Have We Hit The Top?

[Spooky]

12 minutes ago, dealraker said:

Since I'm out on the limb this morning...

 

What businesses are most at risk?  My view is that while AI is absolutely as meaningful as "we" think it is, the capital mis-allocation towards dealing with it will inevitably prove unsustainable.  So in my view the businesses getting sales and profits from AI spending are the most at risk of losing market cap over time, no matter what the growth of those businesses is today.  Doesn't mean they won't stay in business and stay profitable, but Intel, Cisco, EMC, etc were....well, Intel, Cisco, EMC.....  

 

Agree. The amount of capital spending by these companies with respect to AI is huge. There is a good question on if they make a return on this investment. This Sequoia piece was pretty interesting: https://www.sequoiacap.com/article/ais-600b-question/

 

My view is that it is impossible now to predict who will be the individual winners in AI. It is like the Buffett example on the automobile sector - would have been better to short horses. However, if the technology is able to boost productivity then a wide range of companies and industries will benefit which is why I am putting more funds into broad based global equity ETFs.

[Junior R]

1 minute ago, Spooky said:

 

Agree. The amount of capital spending by these companies with respect to AI is huge. There is a good question on if they make a return on this investment. This Sequoia piece was pretty interesting: https://www.sequoiacap.com/article/ais-600b-question/

 

My view is that it is impossible now to predict who will be the individual winners in AI. It is like the Buffett example on the automobile sector - would have been better to short horses. However, if the technology is able to boost productivity then a wide range of companies and industries will benefit which is why I am putting more funds into broad based global equity ETFs.

Robi Taxis are also hard to predict unless US is able to bring in sub 10k vehicles from international markets as Tesla and other companies would have to front so much money and then compete with humans for the driving rates...

[Junior R]

btw I think Jan there could be a pull back as people take profits in the new year...Followed by a reality check on some companies during the earning season in Jan/Feb

[mattee2264]

https://wealthmanagement.bnpparibas/en/insights/market-strategy/time-to-fade-the-magnificent-7.html

 

Above article is a decent read. But as the article admits timing these things is difficult. 

[Spekulatius]

So $DOW, a company which makes a lot off stuff that everyone uses is worth $29B or EV/S~1 while Broadcom tacks on $250B in market cap because they announced they make AI chips.

 

$DOW chart looks like this and $AVGO looks like that. What to make of it, I have no idea, but it doesn’t look right.

 

Edited December 14 by Spekulatius

[Castanza]

Per Motley Fool today. 

 

“If you look at NVDA's market cap right now, $3.5 trillion, you could buy the entire, if you sold NVDA, you could buy the entire energy sector, all the companies you just talked about, plus the giants like Exxon, Chevron, Oxygen, Petroleum, everything else, you'd still have money leftover to buy Walmart, Coca-Cola and JP Morgan.

And by the way, if you did that, you'd be getting more dividends from those companies than NVDA earns an entire year.”

 

[Junior R]

42 minutes ago, Castanza said:

Per Motley Fool today. 

 

“If you look at NVDA's market cap right now, $3.5 trillion, you could buy the entire, if you sold NVDA, you could buy the entire energy sector, all the companies you just talked about, plus the giants like Exxon, Chevron, Oxygen, Petroleum, everything else, you'd still have money leftover to buy Walmart, Coca-Cola and JP Morgan.

And by the way, if you did that, you'd be getting more dividends from those companies than NVDA earns an entire year.”

 

Lol good one

[Spekulatius]

For comparison, Germany‘s stock Market valuation is ~2.6T if my math is correct.

 

 

Edited December 14 by Spekulatius

[brobro777]

58 minutes ago, Castanza said:

Per Motley Fool today. 

 

“If you look at NVDA's market cap right now, $3.5 trillion, you could buy the entire, if you sold NVDA, you could buy the entire energy sector, all the companies you just talked about, plus the giants like Exxon, Chevron, Oxygen, Petroleum, everything else, you'd still have money leftover to buy Walmart, Coca-Cola and JP Morgan.

And by the way, if you did that, you'd be getting more dividends from those companies than NVDA earns an entire year.”

 

 

I understand NVDA is a much more solid company than Zoom but I remember like yesterday...

 

https://www.forbes.com/sites/sergeiklebnikov/2020/10/29/zoom-is-now-worth-more-than-exxonmobil-and-founder-eric-yuans-net-worth-has-nearly-doubled-in-three-months/

 

 

[John Hjorth]

19 hours ago, dealraker said:

... Today in this world we just gleefully elected to the pres a man who has been a comical failure in business, yet a resounding success in consistently establishing and maintaining a profitable cult-like following.  But business performance wise, that's net profits from sales, the pres stuff shows there's only a massive decay of wealth for 50-60 years from keeping up with inflation.  

 

It doesn't matter today because things with little sales and no profits have huge market caps and these aren't just the pres's holdings such as DJT, these wildly "valuable" things are literally everywhere. 

 

There will be a time when I won't be able to sell my home and land for 50% of tax assessment value again.  Count on it.  The more intense today's chase becomes, the more intense the future discount.  Miss-allocation of capital is the long game weighting temporarily obliterated by the chase of voting.

 

Welcome to boom and bust capitalism.

 

Oh, one last thing: Could the Donald become "capitalism's" most disliked person- even for no real logical blame at all?  If you aren't quite sure of that answer you've got "wet behind the ears" as we say in the south.

 

Life is great...if you can stand it!

 

Please don't worry too much about it, Charlie [ @dealraker ]. All you Americans' President Elect already have your sixs covered, because it's just a matter of fixing the issue with automation : Just move the right foot from the throttle to the brake, and everything will be fine! :

 

https://truthsocial.com/@realDonaldTrump/posts/113642120976193077

 

 

 

[Spekulatius]

@John Hjorth

…and that’s how DOGE will go (imo).

[brobro777]

https://divestor.com/?p=12109

 

This is probably the correct take - there's still room to run 

 

$150k BTC why not baby why not

 

[Spekulatius]

Imagine getting red 10 times in row at the roulette wheel. Is it bad luck or is the wheel rigged?

 

[Junior R]

4 hours ago, Spekulatius said:

@John Hjorth

…and that’s how DOGE will go (imo).

lol very interesting .. DOGE wants to automate many things to save cost but Trump doesn't want to at the cost of workers...Will be very interesting term 

[TwoCitiesCapital]

27 minutes ago, Junior R said:

lol very interesting .. DOGE wants to automate many things to save cost but Trump doesn't want to at the cost of workers...Will be very interesting term 

 

'Interesting' is one way to describe another 4-years of chaos

[cubsfan]

Heck, even the Democrats are excited about DOGE and getting rid of the dementia ridden old man:

 

https://khanna.house.gov/media/in-the-news/opinion-democrats-can-work-doge-i-know-exactly-where-start

 

 

[John Hjorth]

5 hours ago, TwoCitiesCapital said:

'Interesting' is one way to describe another 4-years of chaos

 

Please don't worry too much. Things will 'settle' - nice and easy, over time. Like for Volkswagen.  Stay cool.

[mcliu]

Guessing the top is hard but things feel pretty overbought right now.

Everyone and their cousins are buying/speculating on stocks and crypto.

Growth companies hitting 100x PE, 50x sales. Mature companies trading at 40x, 50x earnings.

Shitcoins hitting record highs.

Berkshire raising record cash.

 

On the other hand, the US is still the most attractive market and one of the only big economies with a growth mindset. Rest of the world economy is slowing and has turned to financial easing (aka money printing). Tons of capital flowing into the US.

[Luke]

29 minutes ago, mcliu said:

Guessing the top is hard but things feel pretty overbought right now.

Everyone and their cousins are buying/speculating on stocks and crypto.

Growth companies hitting 100x PE, 50x sales. Mature companies trading at 40x, 50x earnings.

Shitcoins hitting record highs.

Berkshire raising record cash.

 

On the other hand, the US is still the most attractive market and one of the only big economies with a growth mindset. Rest of the world economy is slowing and has turned to financial easing (aka money printing). Tons of capital flowing into the US.

Yes, share the exact same sentinment except everybody and their cousins and grand cousins are selling China while I am still buying, will I look dumb in the future :D?

Edited December 16 by Luke

[Junior R]

On 12/14/2024 at 10:45 AM, Spekulatius said:

Imagine getting red 10 times in row at the roulette wheel. Is it bad luck or is the wheel rigged?

 

I think today it has now pulled back all gains from election

[Junior R]

1 hour ago, mcliu said:

Guessing the top is hard but things feel pretty overbought right now.

Everyone and their cousins are buying/speculating on stocks and crypto.

Growth companies hitting 100x PE, 50x sales. Mature companies trading at 40x, 50x earnings.

Shitcoins hitting record highs.

Berkshire raising record cash.

 

On the other hand, the US is still the most attractive market and one of the only big economies with a growth mindset. Rest of the world economy is slowing and has turned to financial easing (aka money printing). Tons of capital flowing into the US.

but other countries are also an indicator the economy is slowing...in the US you are packing over extreme PE ratios lol

[Spekulatius]

29 minutes ago, Junior R said:

but other countries are also an indicator the economy is slowing...in the US you are packing over extreme PE ratios lol

Look at all the cyclical components $DOW, $LYB, steel, oil, machinery; they almost all scraping the 52w low and in some cases multi year lows.

Edited Monday at 11:23 PM by Spekulatius

[mattee2264]

Lower taxes and lower interest rates will probably keep earnings going up. And so long as the likes of Microsoft, Amazon, Meta, Google continue to invest their prodigious cashflows into AI that will pump up semiconductor stocks and keep the AI story alive. No idea how long all of this can continue but probably longer than most people think.

 

Aside from the AI bubble bursting the main risk is that the Trump administration economic policies backfire. 

 

He had a very pro-growth agenda in 2017 but it ran out of steam pretty quickly, a trade war was underway, and even before COVID hit the economy was slowing down considerably. And while in business cutting waste and restructuring pays off when it comes to government while beneficial in the long term in the short term it is going to hurt GDP. 

[Gregmal]

Yea there’s plenty of cheap stocks right now except all everyone wants to do is pontificate about macro bs and be the next Mike Burry to call a bubble lol. 

[james22]

4 minutes ago, mattee2264 said:

Lower taxes and lower interest rates will probably keep earnings going up.

 

 

And increasingly "asset light."