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Is it bad that I own mostly the lower left quadrant? I know the claim is that S&P is rotating, but do you believe this will continue long enough to matter? Let's say I'm long-term bullish on MSFT and NVDA (lower left)...isn't it better to just keep buying through 2023 when the Fed changes course?
$NFLX has to show growth with their high investments into content. Netflix is the one stock I would not own. $MSFT, $GOOGL, $AMZN, etc are growing with cash but I'm not so sure with $NFLX. I cancelled them awhile ago and enjoy Disney Plus and HBO Max more...And enough people cut Netflix and go with other streamers instead????
see their fastest-growth division, a reinvention piece called Azure, and see its size and growth rate, compare it to Balmer days and all the supposedly floundering retail you say which still earns MSFT a boatload, although may not float your personal boat (thx for explaining your preferences) between that whic is retail SaaS, and Nadella who fostered these growth initiatives, all your cheeky comments aside, I stick by my flowery comments earlier
Part 2- Stay with me please..... 1️⃣"The large institutional call spread trades that have been discussed with such excitement the last few days. 📝These total a few billion dollars of premium spend, in 3-6 month maturities, in mega-cap tech names (MSFT, AMZN, NFLX, etc). 📝Based on color from flow desks, these trades were mostly executed versus stock: which means that the client bought the call spreads and sold stock, executing a delta neutral trade. 📝So these transactions themselves did not represent meaningful buying pressure on the stocks."
I guess I must be financially incompetent. But let me explain why EBIDTA is used because I must be so incompetent. Its simply a proxy for cashflow that is capital structure neutral. If a company is still growing, we use that proxy instead of earnings because by the time earnings matter, its already too late to be invested. You realize stocks with a PE of 10 or less are trash companies that are expected to be disrupted right? Its cheap for a reason. There's no growth or additional streams of revenue that company can get into. You will always miss opportunities if you only focus on earnings, but have a bias towards low P/E "value" companies that are junk. Don't sit high and mighty with a false sense of understanding (or lack of understanding) of when to use EBITDA or earnings as a method of determining a good opportunity. Re: $INTC Ahhhh I understand why you're being so condescending.. bro you're probably bag holding INTC. Got it. lol, we don't need 10 years to see the performance. Give it 36 months, itll be dead money like since 2018. As a financial guru like you believe yourself to be... ask yourself. Do you believe that in the value chain, does "manufacturing" or the "foundry" business strike you as a high moat or high margin segment of the value chain? Do you know why since 2018 the stock price has been flat, even during incredibly high demand for chips through 2020+? INTC is getting its lunch eaten by AMD in the commercial server business and the margins are shrinking. Do you even understand the issues with the business? Or do you just see "cheap" and jump head first without formal analysis of the underlying issues? Let also guess, youre bag $BABA because its also so "cheap". Where as you're shitting on the cloud business that MSFT the 2nd dominate player. growing like wildfire in, with incredibly high stacked margins and its entrenched MOAT position, with diversified revenue streams between consumer + commercial customers. But please tell me why its such a overvalued trash company... Yes, lets print out our comment and revisit in 10 years. 10 years ago at 24, my portfolio was $150k, now.. $1.5M, maybe in 10 years, $10M? hmmm maybe, but I'm financially incompetent. So who knows. But I've had a good run.
Inflation as a discount rate is obviously a very rough estimate.. you seemed like you don't understand the basics of valuation so I was trying to make it simple. Again, I agree with all your points... margins are incredibly high, megacaps are riskier than we think (although MSFT is likely one of safest of FAANG).. and yet you're still wrong. It's valued just fine. 70% MSFT is still kicking at 30 years. 60% at 35, 50% at 40 etc. You have to discount all of these. You also have to recognize the bull case. If MSFT continues on in a similar fashion to the past few years, for any significant part of those next 30 years, that 35 pe you find too expensive can quickly drop into the teens. Yeah, no sh*t, margins could drop, the economy could fall apart, there could a competitor tomorrow offering free cloud to every business in the world, people could actually start using google sheets.. But none of those have happened, and there's no indication that they will. The market is making it's decision on valuation based on all available information. Until something changes, there's no reason to believe MSFT won't still be a powerhouse in 30 years.
> Lol you don't think MSFT is going to be around in 30 years after entrenching itself into the core of all business (and education/govt) activity? > I've actually made this same point to many folks. Tech changes faster than anyone can know and holding mega cap current leaders is riskier than people think. Watching you argue with yourself is fascinating, but unproductive. Also still baffled why you are arguing against a point I never made or introduced, I guess some people just love to insert whatever is on their mind into discussions, without caring for what other people are actually discussing. > A stocks "correct" price is the present value of all forecasted future cash flows. If you think that MSFT will be around in 35 years, and that they'll grow earnings by at least inflation, then the valuation is entirely reasonable... Uhhh... yes, and the important words here are **present** and **forecasted**. Will Microsoft be around in 30 years? Uhh, probably? Let's say 70% chance. That's 30% off whatever our final estimate is, right away, to account for timelines where Microsoft fails. If you assume the probability microsoft is around in 30 years is 100%, you're a zealot, not an investor. As for present value. It depends on your discount rate. You seem to think earnings will grow by at least inflation. That's your assumption, sure as hell isn't mine! I can see many situations where Microsoft exists but earnings are 1/2, 1/4, 1/8 of today, adjusted for inflation. Many companies are unable to maintain earnings over time, even if revenues hold up. For example: taxes can rise, salaries can rise, even if sales continue to grow with inflation, eating up margin. Did you know that US corporate margins are pretty much at an all-time high right now? If they mean revert, even with constant real revenue you'll see a huge drop in earnings. You appear to be using 'inflation' as your discounting rate too, which is... unconventional. I don't think the days of zero real rates on bonds will last the next 30 years, though I accept, that's currently how the 30y is literally priced.
> It’s only 26X ebidta EBITDA has a meaning: earnings before interest, depreciation, tax, amortisation. You know, if I look at the typical millenial's salary, and ignore mortgage interest costs, credit card debt costs, student loan interest costs, the costs of replacing the food they eat and the clothes that wear out, the stuff that breaks around the house, paying taxes, and so on, I really don't think millenials have anything to complain about. EBITDA figures are the last refuge of the financially incompetent. And 26x! Good lord. You can buy great stocks today on 10x GAAP earnings, i.e. 'not pretendy earnings'. > MSFT revenue growth going to be 20%+ over the next 5 years If I had a time machine like yours, I sure as fuck wouldn't be wasting my time posting here, I would be busy burying iphones amongst dinosaur bodies and making archeologists incredibly confused and upset. > $INTC. Like that’ll be a decade of bag holding.. It's a totally unrelated company/issue, but fwiw, I think Intel is going to have a great 10 years. There are only 3 companies in the world capable of current-gen semiconductor manufacturing for CPUs. Intel, Samsung, TSMC. As moats go, that's amazing. I want you to print out your comment, stash it in an envelope and look at it in ten years. Nothing in life is certain but I would guess the odds are probably 80-20 that Intel will be around and making excellent money, which is more than you can say for a lot of the companies in the market these days.
> A 20 P/E for a growth company with a great balance sheet is within my margin of risk. Microsoft is a huge sized, mature company, 5 decades old, not a small tech growth company. It's on a PER of 35. https://finviz.com/quote.ashx?t=MSFT > Many banks who price in literally everything have it to overweight. If you believe banks are pricing in everything you should be holding the index, because there can be no error for you to draw excess profits from over the index. > You’re looking at price to sale and not FCF with a growth stock. Where you do you think profits (and cash flow) come from? The best case is a company that pays their staff nothing, has no need to pay taxes, gets their inputs for free, no building costs, energy costs, no marketing costs etc, and 100% of their sales converts magically into pure profits. Even if all that were true - it's clearly not - Microsoft would STILL be overpriced versus other companies. That's what PSR tells us, it's like a sanity check that you're not fucking up completely. > 5-6 years in the tech sector is like 100 for a stock like PG. Sure, and I'm still young if you pretend my age is in dog years. > Using a DCF calculator: If they maintain a growth rate of 20% with a discount rate of 8% on an earnings per share basis the stock price is $376. If they maintain a 20% growth rate? I will admit that in the last 5 years, with rates at 0%, and little competition, they've done well, with a growth rate over 20%. But trees don't grow to the sky. Microsoft's revenue in 2000 was $23b, income $9.4b. Microsoft's revenue in 2016 was $91b, income $20b. Microsoft's revenue in 2020 was $143b, income $44b. The growth rate for the 16 years between 2000 and 2016 was: Revenue: 9%, *including* inflation. Income: 5%, *including* inflation. **Expecting the best 5 years of the company's history to continue, rather than a reversion to normal performance, is exactly what you see at the peak of speculative bubbles.**
Lol. I've actually made this same point to many folks. Tech changes faster than anyone can know and holding mega cap current leaders is riskier than people think. But, as of right now, the market and even you! expect MSFT to be around in 30-40 years. You can look up what time value of money is. A stocks "correct" price is the present value of all forecasted future cash flows. If you think that MSFT will be around in 35 years, and that they'll grow earnings by at least inflation, then the valuation is entirely reasonable...
> MSFT has truly dynamic leadership What, as opposed to all the companies run by greek statues? > Nadella is beyond rock star It's not a band > seems authentic If authenticity is what you care for, buy berkshire, since Buffett's about as authentic as you'll find in the market. > MSFT has ability to reinvent itself Wow I guess they are truly unique then, I've never heard of a company doing that. On the other hand, hmm, what's this, Windows, I dunno, 11? Yet it looks just like Windows 95 to me. Hmm. ipod-alike-zunes? ipad-alike-surface-tablets? iphone-alike-windows-phones? playstation-alike-xboxes? vive-alike-windows-headsets? aws-alike-azure? google-alike-bing? gmail-alike-hotmail? etc etc etc I don't see innovation at Microsoft, I see a company with decent earnings from farmed legacy customers, desperately trying to keep up with competitors via (often shit) copycat products. Change my view: the last truly innovative product Microsoft made was the Microsoft Mouse. Which I still use, it makes Nokia phones look fragile and puny.
> Lol you don't think MSFT is going to be around in 30 years **Why should I discuss anything with someone who puts ridiculous words in my mouth that I've never said?** For what it's worth though, I'm an IT OG and have been working with computers since the mid 80s so I **could** actually argue against this random statement you've made about MSFT, from a 'what can happen in 30 years' perspective. I have seen many great IT companies stopped or stagnated or totally changed in my time. Oracle seemed unstoppable, but nowadays, with postgresql being free and amazing, I think only an idiot should hold Oracle; they're still around and making money, but for how long? Apple once (or twice) looked like it would perish. Sun microsystems? Used to be found everywhere, invented Java etc. Cray? Who's ever heard of Cray now. Yahoo used to be bigger than Google. IBM used to be king. HP too used to be amazing, world leading tech. Heck, HTC used to be a leading phone manufacturer. So did Nokia. Where's Windows Phone these days? etc. Those aren't even 30 years back, barely 10-15. God, look at the hard drive sector! It's been annihilated via consolidation. PowerPC chips used to be great performers, 3DFX were amazing, now they're gone. The world changes faster than you'd ever think possible.
MSFT is my biggest investment by far. It can drop every day and everyone on here can tell me it's going to keep dropping forever, and I'd still confidently hold it. NVDA is great too, but idk I just like MSFT a lot more. Ironic because I hate Windows. I also notice that NVDA always drops a bit after they announce their new products. So you'd always have a drop every now and then.
> but you never know. Agreed. AAPL/MSFT are "safer" but you never know. > The big question for individual stocks is will you be able to exit if they no longer match your investing goals (aka will you know they stop being safe?), if not might be good to stay with index funds and forget it. I am leaning towards this and to get a bigger bite at the tech action may do 5-10% QQQ.
NVDA is at it below it’s after split price. Great time to get in and you’ll get more shares. MSFT hasn’t had a split in a long time and is overdue. You’d get less shares right now compared to NVDA but it’s also a solid company that should split eventually, creating a situation where you could get more shares.
I don’t mean to sound like a jerk, but it’s true. The same went for me last year. I had some meme stocks that I bought because they were hyped up a lot. I was down on nearly all of those but I was up on my smarter picks, such as MSFT, AAPL, VTI, etc. Best advice I can give you is if you don’t know much about a company, don’t invest in it until you do. I don’t know much about how to do a technical analysis of a company or what all the financials mean just yet, so I stick with an ETF and companies that have a proven track record that is innovative. I took a loss on some of my others but I’ve also recouped a lot by transitioning into blue chips for the most part. Good luck out there!
It was different in a lot of ways, but kinda similar in sentiment I guess. Back then valuations were more reasonable with most large-cap tech stocks selling at about a 30-50% discount to today's valuations. During the sell-off growth tech stocks mostly fell with the rest of the market (although slightly more aggressively) where as today investors seem to think only small-cap growth stocks should be significantly impacted by interest rates and that high PE stocks like MSFT, AAPL and NVDA are safe, which hasn't been true historically. Even bank stocks fell in 2018 where as today they're trading at their highest valuations ever. The sentiment was very similar though, at least here on Reddit. I remember people selling out of stuff that was down and creating posts about how they had made a huge mistake trying to pick stocks. Back then though people were leaving the market entirely because like I say everything was down and people didn't know where to turn. Many thought a recession was practically guaranteed and some were hoping they would be able to get back in after the recession was over, but this obviously didn't happen. Today people are less worried about a recession so perhaps this partly explains why the market overall hasn't been hit so bad. The other thing that was different was inflation and the FEDs messaging regarding hikes. I think a lot of the fear back then came from the FED suggesting that tightening would be on auto-pilot going forward. People felt the FED basically didn't care about the market and would raise rates regardless of what happens. This isn't true today, people generally think the FED is too supportive of the market if anything. We also weren't dealing with record high inflation so there was less urgency to hike back then. Today if markets throw a fit the FED has less room to back down if inflation remains high. The thing that continues to confuse me about today vs 2018 is how strong the overall market is. Given valuations I would have expected the entire market to be down more. Admittedly there has been some weakness in these names over the last couple of weeks, but I'd have thought stocks like NVDA and MSFT would be down more at this point.
For some stuff sure, but it does NOT have the integration that Office365/Excel/every embedded program has specifically because it's MS Google has integration with Google and lots of 3rd party info can be easily captured on sheets In terms of the investment thesis, it's very clear MSFT has that moat that can't be touched!
Long back in 2016 when I did Uber, I picked up someone who worked at MSFT and they were all praise for Satya and told me he respects everyone. He told me a story where he invited even the low level engineers into a meeting to get their feedback too. I invested in MSFT the very next day and its paid off big.
No argument there. All me and the guy I was responding to were saying is that shit doesn't always bounce back quite as quick as OP is saying. The typical advice is that you should have a 5 year time frame for your investments. 13 is even better. Even if you bought the very top of the dot com bubble and did absolutely nothing (don't average down, etc), you still would have seen profit eventually as long as you were in solid companies. If we do end up crashing, shit like WISH probably isn't bouncing back, but MSFT and shit will almost certainly see another all time high again, even if it's several years from now (not saying that will happen, just using it as an example). Also, I know this is WSB and not those pussies at r/investing, but if you just go all in on something like VOO shares right now, you're going to do just fine long term barring some sort of doomsday collapse, in which case your investments will be the least of your worries.
Why a binary solution? I’d go 600 or 700 MSFT and the balance NVDA. Both have essential and outstanding products and services for the next stages of the information economy, but while NVDA may grow faster, MSFT will be steady up and dividend will grow.
I second this. Majority ETFs, a few growth picks. Add what you can comfortably afford EVERY month. Trim your losing picks annually and let the winners run. 60% VOO, 10% ZIM, 10% GOOG, 10% MSFT, 10% AAPL. Wouldnt be a bad distribution for a small account.
> Spy beat majority of hedge funds over last year and over 10 years is even worse... why fight it? Why fight it? Because historically, the return is more like 12 percent annually or something like that right? Why not put all your money in six different companies like GOOG, MSFT, NVDA, FB, AMD & ADBE. I think those 6 companies combined will outperform the Spy 9 out of 10 years
The problem with this is Dotcom didn't end in 01, it was near the end of 02 and down 80% at the low. Many companies, ipos or even existing ones went bankrupt totally disappeared. In the Financial crisis, it didn't end in 08 it bottomed March 09. Again companies went bankrupt or were bought for pennies on the dollar and merged into another. Look at Lehman Brothers and Bear Sterns. When the next event occurs for whatever reason. There's no way to know with certainty who survives or who doesn't, or how long that recovery takes on an individual sock basis. To your point the broad indexes will continue higher after such sell offs. Companies not leading anymore are replaced by new market leaders whose revenues and earnings are growing vs ones that are stagnating or declining. Think GE or ATT vs AAPL or MSFT. Money has time value if you sit on large losses it takes multiples of returns to get back to even vs lower digit multiples only taking lower percentage returns to do so. A 10% decline takes just 11%, a 50% decline 100%, an 80% decline 500%. This is the fallacy and reality of holding large losses. The exception of course is dollar cost averaging continually in any number of etfs or index funds. They most like won't go away unless the whole economic system collapses.
You have to understand that $1000 isn’t going to turn into $10000 anytime soon even putting it all into one stock like MSFT or NVDA. ETFs aren’t sexy but you’ll likely make a decent return and if the market corrects, it likely won’t hurt has bad in an ETF as it would in something like NVDA. You have to remember that the market doesn’t always go up and if shit hits the fan, your $1000 in one stock could very easily turn into $400 quickly. If I’m buying either MSFT or NVDA I’d go MSFT. But for me I’ve been eyeballing GOOGL as a better tech buy right now.
I am definitely in a Hold pattern currently for the expected volatile year ahead as this is a midterm election year. I will look out for certain bargains (ie MSFT if goes under $280). Paying attention to healthcare sector since that is the sector that lagged the most last year plus watching the UK market.
I think INTC is a better value then either MSFT or NVDA right now. There’s no reason to believe any of them will be gone in 40 years. In that time, they will all have good and bad leadership, make good and bad decisions, and go up and down. They are all established companies with good moats, so the odds favor all of them doing well during your lifetime. Buy companies you believe will succeed in the long term but are currently undervalued. The tough part is realizing undervalued companies are unpopular at the moment. So you’ll be going against the crowd.
as someone who works in cloud, Azure is going to be an incredible part of their business and likely to continue growing at a faster rate than Amazons AWS, i can see a Pepsi-Coke type market on the cloud space on these too as on an enterprise level not many opt for Google very excited by MSFT
I would choose Google over either of these two. Or even Apple. MSFT is just got too expensive compared to Google. Plus Google is growing both their top and bottom lines a lot faster. Last quarter Google put up over 40% growth top line and over 60% bottom line.
Idk how people think MSFT is a better choice. It's a shit company that works against the interests of its clients and will surely fall when there's proper competition. Same can be said for NVDA but it's not as bad IMO. Don't take my advice though, I'm not speaking strictly from an investing perspective but more so consumer experience.
First of all your stocks are not in bear markets. They are coming down to decent valuations with a lot of room to drop. Expect further loses. You overpaid. If you actually visit decent analysis of Disney stock for example (everything money channel on youtube is a good start) you would see they are not touching the stock above 80-90$. Great companies can be terrible investments. Throwing money at the market without having a strategy is a recipe for disaster. Think of where you wanna be and design your portfolio to work for you into your goals. Without it you are doomed sir. Putting money into Apple or MSFT right now with expectations of high returns is crazy right now. Their stocks got too big for the time being. Think of it, Apple hit 2T and then 3T in a year, great company but a terrible stock to invest in atm. They can't grow forever, this is not how economics work.
NVDA is overvalued for now, wait for it to come down. MSFT is a great company but generally I wouldn't buy a stock at ATH. 1000$ into MSFT won't grow too much. Learn how to analyse businesses and work with stocks that have a market cap of under 10 billion dollars. These are the high flyers if you can actually spot a good company. Remember, BALANCE SHEET BALANCE SHEET AND BALANCE SHEETS. If company produces nothing or next to nothing, forget about it.
I really like $LAC as a long term play, lithium production being brought back to NA and the demand for Lithium will increase exponentially in the coming years. If you have a bigger risk tolerance go with something like this or from your two NVDA (but maybe wait for a lower buy point). MSFT is as safe an equity investment as you can get. Low risk / low reward.
MSFT a definite yes. Gitlab is solid and I see it slowly popping up in my work environment (Fortune 500 company), so I would think about it. BUT it would be next to impossible, because Gitlab is private and I am not a Venture Capital fund ;)
Google is going to keep being Google until the money runs out and they have to focus on all of their good but half-hearted endeavors. MSFT had to have a reckoning after years of fucking up, but look at them now. I don't think transformational change can happen as long as revenue keeps growing.
Than wait to buy at $73 which is $ARKK 200 dma on the 2 year chart. You may find support there. If i look at $ARKK top 10 holdings, besides $TSLA, the only stock I find compelling is $COIN. I'd buy $PYPL over $SQ. $MSFT over $ZOOM. $EBAY over $SHOP. Any radio app even $SIRI over $SPOT. I'm prolly wrong but I could see a bounce off 200 dma.
I put MSFT higher than NVDA. At the moment both are expensive, but MSFT is less so (PEG of 2.82 vs 3.88). MSFT also has several good business under its belt and a good history of adapting with the current CEO. NVDA has interesting opportunities in mobile and data center CPUs, but the biggest players are also investing to build their own CPUs; their revenue from cryptocurrency projects is also expected to shrink as everyone is switching to proof-of-stake, so no one will need GPUs for mining in a few years…. I am bullish on both, but more so MSFT
The big question for individual stocks is will you be able to exit if they no longer match your investing goals (aka will you know they stop being safe?), if not might be good to stay with index funds and forget it. I invest in AAPL, GOOG, MSFT, and AMZN. I am in tech so my job forces me to pay attention to what everyone is doing, if you can’t monitor there is a risk something happens…. They are old enough and have been stable for a long time, so risk is low… but you never know. There is an old advice on investing where you know the sector or business