this stuff makes my head spin lol. dabbled a bit with portfolio123 a few years ago, cool idea they have to created a matrix to rate stocks... but even small/micro caps are crowded now.. thus the current very lazy style... QQQ/SPY/MAGA.... that's it..
At the risk of sounding like a broken record I don't think there will always be a lack of value in the markets. My filters are only returning around 10-12 stocks at a time for me to look into. This is relatively unusual (and the origin story of my permabear status). There will always be companies that are undervalued and ready to be invested in. The trick is getting your boots on, grabbing a shovel, and digging until you find one. Indexing hasnt failed so far. Nothing wrong with that strategy. Weekly short puts on QQQ was a pretty solid strategy until a month or so ago.
That's what makes it so tough. They're all over-valued. If you owned "Gausian's Lawn Care" and after all the dust settled you were walking away with $200,000/year (at a ridiculous 40% margin on $500K in sales)... without ever so much as sitting on a lawn mower.... and you were in a high growth dynamic city... and...you had some stud that could sell ice cubes to an Eskimo writing new contracts adding $100K/ year of top line revenue (20% yoy revenue growth)... you would still be off the charts lucky to sell the business for $800,000. Insane lucky. $500,000 would be more like it. I don't care how good the salesman, or the potential market is. I'm talking real world here. Now.... and yet (!)... in the world we call Wall Street and everything it entails... "Gaussian's Lawn Care"... would trade at a price to earnings ratio of at least 15.... (the forward growth potential is there right? Peg of .75? What a f'n steal! Buy buy buy!) The "pro boys" will buy the whole company for $3 Million dollars. That's the world of Wall Street. Its the way its always been. Everything is overvalued. Except companies like Ford and maybe a few extremely low PE airlines now that they can actually sustain a long term succession of profitable quarters thanks to technology that usurped the human element.... but even at a PE of 8... "Gaussian's Lawn Care" is still a $1.6 Million business. Overvalued af. Good luck selling out the business for that and retiring to Fl from "Anytown USA". Its off the charts stupid when you look at things with a tad of common sense.
I initially didn't intend to reply to this because I couldn't add any value. However, I'd like to add something. I'm very well known in my small circle of investing friends as an absolute ass when it comes to modern tech companies. Your statement about never riding a lawn mower is exactly how I feel about the entire market. I will dig my heels in and ask "where is the money?" Which, following your KISS strategy, is exactly what you should do. Of course, you always hear "it can't fail" and "to the moon!", etc, etc. As an example, $UBER is trading at extremes despite basically giving away rides. $LYFT is no different. Both companies are inundated in legal trouble and basically relying on what amounts to volunteer work from drivers to deliver earnings. WeWork was a complete catastrophe and every new IPO tech company is levered up to the tits with VC capital. SoftBank is the most salient example of precisely how not to DD. It makes me wonder where bank analysts (the alleged "smart money") is coming up with their multiples. There's a snowball's chance in hell I would consider buying anything on these companies with a horizon of 1-3 years. Unfortunately, they've garnered a lot of hype (and being in tech, I am sufficiently exposed to this echo chamber). From a value perspective, the consolidation of equity in the form of "rush to acquire" entrepreneurship is concerning. The pay off could be incredible if they are acquired, but when they are levered 100x over shareholder equity it's hard to justify anything more than a chuckle. I have friends who crushed it on $FB, and now they think they are expert analysts. Sorry for the rant...this market is funny sometimes.
It fell big today. 3.3% From your original post its down almost 15%. Note... that totally doesn't mean you're wrong fwiw when discussing stocks like this. It trades on very low volume, it doesn't take much to move it either way. 156K traded today. Depends where you're at with it. If its just throwing it out there for ET as an idea, then who cares right(?). But if you own it, and you like it... and you know what you're talking about.... buy more.
Yeah I saw that. Has my idea been invalidated? Dunno. It's been a few weeks and I was looking at 6 months to a year. It could just be a high beta relative to the market and people taking it out on the small caps because they're the easiest to sell off quickly.
6 months will work. That certainly eliminates the noise a bit. And yes, a day like today, its all beta. You are 100% right. Have you looked at what indexes, funds, etc, this thing is in btw? I mean that's where the beta moves come from really. Pure indexing of their positions. That's exactly why I said a 3.3% move is inconsequential with stocks like this. Its just noise. This one will move on company specific news. That's why its important to know what's going on in the company... from a dozen different aspects. Not sure what your game is G.... but you strike me as someone who wants to be a pro. A pro's pro. Good on ya. If you own this pig.... never stop digging.
Thanks man. I hope to make enough money to trade full time one day. Good point on company news. Another good point on the indexes and funds. I haven't done that research - it's a really good way to tell who could be dumping it to clean up their portfolio. Is there a place you can do this research quickly or am I going to be ordering prospectuses from hedge funds for the next few weeks?
My suspicion is many of these are passively managed - meaning they probably selected stocks based on market cap or industry (XOG, GUSH, etc for example). I think it would be much more useful to see actively managed funds. I'll look around for that information - those people are probably more informed.