Originally Posted by
mispoken
A couple things;
First-
Its very in vogue to compare the market today to the dot com bubble. So I’ll ask you this; is there a difference between Tesla and
pets.com? That’s why this isn’t the dot com bubble. Tesla is launching more starlink satellites today.
Second-
I added this update to my previous post and I want to repost it here, because it’s important“EDIT- For fun I checked on the history of morning star fair valuations. Their lowest since 2014 was 34.20 adjusted all the way up to its current “nose bleed” fair value of $349. Since 2014, if you anchored the price of Tesla based on Morningstar models and never bought because of it, you’ve missed out on some incredible growth. Like 15,000% kind of growth. And yet, Morningstar continues to “adjust” fair value up. What does that tell you?”
Third-
Do you think because you’re investing in “value stocks” today that they’re immune to the burst of a bubble? Bubbles, when they pop are indiscriminate and typically take entire economies with it. Based on your thesis you should not invest at all, and perhaps stash cash under your mattress.
Fourth-
I challenge what Mr. Burton Malikel says (what makes him so smart, anyways?). My challenge is based on this chart of the S&P alone (link attached. Still don’t know how to paste images to this board);
https://ibb.co/whR5RKN
Fifth-
When you invest in a company, do you want them to slow growth (be it geographically or by investing less in new technology) in an effort to maintain less EBIT and higher EV/EBIT, or would you rather they expand and invest heavily so as to increase EV in the future at the expense of the ratio today?
First, you keep mentioning new things Tesla is going without even an utter of how much cash flow the company will make off these innovations. The Concorde was very innovative and did JFK to LHR in 3.5 Hrs, costing airlines millions instead of making money. Moreover, a better comparison for Tesla would be Cisco. Blue Chip company, still around, founder is still a Billionaire. Those that invested at irrational levels? Permanent Loss of Capital.
2nd, this is not a question for someone who understands fundamentals of investing should ask. A stock's intrinsic value is it's future cashflows discounted to the present value. Over time a stock's intrinsic value will grow relatively close to its return on invested capital. As far as missing out on "growth", an value investor will always miss out on substantial "growth" with bubble assets. Folks that didn't mindlessly jump into GME at $200-400 a share missed out on lots of growth. You know what they also missed out on? Permanent Loss of Capital
3rd, Value Investor Joel Greenblatt returned 140% the year the tech bubble burst after underperforming the market for 2 years. I'm not completely immune to loss during a downturn, but my risk of permanent loss of capital is significantly reduced as I invest in businesses at a reasonable price that generate significant cashflows now with ample cash reserves instead of paying exorbitant amounts for "Hopes & Dreams"
Apple is a once in a generation company and probably the best company in the history of the modern business world. Not once did it trade at the irrational levels TSLA and SHOP are trading at. Once again, be careful out there. Permanent Loss of Capital is real and the emotional effects on an investor can be devastating. The chart below is likely the future of Tesla and Shopify, Billionaire owners, great businesses but a significant amount of investors facing permanent loss of capital due to buying the stock at irrational prices.
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