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Talk at the Coffee Shop


AzCactus
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Over the holiday weekend I was in Los Angeles visiting family and my aunt wanted to speak to me about investing.  She mentioned that she had spoken to an acquaintance (who is not in the financial industry) at a local coffee shop and this individual mentioned to her the three stocks that she needs to own are: TSLA, FB and SBUX.  I bring this up because the ongoing bull market is the first one I have actually been an adult throughout. 

 

This maybe purely anecdotal but is this the sort of talk that people have heard leading into previous market peaks.  While, I am aware that this situation does not necessarily represent the larger population I thought that it was interesting that these three stocks were picked given their prices. 

 

Anyone who wants to chime in about talk they have heard or general opinion about the market would be good to hear. 

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All I can say is that it is a new era!  Things are fundamentally different...take a look around us:

 

- Online shopping

- Electric cars

- Drones

- Social media

- Biotechnology

 

P/E's don't matter.  P/B doesn't matter.  Debt is cheap.  With this new paradigm and disruptive technology, investment managers have to be fleet of foot...adapt...Sun Tzu! 

 

It's about the alpha, not the beta.  It's about using words like "superfluous" and "aggrandize".  A new world era!  Cheers!

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I started investing around 1997/98.  The climate today is nothing like it was back then.  Everyone had an opinion on markets.  I got into an argument with a newly minted investment advisor on the eve of 2000 (a week before) about tech stocks.  He said that everyone needed some exposure to tech in their portfolios because that was the future for investing.  I told him he was full of it, and the end was coming.  I guess I was right... 

 

Since then I have had no exposure to a stock bull, there hasn't really been much of one.  I only had awareness of the housing bubble (no direct exposure in Canada).

 

I am never clear whether a Bull actually starts with a new high, or right off the bottom.  There is a big difference in the two definitions.  One makes this bull 5.5 years old, the other makes it less than 2 yrs. old. 

 

I know we all hate to hear it but this time is different.  The market bottom was very deep, and the degree of government intervention has heavily affected the normal business cycle.  I am not sure what that means. 

 

Why is it that the ignorant are always drawn to certain stocks, which of course are the most expensive?

 

 

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Individual stocks suggested as "must haves" at the coffee shop, bar or at a holiday gathering should all be considered for short positions! ;D

 

Reminds so much of what Peter Lynch's favorite example.  If everyone at a cocktail party is talking about how great stocks are, its probably the worst time to buy and so-forth. 

 

That said, I've personally witnessed investor sentiment change among our client base over the past 18 months.  People have wanted more exposure to stocks (foolishly chasing returns).  However, the mentality isn't madness.  I haven't had anyone with piles of cash or fixed income holdings demand to be shifted 100% into equities. 

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I've met a few people locally (Seattle area COBF members and some not) and get together every so often so share our thoughts over lunch or coffee...I really enjoy it...

 

I'd like to meet one or more folks who would like to go through some of the investing books and get practical experience valuing stocks...in person preferred but online with shared screens might work too...I realize it's close to what the forum offers...

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All I can say is that it is a new era!  Things are fundamentally different...take a look around us:

 

- Online shopping

- Electric cars

- Drones

- Social media

- Biotechnology

 

P/E's don't matter.  P/B doesn't matter.  Debt is cheap.  With this new paradigm and disruptive technology, investment managers have to be fleet of foot...adapt...Sun Tzu! 

 

It's about the alpha, not the beta.  It's about using words like "superfluous" and "aggrandize".  A new world era!  Cheers!

 

 

Sanj,

 

You haven't changed a bit.  You've always been well grounded.

 

My favourite post of yours was one that you made on the Canadian board of the Motley Fool about 14 or 15 years ago when you sarcastically observed that Nortel at the time was worth more than the five big Canadian banks combined, along with a dozen or so other large Canadian companies.  Some of us listened and reflected, while others dismissed you as a silly, old-school yokel.

 

Well, I'm happy to say that I'm a silly, old-school yokel too!

 

 

SJ

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SBUX is actually trading at a much reasonable PE compared to the other two stocks. It's PE (29) is not much higher than KO (~24).

It's a company with great brand and growth prospect.

 

It was much cheaper when I bought Sbux Leaps in April 2009 - stock was at $10.  Unfortunately, well you know.... 

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SBUX is actually trading at a much reasonable PE compared to the other two stocks. It's PE (29) is not much higher than KO (~24).

It's a company with great brand and growth prospect.

 

It was much cheaper when I bought Sbux Leaps in April 2009 - stock was at $10.  Unfortunately, well you know....

 

well, about 2 years, my wife said I shall buy SBUX. She's an art major, who can't even do multiplication well, and of course have no idea about investing. I gave her a lesson about P/E and value investing and then rejected her buy recommendation.

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All I can say is that it is a new era!  Things are fundamentally different...take a look around us:

 

- Online shopping

- Electric cars

- Drones

- Social media

- Biotechnology

 

P/E's don't matter.  P/B doesn't matter.  Debt is cheap.  With this new paradigm and disruptive technology, investment managers have to be fleet of foot...adapt...Sun Tzu! 

 

It's about the alpha, not the beta.  It's about using words like "superfluous" and "aggrandize".  A new world era!  Cheers!

 

 

Sanj,

 

You haven't changed a bit.  You've always been well grounded.

 

My favourite post of yours was one that you made on the Canadian board of the Motley Fool about 14 or 15 years ago when you sarcastically observed that Nortel at the time was worth more than the five big Canadian banks combined, along with a dozen or so other large Canadian companies.  Some of us listened and reflected, while others dismissed you as a silly, old-school yokel.

 

Well, I'm happy to say that I'm a silly, old-school yokel too!

 

 

SJ

 

Stubble,

 

Over those 14-15 years, everything that has happened to me has sprung from one well...Ben Graham!  You cannot be anything else, but old-school yokel, when things work that well like clockwork! 

 

You always get people saying why doesn't Prem adapt like Buffett and buy quality.  Because buying cheap works just as well if not better!  Prem doesn't need to guess about moats and competitive advantages, as we've seen how many moats collapsed in the last 12 years due to the internet. 

 

While the internet itself didn't affect investing fundamentals espoused by Ben Graham, it did damage alot of competitive advantages!  Who would have thought the Washington Post would have collapsed as it did?  What about Kodak?  Dell?  Sears?  But you still could have made money when buying those various companies cheap and then selling when dear.

 

Old school yokel only makes sense!  :)  Cheers!   

 

 

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I started investing around 1997/98.  The climate today is nothing like it was back then.  Everyone had an opinion on markets.  I got into an argument with a newly minted investment advisor on the eve of 2000 (a week before) about tech stocks.  He said that everyone needed some exposure to tech in their portfolios because that was the future for investing.  I told him he was full of it, and the end was coming.  I guess I was right... 

 

Since then I have had no exposure to a stock bull, there hasn't really been much of one.  I only had awareness of the housing bubble (no direct exposure in Canada).

 

I am never clear whether a Bull actually starts with a new high, or right off the bottom.  There is a big difference in the two definitions.  One makes this bull 5.5 years old, the other makes it less than 2 yrs. old. 

 

I know we all hate to hear it but this time is different.  The market bottom was very deep, and the degree of government intervention has heavily affected the normal business cycle.  I am not sure what that means. 

 

Why is it that the ignorant are always drawn to certain stocks, which of course are the most expensive?

 

UCC--this is what I am wondering too.  Both in terms of previous times people were positive about stocks maybe 06/07--I was still in high school than.  To your point though I think that the "ignorant" are drawn to certain reads expensive stocks is because they have either recently been high flyers or are cool/trendy names.  This description certainly fits for the above names--although  Starbucks is certainly different than the other two. 

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I have seen more anecdotal evidence of people getting back into stocks. Overhead discussions at restaurants and people asking me questions about options and ETFs. But not to the level of the late 90s.

 

I did not really start investing until 2008 but I remember the dot com boom. I knew someone who quit their good paying job as a database administrator to day trade, the local etrade branch had computers set up. Clients would sit there and “trade” for hours. My grandfather who had been investing since the 30s and shunned tech stocks because he did not understand the companies or the sky high valuations finally cracked and was considering buying Cisco in the 50s because he was afraid of missing the boat. Luckily my dad talked him down and convinced he could probably get it for 20 if we waited a couple years.

 

I didn’t really think much about all of this it at the time but it is crazy to look back on it now.

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