TegridyFarms

Telling you—RMG before close today if you can. Will be $28+ by 12/28 when the merger is complete.

TegridyFarms

Agree with you 1,000%.

P/E is a ratio. That is all it is. In some industries stock trade at different multiples. P/E ratio is one part of an assessment. P/E ratio is an indication of health and the future. Has nothing to do with when to buy.

Look at TSLA. TSLA trades at a P/E ratio of 98. Which indicates that investors think the best is yet to come. The company will perform better in the future.

Compare TSLA to the entire domestic automotive industry which has a P/E ratio (or multiple) of 28 or so. Indicating that TSLA is perceived to be best in breed.

Comparing DAL and BA P/E ratio—you get vastly different numbers.

Jaww

Alright, I’m taking investment advice from a pilot. I’m all in with my fun money account.

Planetrain

I like Tesla and Amazon as companies, but I don’t like them at their current price. When speaking of PEs I mean it on a macro level. It’s broadly too high across the entire spectrum of stocks. There is nowhere else: CDs, Bonds, Money market, etc to put money, so everybody is piling into the stock market trying to get some yield. I think the market is propped up by low interest rates, the fed, and NAI No Alternative Investment. At some point (and I think sooner rather than later) we are going to see a crash because there just aren’t earnings to support the exorbitant prices. RCCL as an example is entirely a hope on future earnings. I’m not a gold guy, I’ll just wait for a better day to fish.
I continue to meter money into index funds for long range money, but in my mad money account I’m in a lot of cash and will wait for better opportunity.

https://www.multpl.com/s-p-500-pe-ratio

https://money.cnn.com/data/fear-and-greed/

mispoken

totally get what you’re saying. I can see how someone would think companies are expensive at the moment. I have become very comfortable accepting that not only do I not know anything, neither does anyone else. Including the inventor of the PE ratio, Jim Cramer, anyone on CNBC and so on. When I buy excellent companies like TSLA and AMZN (even at today’s price) I think about the future potential. Amazon is just getting started, Tesla is has so many levers it’s unreal. They’re a $5 trillion company in the making.

I’ll say it one last time; if I tried to put a valuation on Amazon, Tesla, Netflix, Apple et al back in the day, I would have talked myself out of millions. Yes. Millions.

Attempting to value a company is a dead end from the start. Invest in the visionary founders like Musk, Bezos, Cook and watch the magic happen.

I can’t take credit for the returns I’ve seen. I started following the Motley Fool decades ago; I devoted a lot of time to watching what they did, listening to what they said, conversing with their community on their website much like we do here. It take a lot of time and up and down cycles. All I can say is that it’s worked incredibly well for me. I’ve conditioned myself to ignore all metrics and news with the exception of fraud or a company making a complete 180 from say making electric cars to mousetraps. Barring news like that, I. Just. Keep. Buying. (And most importantly, holding).

sorry if that sounded soap boxy. Not my intent and I’m just reflecting here on what has worked so well for me.

Big E 757

I will second Motley Fool! The picks of theirs I’ve bought in the last 1.5 years (that’s when I signed up) have been phenomenal. SHOP, AMZN TSLA, TTD, OKTA, the list goes on but I can’t remember anymore off the top of my head.

Trip7

Your post about PEs being too high reminded me of this tweet

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mispoken

This is getting further from the side hustle discussion; but the Tesla bears are not visionaries (and they’ve never been right thus far). Musk is the visionary and the Wall Street talking heads are the ones that love their metrics and can’t see the potential. Electric vehicles are a small part of what they will do in the future. Solar, storage, space, internet, HVAC and don’t forget about their subscription model for adding features to your Tesla. The thing with taking a negative stance and outlook is that it usually is the smarter SOUNDING argument. Those of us who believe in the future of Tesla and what Elon is doing are “just crazy dreamers”, but Elon is the ultimate capitalist. The talking heads just cannot see it. Tesla is the most misunderstood company on the planet IMO.

The same goes for the state of the market in general. “We are due for a correction” (which implies the market is currently incorrect?), yes it’s a foregone conclusion. The market will go down. Maybe violently. It happens; but boy do the people that “called it” feel smart. Meanwhile; if I went from 100 back down to 75, the pessimist that started calling “the top” at 25 missed out on a gain of 50. But again, they sure sound smart!

One of my favorite articles on the subject of pessimism, in general, is by Morgan Housel who got his start at The Motley Fool. Worth a read! He does a good job of exploring the psychology of investing.

https://www.collaborativefund.com/bl...-of-pessimism/

Trip7

AMZN and APPL both traded at reasonable valuations for a while. Microsoft too. Apple has actually been a value stock until recently. Even Buffet bought Apple and its now his largest holding(44% of his stock portfolio!) . AMZN while their PE was high always traded at decent Price to Free Cash Flow. NFLX and TSLA for the most part have traded at "hopes and dreams" valuations.

The price of a stock is it's future free cash flows discounted the present value. TSLA and NFLX is very unlikely to give you the free cash flows to justify its current price in the next 100 years, let alone 10 or 20. TSLA specifically, IMO, is in the realm of irrational exuberance. PE of 1147. EV/EBIT (Enterprise Value to Operational Cash flow) of 358. Nosebleed prices would be an understatement. I commend those who have made alot of money off the Greater Fool Theory. Would I short Tesla? Absolutely not. The market can remain irrational longer than I can remain solvent

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Trip7

I LOVE TSLA the company. I own a Model S. I believe in its future. But as great as the company is, they'll need to have a cure for cancer to justify the current price. Folks have gone overboard on the Tesla story. We've seen this before with story stocks. 2000s investors went overboard with internet stocks. The Nifty 50 in the 60s folks thought you can buy great companies at any price. Then you have the Tulip mania in the 1600s where irrational prices drove one of the biggest asset bubbles in history.

On the other hand, I prefer to invest towards safety, or invest with a Margin of Safety to be specific. A good example of this is Fiat-Chrysler(FCAU). Strong balance sheet, positive cash flow from operations, plenty of spare cash yet priced for liquidation in March despite all this information clearly available on their financial statements. Up 115% since then and still trading below its intrinsic value based on worse case future free cashflows.

Again I comend all the folks that have made substantial gains from stocks like TSLA, NFLX, Pelaton etc. It's better to be lucky than good. Just a friendly reminder that history shows that with stocks trading at extremely high valuations, when the music stops, an eyewatering, vomit inducing fall in pricing happens shortly thereafter

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