Also, should I not be doing this if I want to buy a house at some point soon(I'm not)? Would this be a prudent move if I wanted to buy a house say five years from now?
Are these in a standard brokerage account, 401k or ira? If they are in a brokerage account they are liquid enough that you can just sell your position and use your funds for whatever you'd like (some funds have an early withdrawl fee if you sell within 3 months or w/e). If they are in a Roth IRA i believe they have a special exception that lets you withdraw funds early if they are being used for a downpayment on a house. For a 401k or a traditional IRA you'll incur early withdrawal fees if you want to take funds out before retirement. I'd double check all that, just info from the top of my head.
Martin Shkreli has been producing some good investment videos every week. Here is this weeks video. If you have time, go back and watch the others, very interesting stuff...
I'm long Tesla and the stock is insane right now. Makes me a little uncomfortable. It's as if a perfect launch of the Model 3 (which won't happen) is being priced into the stock. I have little doubt a short term correction is coming but I still feel good long term.
I'll chime in since I have talking about tsla in this thread and have 2x my account value in tsla on margin. 1. I would not say a "perfect launch" is priced in. The market is merely adjusting expectations from an assumed delayed launch of 0 to very few Model 3s in 2017 to now a more nominal launch. For instance Adam Jonas who was viewed as the most bullish analyst(not anymore since he actually downgraded the stock a couple weeks ago, oops) only assumed 2,000 Model 3s delivered in 2017. 2. I would also not assume a "perfect" launch is impossible. People have the Model X launch and delays ingrained in their brains, but that was possibly the most complex car ever designed and built, so the Model 3 which is actually design for simplified manufacturing is not an analogous situation. Some small issues may be inevitable, but I would certainly not assume major problems. 3. TSLA along with AMZN and perhaps NVDA are the absolute leaders of this market rally. A correction eventually will come, but I get the sense that so many people especially in younger generations are just biding their time for the next "big one". 2000 and 2008 are so fresh in their memories that they assume this is how the stock market normally acts. In reality, that kind of vicious bear market is once in a generation if you look at historic data, and we've had 2 in 1 generation. The next one everyone is waiting for might not be for another 10 years, so good luck while missing out in the meantime. A correction is natural, but I just don't see what would cause an actual crash in the foreseeable future. With that in mind, TSLA unlike some of the other tech leaders is THE most shorted stock in the entire market with in excess of $10B betting against it. As the Model 3 launch approaches, even with minor delays/issues, it may be one of the biggest product launches in recent memory(since Iphone 1). Without a market wide downturn, these shorts are dead money looking for an exit, and it is increasingly looking like a crowded theater with a very small exit out. So while a market correction(10-20%) is inevitable, it is risky to try to time it because a "crash" to the upside is also possible for TSLA.
By any financial modeling you can't justify Amazon'a valuation. Pick any reasonable g and I don't see how you get 462 billion. I wouldn't short them, but being long at this level is insane.
And amzn still continuous to go crazy. Its been 20 years and they have a 100 p/e. When do you actually have to show cash flow to justify your valuation?
Well...you buy on dips. This is a dip. I took the opportunity to invest a little money in a stock and ETF (in my IRA) I wanted that lost most of their recent gains. Hopefully, the bottom is near and this doesn't turn into some panic-driven sell-off that continues to bottom out. The consensus seems to be still bullish and this isn't entering bear territory. Tomorrow, I may invest a little in overseas emerging markets. The consensus seems to be a short term reaction to rising interest rates / increasing wages / corporate tax cuts...and is a necessary short term correction. If it erupts into more sell-offs than that after some pretty good company earnings reports (which it could), then it's a statement about how over-valued stocks are at the moment. This crazy run the stocks have been on since Trump came into office was unsustainable. I guess Trump is ready to take credit for this downturn given how happy he was to take credit for how well stocks were doing prior? Doubtful.
The markets are overvalued in terms of historical norms: http://www.multpl.com/shiller-pe/ So we might go go down a little more. Over the long-term it probably doesn't matter, but you might want to wait for a larger dip to buy, but no one can really predict when it will dip or go up.
The World’s Priciest Stock Market Jan 23, 2018 ROBERT J. SHILLER It is impossible to pin down the full cause of the high price of the US stock market. That alone should remind all investors of the importance of diversification, and that the overall US stock market should not be given too much weight in a portfolio. NEW HAVEN – The level of stock markets differs widely across countries. And right now, the United States is leading the world. What everyone wants to know is why – and whether its stock market’s current level is justified. We can get a simple intuitive measure of the differences between countries by looking at price-earnings ratios. I have long advocated the cyclically adjusted price-earnings (CAPE) ratio that John Campbell (now at Harvard University) and I developed 30 years ago. The CAPE ratio is the real (inflation-adjusted) price of a share divided by a ten-year average of real earnings per share. Barclays Bank in London compiles the CAPE ratios for 26 countries (I consult for Barclays on its products related to the CAPE ratio). As of December 29, the CAPE ratio is highest for the US.1 Let’s consider what these ratios mean. Ownership of stock represents a long-term claim on a company’s earnings, which the company can pay to the owners of shares as dividends or reinvest to provide the shareholders more dividends in the future. A share in a company is not just a claim on next year’s earnings, or on earnings the year after that. Successful companies last for decades, even centuries. So, to arrive at a valuation for a country’s stock market, we need to forecast the growth rate of earnings and dividends for an interval considerably longer than a year. We really want to know what the earnings will do over the next ten or 20 years. But how can one be confident of long-term forecasts of earnings growth across countries? In pricing stock markets, people don’t seem to be relying on any good forecast of the next ten years’ earnings. They just seem to look at the past ten years, which are already done and gone, but also known and tangible. But when Campbell and I studied earnings growth in the US with long historical data, we found that it has not been very amenable to extrapolation. Since 1881, the correlation of the past decade’s real earnings growth with the price-earnings ratio is a positive 0.32. But there is zero correlation between the CAPE ratio and the next ten years’ real earnings growth. And real earnings growth per share for the S&P Composite Stock Price Index over the previous ten years was negatively correlated (-17% since 1881) with real earnings growth over the subsequent ten years. That’s the opposite of momentum. It means that good news about earnings growth in the past decade is (slightly) bad news about earnings growth in the future. Essentially the same sort of thing happens with US inflation and the bond market. One might think that long-term interest rates tend to be high when there is evidence that there will be higher inflation over the life of the bond, to compensate investors for the expected decline in the dollar’s purchasing power. Using data since 1913, when the consumer price index computed by the US Bureau of Labor Statistics starts, we find that the there is almost no correlation between long-term interest rates and ten-year inflation rates over succeeding decades. While positive, the correlation between one decade’s total inflation and the next decade’s total inflation is only 2%. But bond markets act as if they think inflation can be extrapolated. Long-term interest rates tend to be high when the last decade’s inflation was high. US long-term bond yields, such as the ten-year Treasury yield, are highly positively correlated (70% since 1913) with the previous ten years’ inflation. But the correlation between the Treasury yield and the inflation rate over the next ten years is only 28%. How can we square investors’ behavior with the famous assertion that it is hard to beat the market? Why haven’t growing reliance on data analytics and aggressive trading meant that, as markets become more efficient over time, all remaining opportunities to secure abnormal profits are competed away? Economic theory, as exemplified by the work of Andrei Shleifer at Harvard and Robert Vishny of the University of Chicago, offers ample reason to expect that long-term investment opportunities will never be eliminated from markets, even when there are a lot of very smart people trading. This brings us back to the mystery of what’s driving the US stock market higher than all others. It’s not the “Trump effect,” or the effect of the recent cut in the US corporate tax rate. After all, the US has pretty much had the world’s highest CAPE ratio ever since President Barack Obama’s second term began in 2013. Nor is extrapolation of rapid earnings growth a significant factor, given that the latest real earnings per share for the S&P index are only 6% above their peak about ten years earlier, before the 2008 financial crisis erupted.2 Part of the reason for America’s world-beating CAPE ratio may be its higher rate of share repurchases, though share repurchases have become a global phenomenon. Higher CAPE ratios in the US may also reflect a stronger psychology of fear about the replacement of jobs by machines. The flip side of that fear, as I argued in the third edition of my book Irrational Exuberance, is a stronger desire to own capital in a free-market country with an association with computers. The truth is that it is impossible to pin down the full cause of the high price of the US stock market. The lack of any clear justification for its high CAPE ratio should remind all investors of the importance of diversification, and that the overall US stock market should not be given too much weight in a portfolio. ROBERT J. SHILLER Writing for PS since 2003 117 Commentaries Robert J. Shiller, a 2013 Nobel laureate in economics, is Professor of Economics at Yale University and the co-creator of the Case-Shiller Index of US house prices. He is the author of Irrational Exuberance, the third edition of which was published in January 2015, and, most recently, Phishing for Phools: The Economics of Manipulation and Deception, co-authored with George Akerlof.
