Know Your Worth

Stop me if you've heard this one before: US equities hit fresh all-time highs with tech leading the charge. Wednesday was the fourth straight session during which US benchmarks celebrated new records. Once again, the Nasdaq 100 outpaced both the S&P and small-caps, with the latter lagging big-cap tech by some 280bps. The FAAMG cohort surged on Wednesday. That, despite good news from Moderna on the company's vaccine candidate and a strong beat on durable goods. Typically, days defined by (c

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13 thoughts on “Know Your Worth

  1. A company “worth” in the thousands of billion dollars? Still hard to wrap my brain around that concept. Especially in the case of Alphabet and Facebook, which basically exist to sell advertising…And if you own a big chunk of one, and it keeps going up, what will you do with a million million dollars?

    1. Yeah, where to put it.

      I’d like to have the problem.

      The gain will evaporate. Great opportunity to take the gains and plow it into technological innovation in small companies developign big ideas in AI, biotech, nano-tech, clean energy, etc, etc. …the generation of companies in 20 years, or more, that will replace at least the advertisers.

  2. Blows me away that more “investors” (whoever these people are) are not taking profits in the S&P5. What, maybe another 10% upside? Compared to, what 20%, 30%, 50%, downside risk?

    1. In regards to TSLA…. why would I want to buy the betamax? I want to buy the vcr. Valuations are ridiculous. We have massive inflation in food and housing combined with record unemployment going into flu season. We have morons in charge and are going to be raising corporate taxes in 5 months. The algorithms just keep leading us onward.

  3. What about the $60 billion in leveraged funds that are short QQQ reported in these pages as of last week. Does not a substantial portion of this action need to close prior to the market going down? Today should have been a good short covering day. Also those who think we are on the verge of a new bull market in FAANG do not they need to buy in?

  4. It’s almost like the coyote learned that if he looks up instead of down that cliffs don’t exist and in fact he could fly this whole time. Waiting for the meep meep.

  5. Feels so “blow offy”. Who knows when and from what level but a violent (most likely short term) reversal seems to be coming. The growth embedded in the prices is aggressive while the belief discount rates will stay low forever seems naive.

    Normal, rational people don’t usually trade so “grabby”. It can last longer than one can remain solvent but it is important to stay rational when you don’t have to play the relative performance game.

    Be smart everyone and look for good risk rewards opportunities. Maybe the earnings leverage is higher than I believe but one needs a lot of growth, op leverage and low discount rates to justify a lot of this in my opinion.

    In the “old days” a $2Tn mkt cap required about $200bn of FCF per yr into perpetuity. Maybe today it is $75Bn (lower future returns) but that is a lot of recurring business. I am just not sure a lot of the world will look the same 10 years from now.

    This is not 2000 per se as the businesses are better but the GEs of the 2000 world thought they would forever be on top.

    We shall see. Be smart.

  6. Perhaps we’re witnessing end-stage capitalism. Even Adam Smith understood that capitalism unchecked leads to monopoly. Google, Microsoft, Facebook, Apple, and Amazon together control the information we get, what we buy, what we want to buy, and who gets elected. Not completely, not yet, but that’s where we’re headed. So if you think it will continue unchecked, then the value of these companies is infinite. I think the election could be an inflection point. If Trump wins and the Republicans keep the senate, then who knows what happens–probably more chaos and bluster but no real antitrust reform. If the Democrats win the presidency and take over the senate, then it gets interesting. Joe is part of the system, but there are many scenarios in which anti-monopoly voices could become powerful again.

  7. In my mind, Trump narrowing the gap to Biden in an unequivocal negative. Can you imagine the the large American cities the day after another surprise victory from Trump? So it has not surprised me that there has been a buoyant stock market while the Biden lead was substantial and Trump and GOP control of the Senate was written off. I also find something else weird. Gold is up a lot. NDX is up a lot. Why is the first one accepted and the second one engender such broad skepticism?

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