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Funny because honestly 10 years ago people said very similar things about Apple under Jobs that people say today about Tesla under Musk. One big difference is t
by Kranar 6y ago
Funny because honestly 10 years ago people said very similar things about Apple under Jobs that people say today about Tesla under Musk. One big difference is that Twitter exists, so now you get to hear directly from certain CEOs outside of highly polished and rehearsed presentations, whereas 10 years ago the public never got that chance.
And don't get me started about what people said about Amazon's profitability and fiscal stability 10-15 years ago. Amazon's PE ratio was around 4000 whereas Tesla's is 1500.
My speculation, and that's all it is, speculation, is that for the most part people invest in companies that they want to see succeed and by investing in it, they become a kind of participant in the future growth and success of the company. It's mostly a place for people to park their money in a venture that they want to see flourish. There is no magic formula you plug into an Excel spreadsheet and get out a perfect stock price, there is no metric that can reliably be used to press a button to invest. You see a company working in an area you are interested in and that has a chance to succeed in, you have a positive feeling about the company, its products, its people, then you invest.
Good luck finding a stable, fiscally responsible and reliable company that ticks off all the fundamental indicators, a CEO who is a rock who never offends anyone or anything, and has a stock that does more than barely beat the rate of inflation and maybe pays out a measly 1-2% dividend.
The reality is that if the degree to which you value a stock is based on its PE ratio and other naïve but nice sounding metrics, then to be blunt you're no more sophisticated an investor than the people blowing their money on GME.
- ericmay 6y agoTo piggyback off of your GME point I’d say even less sophisticated. At least they saw the opportunity and understand what they’re doing. But I enjoyed reading your comment that the comment above and think it’s good to have a healthy discussion about the topic. It’s awesome!
- xiphias2 6y agoActually the same group of people (r/wallstreetbets) was crowding Tesla before it went up. Anyways I'm watching GME all the time, having a lot of fun and hoping for at least 1 bankrupcy.
- threeseed 6y ago> Good luck finding a stable, fiscally responsible and reliable company that ticks off all the fundamental indicators, a CEO who is a rock who never offends anyone or anything, and has a stock that does more than barely beat the rate of inflation and maybe pays out a measly 1-2% dividend. You mean like every single, successful startup ? Almost all of whom are run by CEOs who act professionally, are careful about their public statements and don't have the net worth to keep paying out SEC fines.
- ericmay 6y agoLet us know when we can invest. I don’t make enough money to be an accredited investor.
- killtimeatwork 6y ago> The reality is that if the degree to which you value a stock is based on its PE ratio and other naïve but nice sounding metrics, then to be blunt you're no more sophisticated an investor than the people blowing their money on GME. Or, the stock market is in a huge, 1929-style bubble and that's why the P/E numbers don't make sense. People don't want to even consider that though, because of what it'd do to their investments. Considering how many people have the money in the markets nowadays, this collective magical thinking can go on for some time. At some point though the value of the stock becomes detached from the actual company and its profits, and the stock becomes just a fiat token that people trade, like crypto. BTW one scenario that can play out in the upcoming years is that the inflation finally catches up with the money printing, which increases the nominal profits of companies (as the dolar value of every product they sell increases), and the P/E numbers will again normalize. No idea how likely that is though.