3 ms·

There was a time when trading in equity shares was driven in part by the so-called "fundamentals". How the business was doing (and the outlook), if the company

by kgwgk 5y ago

There was a time when trading in equity shares was driven in part by the so-called "fundamentals". How the business was doing (and the outlook), if the company was making money (and would make money in the future), things like that.

lotsofpulp 5y ago
Is that not how it is now? The top companies seem to have pretty good fundamentals and trajectories to me.
- ramraj07 5y ago
  You mean like Tesla? Or even any of the top tech companies?
  - cainxinth 5y ago
    Tesla does have good fundamentals and a good trajectory as a car company. They make a product that people want, that sells well even with large margins, for which demand is expected to continue to grow. The fact that the market ran up its stock price till the P/E went stratospheric doesn’t make their core business any less viable. If Tesla stock crashes, it likely won’t be because of anything the company did, but because all bubbles eventually burst, and just about every market, from equities to crypto to trading cards and real estate is heinously overvalued right now and due for correction.
    - kgwgk 5y ago
      > The fact that the market ran up its stock price till the P/E went stratospheric doesn’t make their core business any less viable. Of course the highly inflated stock price doesn't make their business less viable. It does make it more viable! They've raised large amounts of capital at very favorable terms. In any case, the point is that the price is quite dettached from those "good fundamentals".
  - lotsofpulp 5y ago
    Not any specific company. The person I responded to implied that equity shares are not being traded according to if they were making money or will make money. But from this list, and the net profit and net profit margin figures, they seem to be mostly ordered correctly. https://companiesmarketcap.com/ https://companiesmarketcap.com/
    - kgwgk 5y ago
      I was (mostly) joking! Fundamentals are still somewhat relevant. Nevertheless: "The basic issue is that right now everything is dumb. You can complain about that, or you can embrace it. In investing in 2021, “my channel checks and fundamental modeling suggest that this company will grow earnings faster than the market expects so I will buy it with a price target 20% above today’s price” might sound smarter than “this company’s chief executive officer just tweeted a picture of a dog at Elon Musk so I’m going to buy out-of-the-money call options expiring Friday because the stock will go up 200% today,” but the latter approach happens to work better right now. https://www.bloomberg.com/opinion/articles/2021-11-04/macy-s-targeted-by-meme-activists https://www.bloomberg.com/opinion/articles/2021-11-04/macy-s...
      - lotsofpulp 5y ago
        Short term trading might be more dumb than usual, but for investment horizons years into the future, it still seems like people are betting on companies that are in relatively strong positions to have inflation protected cash flows.

by kgwgk 5y ago

lotsofpulp 5y ago

Is that not how it is now? The top companies seem to have pretty good fundamentals and trajectories to me.

ramraj07 5y ago
You mean like Tesla? Or even any of the top tech companies?
- cainxinth 5y ago
  Tesla does have good fundamentals and a good trajectory as a car company. They make a product that people want, that sells well even with large margins, for which demand is expected to continue to grow. The fact that the market ran up its stock price till the P/E went stratospheric doesn’t make their core business any less viable. If Tesla stock crashes, it likely won’t be because of anything the company did, but because all bubbles eventually burst, and just about every market, from equities to crypto to trading cards and real estate is heinously overvalued right now and due for correction.
  - kgwgk 5y ago
    > The fact that the market ran up its stock price till the P/E went stratospheric doesn’t make their core business any less viable. Of course the highly inflated stock price doesn't make their business less viable. It does make it more viable! They've raised large amounts of capital at very favorable terms. In any case, the point is that the price is quite dettached from those "good fundamentals".
- lotsofpulp 5y ago
  Not any specific company. The person I responded to implied that equity shares are not being traded according to if they were making money or will make money. But from this list, and the net profit and net profit margin figures, they seem to be mostly ordered correctly. https://companiesmarketcap.com/ https://companiesmarketcap.com/
  - kgwgk 5y ago
    I was (mostly) joking! Fundamentals are still somewhat relevant. Nevertheless: "The basic issue is that right now everything is dumb. You can complain about that, or you can embrace it. In investing in 2021, “my channel checks and fundamental modeling suggest that this company will grow earnings faster than the market expects so I will buy it with a price target 20% above today’s price” might sound smarter than “this company’s chief executive officer just tweeted a picture of a dog at Elon Musk so I’m going to buy out-of-the-money call options expiring Friday because the stock will go up 200% today,” but the latter approach happens to work better right now. https://www.bloomberg.com/opinion/articles/2021-11-04/macy-s-targeted-by-meme-activists https://www.bloomberg.com/opinion/articles/2021-11-04/macy-s...
    - lotsofpulp 5y ago
      Short term trading might be more dumb than usual, but for investment horizons years into the future, it still seems like people are betting on companies that are in relatively strong positions to have inflation protected cash flows.