GE has a market cap around $150 billion. Yet it is sitting on around $80 billion of cash & equivalents - at least in June.

https://www.bloomberg.com/graphics/2017 ... s-profits/

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Re: Starting to feel like the late 1990s?

Post by willthrill81 » Sun Jan 28, 2018 5:56 pm

JBTX wrote:
Sun Jan 28, 2018 5:46 pm
Total market cap of FANG is around 2.5 trillion.

The fang stocks are sitting on close to $500 billion in just cash and cash equivalents. So almost one fifth of their valuation is straight up cash.

https://www.investopedia.com/terms/f/faang-stocks.asp

https://www.bloomberg.com/graphics/2017 ... s-profits/
But if they just paid that out in dividends, they'd be worth even MORE, right? :wink:
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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nedsaid
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Re: Starting to feel like the late 1990s?

Post by nedsaid » Sun Jan 28, 2018 6:03 pm

Wow. There is a pretty compelling case for Google. With the strong earnings and revenue growth, a forward P/E of 28.6 and a trailing P/E of 39.37 would seem to be quite reasonable. This would imply a growth rate of at least 15% to 20%. On the other hand, Amazon has a forward P/E of 156.2 and a trailing P/E of 357. This implies stratospheric growth rates, which for a retailer, seems ridiculous. But who is going to have the courage to short Amazon? Not me. The implied growth rate would include expansion to Venus, Mars, and Jupiter. At some point, something has got to give.

This is the weakness of Value investing. You miss things like Amazon and Google that have been big winners for years. I do own Microsoft, which has been performing rather well, thank you. Microsoft was purchased when it looked like a Value stock. But pretty much, at least with my individual stocks, I stay away from the high P/E stuff. Fortunately, I own the FAANG stocks (Facebook, Apple, Amazon, Netflix, Google) through my index and active funds. But certainly I am underweight the FAANG stocks.

The problem with the high tech and internet stuff is that some brilliant 14 year old kid from Taiwan could come up with an idea that blows all of this stuff up. Look at how quickly Google and Facebook squashed their competitors. No one even remembers Alta Vista or Lycos in internet search. Yahoo has pretty much been left in the dust. In the social media space, who remembers My Space? Doesn't take long for the ground to shift.
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Re: Starting to feel like the late 1990s?

Post by JBTX » Sun Jan 28, 2018 6:04 pm

willthrill81 wrote:
Sun Jan 28, 2018 5:56 pm
JBTX wrote:
Sun Jan 28, 2018 5:46 pm
Total market cap of FANG is around 2.5 trillion.

The fang stocks are sitting on close to $500 billion in just cash and cash equivalents. So almost one fifth of their valuation is straight up cash.

https://www.investopedia.com/terms/f/faang-stocks.asp

https://www.bloomberg.com/graphics/2017 ... s-profits/
But if they just paid that out in dividends, they'd be worth even MORE, right? :wink:
I think you can argue the valuations are reasonable, based on actual financial metrics. The question is do you believe the business model can sustain itself for the long term - have these become quasi wide moat monopolies, or will technology and competition wash them out down the road. Only time will tell.

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Re: Starting to feel like the late 1990s?

Post by nedsaid » Sun Jan 28, 2018 6:05 pm

JBTX wrote:
Sun Jan 28, 2018 5:46 pm
Total market cap of FANG is around 2.5 trillion.

The fang stocks are sitting on close to $500 billion in just cash and cash equivalents. So almost one fifth of their valuation is straight up cash.

https://www.investopedia.com/terms/f/faang-stocks.asp

https://www.bloomberg.com/graphics/2017 ... s-profits/

As an aside, GE has a market cap around $150 billion. Yet it is sitting on around $80 billion of cash & equivalents - at least in June.

https://www.bloomberg.com/graphics/2017 ... s-profits/
Don't remind me. GE never fails to disappoint, I still own the thing.
A fool and his money are good for business.

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nedsaid
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Re: Starting to feel like the late 1990s?

Post by nedsaid » Sun Jan 28, 2018 6:07 pm

With Facebook, forward P/E there is 28.5. For a fast growth company, that is a reasonable valuation.
A fool and his money are good for business.

JBTX
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Re: Starting to feel like the late 1990s?

Post by JBTX » Sun Jan 28, 2018 6:08 pm

nedsaid wrote:
Sun Jan 28, 2018 6:05 pm
JBTX wrote:
Sun Jan 28, 2018 5:46 pm
Total market cap of FANG is around 2.5 trillion.

The fang stocks are sitting on close to $500 billion in just cash and cash equivalents. So almost one fifth of their valuation is straight up cash.

https://www.investopedia.com/terms/f/faang-stocks.asp

https://www.bloomberg.com/graphics/2017 ... s-profits/

As an aside, GE has a market cap around $150 billion. Yet it is sitting on around $80 billion of cash & equivalents - at least in June.

https://www.bloomberg.com/graphics/2017 ... s-profits/
Don't remind me. GE never fails to disappoint, I still own the thing.
I don't own individual stocks, but that one looks like an interesting gamble. Basically investors are betting the GE is going to #### away their massive pile of cash.

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Re: Starting to feel like the late 1990s?

Post by SGM » Sun Jan 28, 2018 6:14 pm

It doesn't feel like the late 90s to me. No one is trying to get me to invest in start ups as a former NYC detective with no financial training did in the 90s. I don't know anyone who took his software company public for millions and then lost it all before he was allowed to dispose of the stock as a friend did in the 90s. A lot of people are partially or completely out of the market because of fear. I don't know what is going to happen, but I am not worried. I would like to see if the recent tax law changes and the movement to decrease regulations will have a lasting positive effect on industry profits or as others say it will have no effect.

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BuyAndHoldOn
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Re: Starting to feel like the late 1990s?

Post by BuyAndHoldOn » Sun Jan 28, 2018 7:31 pm

This Howard Marks memo probably resonates with a lot of people on this forum.

https://www.oaktreecapital.com/insights ... arks-memos

^^ once that link changes (when this is no longer the "current" memo): The date [for the memo] is January 23, 2018.

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Re: Starting to feel like the late 1990s?

Post by Index Fan » Sun Jan 28, 2018 7:50 pm

Valuethinker wrote:
Sun Jan 28, 2018 12:26 pm
Your view of him is shaped by your disagreement with his politics and the fact that he has a rather large platform on which to share his views-- and I think you should admit that to yourself.
And your views of him are shaped by your politics, which have been made clear by years of posts here. Krugman has made emotional and political screeds before. The man could put all of his degrees on his wall, but he still entitled his column 'The Conscience of a Liberal'. Don't conflate his politics with his expertise.

Time to move on.
Last edited by Index Fan on Sun Jan 28, 2018 8:09 pm, edited 1 time in total.
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stlutz
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Re: Starting to feel like the late 1990s?

Post by stlutz » Sun Jan 28, 2018 8:03 pm

It doesn't feel like the late 90s to me
It's worth noting that to get back to peak valuations in the late 90s, the market needs to go up another 30% or so. And that leaves out the impact of the tax cut.

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Re: Starting to feel like the late 1990s?

Post by CyclingDuo » Sun Jan 28, 2018 8:08 pm

nedsaid wrote:
Sun Jan 28, 2018 6:03 pm
The problem with the high tech and internet stuff is that some brilliant 14 year old kid from Taiwan could come up with an idea that blows all of this stuff up.
That would be the other FAANNG stocks known as STAB stocks - also really excellent performers and growth oriented investments.

Sina
Tencent
Alibabu
Baidu

Three of which are the top holdings in one of our funds - Vanguard International Growth Fund.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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CyclingDuo
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Re: Starting to feel like the late 1990s?

Post by CyclingDuo » Sun Jan 28, 2018 8:52 pm

BuyAndHoldOn wrote:
Sun Jan 28, 2018 7:31 pm
This Howard Marks memo probably resonates with a lot of people on this forum.
Only to the point that Bogle would say "nobody knows nothing". We have to rightfully throw Marks under the bus according to Bogle's adage. Let's not forget Oakmark, the firm where Marks works has only $100B. Vanguard has a bit more at $4.5 Trillion. Not to mention Blackrock with $5.7 Trillion, and Fidelity at $2 Trillion.

Marks has been cautious for a long time. Given his July 2017 "memo" against the FAANG stocks - it is hard to view his thoughts without thinking back to his memos and thoughts from 2013 to present.

Opinions are opinions. Best to view the opinions and thoughts of Marks next to one of the best traders on Wall Street, Joe Fahmy of Zor Capital. Joe doesn't mess around and is easily bearish or bullish depending on the trend. His track record has been well worth following. Here are his thoughts this weekend on the FANG stocks compared to the non-stop cautious tale of Marks:

https://www.joefahmy.com/2018/01/28/wee ... ng-1-28-18
Last edited by CyclingDuo on Sun Jan 28, 2018 9:52 pm, edited 1 time in total.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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TinkerPDX
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Re: Starting to feel like the late 1990s?

Post by TinkerPDX » Sun Jan 28, 2018 9:08 pm

visualguy wrote:
Sat Jan 27, 2018 2:07 am
willthrill81 wrote:
Sat Jan 27, 2018 1:02 am
visualguy wrote:
Sat Jan 27, 2018 12:55 am
It is very frightening for people who put a very large lump sum in the market at these levels - I would hate to be in those shoes. For the rest of us who rode this up, we can probably ride it back down without too much anxiety unless it really overshoots on the way down, and there's no catalyst on the horizon for a real crash as opposed to a correction.
Whether you put a lump sum in the market or dollar cost averaged in is irrelevant at this point. Either way, you have the same stake in what happens going forward.
Seeing some of your hard-earned money evaporate is a lot more painful than seeing stock market gains evaporate.
Might feel different, but the effect is objectively identical. One should treat investments the same no matter what price the were purchased at.

Every day you hold, you are choosing not to sell, which is essentially choosing to buy. We all buy our portfolio at its current price every day.

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nedsaid
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Re: Starting to feel like the late 1990s?

Post by nedsaid » Sun Jan 28, 2018 10:52 pm

CyclingDuo wrote:
Sun Jan 28, 2018 8:08 pm
nedsaid wrote:
Sun Jan 28, 2018 6:03 pm
The problem with the high tech and internet stuff is that some brilliant 14 year old kid from Taiwan could come up with an idea that blows all of this stuff up.
That would be the other FAANNG stocks known as STAB stocks - also really excellent performers and growth oriented investments.

Sina
Tencent
Alibabu
Baidu

Three of which are the top holdings in one of our funds - Vanguard International Growth Fund.
I did a portfolio X-Ray of my portfolio and saw both Alibaba and Tencent in my top 25 stocks. Tencent was number 19 and Alibaba was number 22. I had to look up Tencent to see what it was. So I am invested in China whether I realize it or not. Number 25 was Taiwan Semiconductor.
A fool and his money are good for business.

SlowMovingInvestor
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Re: Starting to feel like the late 1990s?

Post by SlowMovingInvestor » Mon Jan 29, 2018 3:34 pm

I continue to believe that Amazon is overvalued, although probably not as overvalued as it was in 2000 :).

Even today, with other tech stocks taking a tumble, AMZN continues to rise.

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Re: Starting to feel like the late 1990s?

Post by SlowMovingInvestor » Mon Jan 29, 2018 3:45 pm

JBTX wrote:
Sun Jan 28, 2018 6:04 pm
willthrill81 wrote:
Sun Jan 28, 2018 5:56 pm
JBTX wrote:
Sun Jan 28, 2018 5:46 pm
Total market cap of FANG is around 2.5 trillion.

The fang stocks are sitting on close to $500 billion in just cash and cash equivalents. So almost one fifth of their valuation is straight up cash.

https://www.investopedia.com/terms/f/faang-stocks.asp

https://www.bloomberg.com/graphics/2017 ... s-profits/
But if they just paid that out in dividends, they'd be worth even MORE, right? :wink:
I think you can argue the valuations are reasonable, based on actual financial metrics. The question is do you believe the business model can sustain itself for the long term - have these become quasi wide moat monopolies, or will technology and competition wash them out down the road. Only time will tell.
In the 90s/2000, MSFT looked truly unstoppable (except by the DOJ, and even that was assumed to be somewhat defanged). It didn't do much in HW (it left that to partners Dell and Intel, for lower margins), but It dominated software with incredible profits and margins, and everyone that gone up against them had gone bankrupt, or at best hung on. AAPL had to get a lifeline from them. Even once mighty IBM had ceased to compete in MSFT's areas. It was assumed that the Enterprise SW market would be the next to fall, and even Oracle might get taken out.

But times change quickly. The same could happen for a lot of today's tech companies too. If you bought MSFT in 2000, it might have taken 8 years to get back to where you where ...

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Re: Starting to feel like the late 1990s?

Post by willthrill81 » Mon Jan 29, 2018 6:06 pm

TinkerPDX wrote:
Sun Jan 28, 2018 9:08 pm
visualguy wrote:
Sat Jan 27, 2018 2:07 am
willthrill81 wrote:
Sat Jan 27, 2018 1:02 am
visualguy wrote:
Sat Jan 27, 2018 12:55 am
It is very frightening for people who put a very large lump sum in the market at these levels - I would hate to be in those shoes. For the rest of us who rode this up, we can probably ride it back down without too much anxiety unless it really overshoots on the way down, and there's no catalyst on the horizon for a real crash as opposed to a correction.
Whether you put a lump sum in the market or dollar cost averaged in is irrelevant at this point. Either way, you have the same stake in what happens going forward.
Seeing some of your hard-earned money evaporate is a lot more painful than seeing stock market gains evaporate.
Might feel different, but the effect is objectively identical. One should treat investments the same no matter what price the were purchased at.

Every day you hold, you are choosing not to sell, which is essentially choosing to buy. We all buy our portfolio at its current price every day.
+1

That is the objective reality of the situation.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

SlowMovingInvestor
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Re: Starting to feel like the late 1990s?

Post by SlowMovingInvestor » Tue Jan 30, 2018 1:11 pm

This is proof that is the late 1990s again :)

https://www.bloomberg.com/news/articles ... tartup-wag

Son is a very successful investor, but really ...

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Re: Starting to feel like the late 1990s?

Post by Valuethinker » Tue Jan 30, 2018 4:56 pm

SlowMovingInvestor wrote:
Tue Jan 30, 2018 1:11 pm
This is proof that is the late 1990s again :)

https://www.bloomberg.com/news/articles ... tartup-wag

Son is a very successful investor, but really ...
Good one!

the number of "me too" venture startups which basically seem to be 2 guys (usually guys) and a business plan which goes "walking is an inefficient and not enjoyable activity. We plan to disrupt the walking market by allowing people to use their phones to interact with other users whilst walking and monetize this by... "

They all have the following generic form

<name of old world activity or industry> is <inefficient, stupid, old world> and this business will disrupt the <inefficient old world industry> by ... and monetize it by

ICOs are the ultimate bubble sign though. They raise money from investors, but don't give them shares. And they invest it in something, which gives more somethings...

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Re: Starting to feel like the late 1990s?

Post by Valuethinker » Tue Jan 30, 2018 4:59 pm

JBTX wrote:
Sun Jan 28, 2018 5:51 pm
As an aside, GE has a market cap around $150 billion. Yet it is sitting on around $80 billion of cash & equivalents - at least in June.

https://www.bloomberg.com/graphics/2017 ... s-profits/
Ahhh. What is its debt?

I suspect that's gross cash? It has a large pension deficit plus financial liabilities.

The origin is its international spread of operations-- thus large overseas cash balances. It may repatriate these now that the US tax act has passed.

That's different from most of the big tech stocks. They have net cash (gross cash - financial liabilities). And by definition, almost, they won't have Defined Benefit pension fund liabilities (except IBM).

GE gross debt looks to be over $160bn (article is from last year).

https://seekingalpha.com/article/409284 ... trics-debt

so net debt c. $80bn. Means they won't have any short term liquidity problems, but they are not debt free.
Last edited by Valuethinker on Sat Feb 03, 2018 2:26 pm, edited 1 time in total.

lazydavid
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Re: Starting to feel like the late 1990s?

Post by lazydavid » Wed Jan 31, 2018 11:18 am

SlowMovingInvestor wrote:
Tue Jan 30, 2018 1:11 pm
This is proof that is the late 1990s again :)

https://www.bloomberg.com/news/articles ... tartup-wag

Son is a very successful investor, but really ...
Good lord.... "we want $100 million to deliver pet services via the internet". "I'll give you $300 million to be your sole investor". :oops:

It's official, SlowMovingInvestor called it.

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BuyAndHoldOn
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Re: Starting to feel like the late 1990s?

Post by BuyAndHoldOn » Sat Feb 03, 2018 6:21 am

CyclingDuo wrote:
Sun Jan 28, 2018 8:52 pm
BuyAndHoldOn wrote:
Sun Jan 28, 2018 7:31 pm
This Howard Marks memo probably resonates with a lot of people on this forum.
Only to the point that Bogle would say "nobody knows nothing". We have to rightfully throw Marks under the bus according to Bogle's adage. Let's not forget Oakmark, the firm where Marks works has only $100B. Vanguard has a bit more at $4.5 Trillion. Not to mention Blackrock with $5.7 Trillion, and Fidelity at $2 Trillion.

Marks has been cautious for a long time. Given his July 2017 "memo" against the FAANG stocks - it is hard to view his thoughts without thinking back to his memos and thoughts from 2013 to present.

Opinions are opinions. Best to view the opinions and thoughts of Marks next to one of the best traders on Wall Street, Joe Fahmy of Zor Capital. Joe doesn't mess around and is easily bearish or bullish depending on the trend. His track record has been well worth following. Here are his thoughts this weekend on the FANG stocks compared to the non-stop cautious tale of Marks:

https://www.joefahmy.com/2018/01/28/wee ... ng-1-28-18

For sure. Marks is giving just one more opinion, but I did think this piece was quite topical. I don't always find that to be the case with what he writes.

3funder
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Re: Starting to feel like the late 1990s?

Post by 3funder » Sat Feb 03, 2018 10:00 am

I was a high school freshman/sophomore in the late 1990s, so no, it doesn't feel like the late 1990s, but I wish it did.

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zaboomafoozarg
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Re: Starting to feel like the late 1990s?

Post by zaboomafoozarg » Sat Feb 03, 2018 12:30 pm

3funder wrote:
Sat Feb 03, 2018 10:00 am
I was a high school freshman/sophomore in the late 1990s, so no, it doesn't feel like the late 1990s, but I wish it did.
LOL same here, there was no better time than that.

3funder
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Re: Starting to feel like the late 1990s?

Post by 3funder » Sat Feb 03, 2018 1:28 pm

zaboomafoozarg wrote:
Fri Jan 26, 2018 4:39 pm
Nah, this website loaded instantly for me. Back in the late 90's it would have taken a good 10 seconds to pull this page up over 14.4 kbps.
Ah, good old copper wire...

finite_difference
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Re: Starting to feel like the late 1990s?

Post by finite_difference » Sat Feb 03, 2018 2:09 pm

MindBogler wrote:
Sun Jan 28, 2018 1:25 pm
nedsaid wrote:
Sun Jan 28, 2018 12:53 pm
I think it is important to read pieces written by people that you disagree with. I would read Paul Krugman if his articles were more objective and frankly more humble. I am sure he is a thoughtful and intelligent guy but he has gotten to the point where he just dismisses those who disagree with him.
I agree. I believe Krugman has reached the point where he talks at his audience. This is the epitome of what has gone wrong in societal discourse. Everyone is talking louder and louder while their fingers are in their ears and eyes closed. :beer
I disagree. I may not agree with all his views but I think Krugman is one of the few credible economists writing regularly. Please feel free to list any others you find are more credible.

While many were predicting the deficit would cause runaway inflation, he has steadily beat the drum that inflation has not been a problem. He has steadily countered panics that ACA would lead to a “death spiral”. He predicted the complications that would arise from companies dealing in complex financial dealings like Enron (and before its collapse).

I think Krugman’s contributions overall are a net positive and he’s much more rational and less of a fear-monger than most.

A lot of the Bogleheads philosophy is repetitive, but in the absence of Jack Bogle and Taylor Larimore, the Edward Jones of the world are happy to fill that vacuum.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

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Re: Starting to feel like the late 1990s?

Post by MindBogler » Sat Feb 03, 2018 3:42 pm

finite_difference wrote:
Sat Feb 03, 2018 2:09 pm
I disagree. I may not agree with all his views but I think Krugman is one of the few credible economists writing regularly. Please feel free to list any others you find are more credible.
I don't find any economists credible, but perhaps I have a more rigorous definition of proof than most. Krugman is a just another conceited prognosticator.

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snodog
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Re: Starting to feel like the late 1990s?

Post by snodog » Sat Feb 03, 2018 4:12 pm

finite_difference wrote:
Sat Feb 03, 2018 2:09 pm


I disagree. I may not agree with all his views but I think Krugman is one of the few credible economists writing regularly. Please feel free to list any others you find are more credible.
Warren Mosler

FedGuy
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Re: Starting to feel like the late 1990s?

Post by FedGuy » Sat Feb 03, 2018 9:09 pm

I was swimming in the pool at my gym today and overheard a swim coach give advice about stocks to his student in the middle of a lesson.

So: yes, it's starting to feel like the late 1990s, and I'm now pretty sure there's about to be a crash.

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