Milu

Yes I like to treat it as a junior employee, get it to do the grunt work and come up with an answer, but then be sure to check it makes sense.

Yes wise words, I do try to caution myself with any of my opinions/predictions. Anybody who has read any amount of human history has be aware that we are forever humbled and there are never any guarantees. Hence what keeps this game of investing so interesting.

Yup and my thinking is that people are making the same mistake again. The whole world is continuously moving into the digital space, before these companies were going after the consumer and advertising markets, now with the advent of AI and Robotics this is opening up the whole labour market to be disrupted. If you think about all the jobs out there going from entry level things like a barista, to factory workers, to junior lawyers, to accountants, all the way up. Over the coming decades a decent proportion of these could likely be replaced/augmented. It may happen faster or slower than people think but the direction of travel is only going one way.

Ya you could certainly be right, nobody knows how these things play out. I think some of Zuck's logic is that the payoff is so large that it's worth making the bet, and if it doesn't work out a lot of the data centre infrastructure can be used anyway to improve it's ad engine and as compute for other areas of the business. I have faith that he is a good operator and is not just flinging money into a pit without assessing returns and downside. Doesn't mean he's always going to be right.

Yup aware of the free cash flow, but again if the capex can be deployed at high rates of return then the optimum strategy would be to invest all excess cash and run a free cash flow of zero. It all depend on how much of today's current capex you view as growth vs maintenance capex and whether the growth capex generates the incremental ROIC or not. And as you said the earnings each year will be factoring in more depreciation so wouldn't the earnings continue to be a good yardstick to look at for multiples?

Maybe we are confusing each other here, maybe I'm confusing myself . Is your opinion that the market is currently pricing in epic returns from the massive cap ex build out. If you look at the valuation multiples of Alphabet or Meta do they look elevated in anyway against their average multiples over the last 5 years, or last decade. If the market was pricing them in a bubbly way I'd have expected significantly higher multiples to earnings, cash flow etc, but I don't see anything different to valuations before this AI capex ramped up. I can't speak to Nvidia or Microsoft as I don't own those stocks but maybe they are bubblier. I'm not sure whether we are agreeing with each other or not.

I don’t really believe bubbles can be called until after the fact, and even after the fact it’s tough to say. For example if tech stocks drop 80% during dot com crash I’d be comfortable saying that it was a bubble, but what if stocks drop 50%, 40%, 30%? Where is the transition point from overpriced equities correcting down to regular price vs bubble crash. Also if somebody today says that Mag 7 are in a bubble and they double in price and then crash 40% then all the bears would be proclaiming how they called the bubble. Yet in reality the post crash low is higher than the price they were shouting bubble. Alphabet, one of the best positioned stocks has been trading at 20 pe until the past few days. Meta has trailing pe of less than 27. Microsoft is quite pricey at 37 times trailing but again these are the largest most cashflow generative businesses in history. This isn’t Cisco trading at 35 times revenue like in 2000. so in summary while some pockets of the market are overvalued I don’t necessarily think we are in a bubble and seeing as most people do think we are in some sort of bubble, the contrarian view would be to hold on and not sell any msg 7 stocks as the could have a long runway ahead.

How do you know the cap ex is wasted?

Not fully sure about this. Everything I read seems to be along the lines that AI is a bubble and that the mag 7 are just dumping hundreds of billions into low returning cap ex. I’d say the contrarian view is that this isn’t a bubble and that the leaders of these companies are seeing great ROIC from these investments so are continuing to plough more money into it. So far we are over two years into this buildout and returns on capital for alphabet, Amazon, Microsoft, meta seem to holding up if not improving, maybe this will change at some point.

Yes I agree with this. I think most naysayers here will be continually surprised at how much bigger big tech gets over the next 10-20 years.

Yup latest drama of the week. If this lady cook has broken the law then she deserves to go. If she didn’t then not fair to fire her. Be better if the media spent their time investigating this allegation rather than hyping up the racial angle or fed independence.

Yes that's a good approach regarding insurance. When it comes to insurance I just want to be covered for the crippling black swan style scenario but don't mind paying for all routine stuff out of pocket.

Maybe, but I think Trump has proved time and time again the ability overcome and succeed in all kinds of situations. You'd think at this point people would give him the benefit of the doubt, yet here we are and most people are doubting the potential for success or even rooting for failure. Any stuff I've read about trump from people inside the ropes is that he takes a lot of opinions from his advisors, businessmen, other world leaders, triangulates these while retaining a lot of flexibility to change his approach on a dime. He will then decide on an approach but retain flexibility to roll things back or go in different direction if things change. So depending on your opinion of trump it's either a bull in a china shop, or a rational approach of getting information, testing, reassessing, testing again. It looks messy but is quite effective in my opinion.

I wonder if many of the Trump critics have been involved in complex negotiations before, or even played a game of poker. Many of the comments seem to revolve around, 'he said this and now he said that, what an idiot' whereas in reality nobody knows what trumps full strategy is. When you are negotiating a deal there is a lot of smokescreening of intentions and feeling out the other parties through different comments, going aggressive, then walking away. All of which will give more information on the other parties position. Revealing your true intentions from the outset or having some static upfront strategy is not how you win when negotiating with Putin.

Might be time to change the thread title. Market seems to be on a tear - Crypto at all time highs - S&P and Nasdaq at all time highs - IPOs popping 100%+ on first day (Circle, Figma etc) Feels like a 1990's style set up and the question is are we in 1996 or 1999?

Yes things are going pretty badly in luxury right now. Possibly one of the most disliked industry at the moment. Potentially means good value to be had for long term investors if you believe that people will eventually go back to consuming luxury items in a big way or not. I personally believe they will.

Why so many? Do you generally buy and sell multiple positions each day, or just deciding to get out of everything for some reason?

Ya it's a bit strange. There are obviously a lot of very intelligent people on this forum but it seems like trump just breaks their brains rendering them unable to view things objectively. There seems to be a lot of emotion and wishful thinking rather than viewing of the facts and data. Whether you like trump or not (and personally I'm neutral on him) it should be quite clear that he's succeeding quite well on his goals of america first, whether that's the best for the rest of the world who knows.

Haha ya, the forecasting skills are second to none.

Looks like deal is done https://www.bbc.com/news/live/c5y0d0yz282t

No idea what price will do over the next few months or years, it’s all just finger in the air stuff really. Over 5 to 10 years though it should continue its ride upwards. Happy to be on the journey.

Ya I'd be more surprised if the market didn't pull back 20-25% in any president's reign.

In the interest of pointless calendar scorekeeping. First half stats, down 2.2% YTD Portfolio Meta (18%) Bitcoin (16%) Tesla (11%) Google (8%) LVMH (5%) Lululemon (5%) Nintendo (5%) Amazon (5%) Dominos (3%) Ethereum (1.5%) Cash (22.5%)

People are unfortunately struggling with the fact that inflation has stayed flat or even come down, and the S&P is up 5% so far for the year. The economy was supposed to have dived into a tailspin by now but so far things are progressing as normal. It's easier to come up with a new acronym TACO etc to explain this than it is to adjust their deeply held beliefs. Maybe after a couple more years of solid returns they will finally come around but by that point they will have missed a lot of the growth. I don't think anybody should make any investment decisions based on who the president is.

Good call, it’s about an 8% position for me.