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Yeah, a bit because I'd argue at least 3 of largest stocks in the major indexes are now extremely overvalued -- AAPL, NVDA and TSLA. Historically AAPL was valu
by kypro 5y ago
Yeah, a bit because I'd argue at least 3 of largest stocks in the major indexes are now extremely overvalued -- AAPL, NVDA and TSLA.
Historically AAPL was valued with a PE around to 10-15, but today it's trading with a PE over 30. This alone may not be a huge problem if it wasn't also for the fact AAPL's best growth years are likely behind them and they'll may struggle to continue to justify their valuation.
Over the last few years many stocks have seen significant multiple expansions without similar expansions in the fundamentals. On one hand it could be argued the multiple expansion seen in recent years has been justified given where interest rates are and the pandemic stimulus measures, but regardless of whether what we're seeing is the reflection of economic policy or a market bubble, it's clearly not sustainable.
The risk of course is that inflation starts to run away and the FED need to remove liquidity and raise rates much faster than the market is anticipating. In this scenario we'll see the opposite of what happened in 2020/2021 and stock multiples will drop like a rock. If you're a regular person though without significant amounts invested in the market then the risk to you is that inflation remains hot slowly eroding into your savings, wages and purchasing power. Either way, it's probably not great news and there's probably a reason why CEO's and insiders are selling their stock holdings at record rates.
- cardosof 5y ago> Historically AAPL was valued with a PE around to 10-15, but today it's trading with a PE over 30. I've seen an interview with this fund manager saying something along the lines of "this high P/E is the new normal, those companies are really better, more sustainable and profitable than their historical peers"... Maybe there's a bullish case there, or maybe so much money was printed and then funneled to financial assets and real estate.
- meepmorp 5y agoMaybe it's just having lived through the first internet bubble, but when I see fund managers making statements like that, it makes me nervous.
- pjc50 5y agoInflation tends to push the market up because there's a dash away from bonds to equities. > reason why CEO's and insiders are selling their stock holdings at record rates. [citation needed]; and what are they putting this into? Real estate? Obviously if you fear inflation you aren't going to take it back to cash.
- sigmaprimus 5y ago> reason why CEO's and insiders are selling their stock holdings at record rates. my top Google result https://www.cnbc.com/2021/12/01/ceos-and-insiders-sell-a-record-69-billion-of-their-stock.html https://www.cnbc.com/2021/12/01/ceos-and-insiders-sell-a-rec...
- ralusek 5y agoWith Apple potentially entering automotive space as well as VR, I find it unlikely that they've peaked. They've consistently demonstrated that they're not a company interested in sitting still. Move to Apple Silicon alone shows their continued commitment to throwing the industry for a loop.
- microtherion 5y ago> AAPL, NVDA and TSLA P/E of 30, 85, and 310, respectively. Not exactly in the same league. > AAPL's best growth years are likely behind them You could encounter that opinion literally every year for more than a decade (PREDATING the introduction of the iPhone, because pundits said this about the iPod, and technically, they were right). Thermodynamics suggests that one day, this prediction will come true, but in terms of market timing, it has not proven a sound investment thesis so far. Disclosure: I own stock in some of the companies mentioned here.