US stock market valuations

[Anonymous]

Wow, it seems I totally missed the boat on AMC! And I almost bought some of their stock back when it was really low thinking they might rebound over time, sadly I lacked the confidence to risk any Money on what seems a sinking ship. Of course I doubt that I'd have been abe to capitalize like others did since i don't watch the market that closely.

[credit_endurance]

Hey my friends,

Question was anyone able to actually get in on this GME extravaganza?😅  Make any gains or losses? I l was late getting all details so really wasn't very invested into it until the last tail end 🙄

[iced]

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@credit_endurance wrote:

Hey my friends,

Question was anyone able to actually get in on this GME extravaganza?😅  Make any gains or losses? I l was late getting all details so really wasn't very invested into it until the last tail end 🙄

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A coworker made about $10k on it and another friend made around $30k, but nothing even remotely approaching life-changing.

On the bright side, I don't know anyone who lost money on GME, but the people I know are also overwhelmingly long investors and largely stayed away from the absurdity.

[credit_endurance]

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@iced wrote:

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@credit_endurance wrote:

Hey my friends,

Question was anyone able to actually get in on this GME extravaganza?😅  Make any gains or losses? I l was late getting all details so really wasn't very invested into it until the last tail end 🙄

---

A coworker made about $10k on it and another friend made around $30k, but nothing even remotely approaching life-changing.

On the bright side, I don't know anyone who lost money on GME, but the people I know are also overwhelmingly long investors and largely stayed away from the absurdity.

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Thanks for sharing your experience @iced. Funny thing for me as I am always keeping up with the lastest news, not necessarily stocks but had not interest for some reason until (not knowing at the time) late to the party. Do you think this GME is a good long-term play?

Also looking at TESLA now wishing I would have gotten in on that one long ago. 🙄

[iced]

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@credit_endurance wrote:

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Thanks for sharing your experience @iced. Funny thing for me as I am always keeping up with the lastest news, not necessarily stocks but had not interest for some reason until (not knowing at the time) late to the party. Do you think this GME is a good long-term play?

Also looking at TESLA now wishing I would have gotten in on that one long ago. 🙄

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For me, neither TSLA nor GME are good buys right now. GameStop is at a crossroads where it needs to find a new direction or face extinction; no matter how much sentimental value or attachment I had to it in years past, that's not a winning strategy to parking money in long-term. I was a Toys-R-Us kid growing up, but look at them now. If GME were around $5-10 again, I'd consider a token investment of a few thousand dollars, but I'm not pinning any real hopes for realistic growth on them until I see some change of direction from their leadership.

TSLA has reached the point where they're actually producing cars in some number, and that's great. That said, they are way overpriced for what they are today, and the people jumping in with both feet are playing a very long game of hopes and dreams. Tesla's valuation puts it at more than Target, Chipotle, Verizon,  and Chase combined. Tesla will generate around $50B in revenue in 2021 and just under 6% margin. By comparison, Target is projecting around $100B in revenue in 2021 on around 4.5% margin...but TGT's valuation is around 12% that of TSLA?

Will it still go up despite the fundamentals? Probably. It's a pure sentiment stock (exactly like how BTC is worth what it is), but sentiments are unpredictable and can change on a whim, and neither of those are conducive to long-term investments.

[credit_endurance]

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@iced wrote:

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@credit_endurance wrote:

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Thanks for sharing your experience @iced. Funny thing for me as I am always keeping up with the lastest news, not necessarily stocks but had not interest for some reason until (not knowing at the time) late to the party. Do you think this GME is a good long-term play?

Also looking at TESLA now wishing I would have gotten in on that one long ago. 🙄

---

For me, neither TSLA nor GME are good buys right now. GameStop is at a crossroads where it needs to find a new direction or face extinction; no matter how much sentimental value or attachment I had to it in years past, that's not a winning strategy to parking money in long-term. I was a Toys-R-Us kid growing up, but look at them now. If GME were around $5-10 again, I'd consider a token investment of a few thousand dollars, but I'm not pinning any real hopes for realistic growth on them until I see some change of direction from their leadership.

TSLA has reached the point where they're actually producing cars in some number, and that's great. That said, they are way overpriced for what they are today, and the people jumping in with both feet are playing a very long game of hopes and dreams. Tesla's valuation puts it at more than Target, Chipotle, Verizon,  and Chase combined. Tesla will generate around $50B in revenue in 2021 and just under 6% margin. By comparison, Target is projecting around $100B in revenue in 2021 on around 4.5% margin...but TGT's valuation is around 12% that of TSLA?

Will it still go up despite the fundamentals? Probably. It's a pure sentiment stock (exactly like how BTC is worth what it is), but sentiments are unpredictable and can change on a whim, and neither of those are conducive to long-term investments.

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@iced  check your pm.

[redpat]

The market is a traders market w/ rotating cycles. 

Selling OTM naked puts and covered calls, the house always wins......

There is always opportunity in any market condition, all you need is knowledege and research/homework.

[Anonymous]

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@Citylights18 wrote:

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@Anonymous wrote:

I've only recently started saving again after several months post-bankruptcy.

We recovered well and my husband has a good job now.

Right now, I'm just focusing on getting rid of excessive amounts of cash out of our bank account, and I'm building up some I Series savings bonds before moving on to EE. 

It'll be a long time before I'm interested in stocks again, because there would have to be a massive correction from these levels of like 30-40% before I bite.

In the mean time, why let the money you're not going to need for daily bills and and emergency expenditures rot away at bank account interest? I Bonds have the benefit of paying out interest that beats inflation a little, and EE Bonds are guaranteed to double if you sit on them for 20 years. (The worst that happens is after a year you could redeem all or part of one with very little earned interest and a 3 month interest penalty.).

In no way is your principle ever at risk. The EE rate works out to 3.5%, or about 3.6% in my neck of the woods (Illinois) when you consider that state and local governments MAY NOT tax the interest.

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What you're doing is deferring the tax on the interest while you hold them and paying them later once they mature.

Inflation is something to consider. I remember I used to always get a savings bond from my grandparents and aunt every year. When I was 18 I cashed them out and weren't worth very much (though still a nice thought).

We'll probably be in an ultra low interest rate environment for the remainder of our lives.

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You defer federal tax on the interest, but states and locals can't touch Savings Bond interest at all.

With the guaranteed doubling after 20 years on an EE and with the exemption for state and local income taxes, the EE will most likely beat inflation. 

If you put $100 in an EE in 2001 you could cash it out now for $200, but you'd only need about $149 to buy what $100 did in 2001. So your real, net profit on the EE bond would have been $51 (less the federal tax on the $100...still, you would see a real gain in the end).

Considering that you didn't risk any principal and that the US government has never defaulted on its bonds, Savings Bonds are considered the closest thing to a perfectly safe savings instrument. 

If you look at the S&P 500 over the decades, it has only averaged something like 5% annual growth since 1956 (iirc), so 3.6% annual guaranteed with no loss possible is not an _awful_ deal.

Especially when you consider that most people suspect the stock market is overvalued right now, and has only continued to gain on paper thanks to Herculean efforts by the Federal Reserve and enormous deficit spending.

[Citylights18]

Try 8% growth in the SPY since 1956.

https://www.thestreet.com/investing/annual-sp-500-returns-in-history

That is if you invested in a basic passive index funds like the SPY. If you held some SPXL where its 3x return of the spy then you would be looking at a return of 24%.

[Citylights18]

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@redpat wrote:

The market is a traders market w/ rotating cycles. 

Selling OTM naked puts and covered calls, the house always wins......

There is always opportunity in any market condition, all you need is knowledege and research/homework.

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I had a guy at work yesterday tell me he went all in with a health care stock.

That might work for a while but as soon as a correction hits you'll start losing big.

Staying all cash and just putting in a trade once in a while is the best way to avoid declines from corrections, IMO.