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Market Talk

Man, anyone watching the market today? Amazon, which is currently one of only two individual stocks I own, is on a hell of a tear -- up 12.71% over the course of the day! I tend to buy big companies, so this is the first time I've ever had a day like this. The consensus earnings per share forecast had been just 0.01 and actual earnings per share came in at 0.52, which is a 5100% surprise. That left people scrambling.

I'm kicking myself right now. Although I own a bunch of Amazon, I'd planned to buy a little less than $10,000 more of it a month ago, but was having trouble with my new broker doing an electronic transfer from my bank account to fund it (they require me to fill out some physical paperwork, and I've been dragging my feet on getting around to it). So, that money was sitting in cash and didn't get to go for this ride, which would have been worth $1200. You snooze, you lose.
Planned to buy $10,000 worth huh?

But you had to wait on your tax return to buy a couple of ounces of gold?

Blow me another one.
 

Raoul_Luke

I feel a bit lightheaded. Maybe you should drive.
True, unfortunate, but true...and something that has been coming most of our lifetimes. Consumers demanding consistency wanted Budweiser, all over the country. They wanted McDonalds, all over the country...and they wanted Holiday Inns, all over the country. So, that's what they got.

Another example is ride sharing. Folks act like getting a ride from a stranger is some brand new concept...because they can use an "app" instead of actually making a phone call.
http://money.cnn.com/2017/10/26/investing/anheuser-busch-inbev-budweiser-beer-sales/index.html

Never go long poor taste...
 

Arkady

President
Yes because everyone knows that the markets are backward looking…oops!
This particular result wasn’t forward-looking. It was backwards looking. It was a measure of the Amazon profits already realized, which were greater than the market had anticipated.
 

Arkady

President
Planned to buy $10,000 worth huh?
Yes. At the start of the year, I earn less, since I haven’t hit my 401k max, company-stock-purchase max, and Social Security tax max. Plus, I have Christmas bills to pay off. So, I’m cash poor until my tax refund comes in. At this point, in the year, by comparison, my take-home pay is much higher, since I’ve maxed out all my contributions. My take-home pay (just mine, not counting my wife’s) is $10k per month right now.
 

Days

Commentator
How would Trump’s budget (a budget that hans’t even been presented in a detailed form, much less enacted) have created the surprisingly large Amazon profit?
I said enjoy that Trump budget looking forward...

I said we have been in a Trump bull market for the past 10 months looking backward...

capice?
 
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Raoul_Luke

I feel a bit lightheaded. Maybe you should drive.
This particular result wasn’t forward-looking. It was backwards looking. It was a measure of the Amazon profits already realized, which were greater than the market had anticipated.
Yes, everybody expects to sit back and collect that awesome 246 p/e. Seriously, you should not be investing for own money if you really believe that...
 
Yes. At the start of the year, I earn less, since I haven’t hit my 401k max, company-stock-purchase max, and Social Security tax max. Plus, I have Christmas bills to pay off. So, I’m cash poor until my tax refund comes in. At this point, in the year, by comparison, my take-home pay is much higher, since I’ve maxed out all my contributions. My take-home pay (just mine, not counting my wife’s) is $10k per month right now.
LOL! Thought you were a baller. No wonder your wife has to work.
 

Raoul_Luke

I feel a bit lightheaded. Maybe you should drive.
Investors are anticipating a falling P/E ratio:

http://www.nasdaq.com/symbol/amzn/pe-ratio
When it comes to the last financial crisis, few timed the peak quite as well as Sam Zell, who sold his Equity Office Properties Trust, the largest office REIT, to Blackstone in 2007, literally days before the bottom fell out of the market.

Asked if "there places today where you think we are at or near the top of the cycle and expect a sharp reversal?" His response was classic:

I can’t explain the valuation of the big tech companies, and can't believe that we won’t see a significant correction there. For example, in order to justify the multiple that Amazon trades at today, the company would have to be worth 25% of the US economy five years from now. This situation is no different from the one in 1997, when I pointed out that Cisco’s multiple would only be justifiable if the company represented 25% of the US economy five years later. Obviously, that didn't happen, and I don't think it's going to happen with today’s big tech companies, either.


http://www.zerohedge.com/news/2017-11-10/sam-zell-stumped-amazons-value-be-justified-it-has-be-worth-25-us-economy-5-years


You're welcome...
 

Arkady

President
When it comes to the last financial crisis, few timed the peak quite as well as Sam Zell, who sold his Equity Office Properties Trust, the largest office REIT, to Blackstone in 2007, literally days before the bottom fell out of the market.

Asked if "there places today where you think we are at or near the top of the cycle and expect a sharp reversal?" His response was classic:

I can’t explain the valuation of the big tech companies, and can't believe that we won’t see a significant correction there. For example, in order to justify the multiple that Amazon trades at today, the company would have to be worth 25% of the US economy five years from now. This situation is no different from the one in 1997, when I pointed out that Cisco’s multiple would only be justifiable if the company represented 25% of the US economy five years later. Obviously, that didn't happen, and I don't think it's going to happen with today’s big tech companies, either.


http://www.zerohedge.com/news/2017-11-10/sam-zell-stumped-amazons-value-be-justified-it-has-be-worth-25-us-economy-5-years


You're welcome...
As I'm sure you'll recall, we've been over this same ground repeatedly for years. Zero Hedge consists of a pack of permabears. They've been predicting a crash every year since the last actual crash.

I'm having trouble remembering exactly when it was, but at several points in the past, you provided advice to get out of stocks in a hurry. Perhaps one was back in late 2013, when Tyler Durden was screeching from the top of his lungs about how stocks were going to take a terrible beating in 2014. I ignored the advice to sell back then. Needless to say, I'm very pleased I did.

Back in late 2013, Zero Hedge was pushing Faber's idea that one should short Facebook, Tesla, and Netflix. At the time, Facebook was trading at 55.44. Today it's at 178.46. Tesla was at 151.12. Today it's at 302.99. Netflix was at 52.50, and today it's at 192.02.

There's a reason I tune out the permabears like Zero Hedge. And Sam Zell is on that list, too. Remember this?

http://blogs.marketwatch.com/thetell/2014/04/08/sam-zell-stock-market-is-overvalued/

At the time, the S&P 500 stood at 1845.04. It's up 40% since then.

It would be tempting to say the permabears are always wrong, but, by definition, they aren't. Just like a stopped clock, eventually they'll be correct. And when the eventual bear market arrives, they'll crow about it and dine out on that correct prediction for years, hoping nobody remembers all the incorrect ones before that. But the point is you'd come out far behind if you followed their advice -- sure, you'd dodge the bear market, but you'd also miss the bull market.
 

Raoul_Luke

I feel a bit lightheaded. Maybe you should drive.
As I'm sure you'll recall, we've been over this same ground repeatedly for years. Zero Hedge consists of a pack of permabears. They've been predicting a crash every year since the last actual crash.

I'm having trouble remembering exactly when it was, but at several points in the past, you provided advice to get out of stocks in a hurry. Perhaps one was back in late 2013, when Tyler Durden was screeching from the top of his lungs about how stocks were going to take a terrible beating in 2014. I ignored the advice to sell back then. Needless to say, I'm very pleased I did.

Back in late 2013, Zero Hedge was pushing Faber's idea that one should short Facebook, Tesla, and Netflix. At the time, Facebook was trading at 55.44. Today it's at 178.46. Tesla was at 151.12. Today it's at 302.99. Netflix was at 52.50, and today it's at 192.02.

There's a reason I tune out the permabears like Zero Hedge. And Sam Zell is on that list, too. Remember this?

http://blogs.marketwatch.com/thetell/2014/04/08/sam-zell-stock-market-is-overvalued/

At the time, the S&P 500 stood at 1845.04. It's up 40% since then.

It would be tempting to say the permabears are always wrong, but, by definition, they aren't. Just like a stopped clock, eventually they'll be correct. And when the eventual bear market arrives, they'll crow about it and dine out on that correct prediction for years, hoping nobody remembers all the incorrect ones before that. But the point is you'd come out far behind if you followed their advice -- sure, you'd dodge the bear market, but you'd also miss the bull market.
So you believe Amazon is destined to become worth 25% of the US economy? Good luck with that...
 

Raoul_Luke

I feel a bit lightheaded. Maybe you should drive.
As I'm sure you'll recall, we've been over this same ground repeatedly for years. Zero Hedge consists of a pack of permabears. They've been predicting a crash every year since the last actual crash.

I'm having trouble remembering exactly when it was, but at several points in the past, you provided advice to get out of stocks in a hurry. Perhaps one was back in late 2013, when Tyler Durden was screeching from the top of his lungs about how stocks were going to take a terrible beating in 2014. I ignored the advice to sell back then. Needless to say, I'm very pleased I did.

Back in late 2013, Zero Hedge was pushing Faber's idea that one should short Facebook, Tesla, and Netflix. At the time, Facebook was trading at 55.44. Today it's at 178.46. Tesla was at 151.12. Today it's at 302.99. Netflix was at 52.50, and today it's at 192.02.

There's a reason I tune out the permabears like Zero Hedge. And Sam Zell is on that list, too. Remember this?

http://blogs.marketwatch.com/thetell/2014/04/08/sam-zell-stock-market-is-overvalued/

At the time, the S&P 500 stood at 1845.04. It's up 40% since then.

It would be tempting to say the permabears are always wrong, but, by definition, they aren't. Just like a stopped clock, eventually they'll be correct. And when the eventual bear market arrives, they'll crow about it and dine out on that correct prediction for years, hoping nobody remembers all the incorrect ones before that. But the point is you'd come out far behind if you followed their advice -- sure, you'd dodge the bear market, but you'd also miss the bull market.
Just so you know, Zell was 100% correct in late 2014:

Screen Shot 2017-11-17 at 7.11.01 PM.png

Just like he was about Cisco in 1997 (he was typically way ahead of the herd):

Screen Shot 2017-11-17 at 7.12.52 PM.png

He makes his living off of people like you who think you are smarter than the market. After all, they don't call him "The Grave Dancer" for nothing:

http://mastersinvest.com/newblog/2017/7/20/learning-from-sam-zell

You can't say he doesn't fight fair - he does warn you "marks…"
 
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EatTheRich

President
Of course. That's why cities and states seek to "out-lavish" each other when it comes to showering Amazon with subsidies.

But the question is how we got to this place, and whether we should stay there. Countless small businesses have been squeezed out by the likes of Amazon, Walmart, Home Depot, etc. And the reality is such that government seeks to provide such companies with an even greater edge through additional subsidies. Where does it stop?
I've been seeing a lot of stories recently about cutthroat competition between Amazon and Wal-Mart. Amazon is trying to increase its distribution network for the types of things people buy at Wal-Mart, and Wal-Mart is trying to increase its media presence, at the expense of each other. Even the behemoths get squeezed out ... US Steel, Eastern Airlines ... for a while Toyota was putting too much pressure for GM and Ford to build, until safety defects doomed Toyota's market share and the government reorganized and rescued GM. Wal-Mart could get squeezed out too, powerful as they are. They are squeezed not just by Amazon but by Tesco, Costco, even mom & pops and multilevel marketing scams.
 

EatTheRich

President
Of course. That's why cities and states seek to "out-lavish" each other when it comes to showering Amazon with subsidies.

But the question is how we got to this place, and whether we should stay there. Countless small businesses have been squeezed out by the likes of Amazon, Walmart, Home Depot, etc. And the reality is such that government seeks to provide such companies with an even greater edge through additional subsidies. Where does it stop?
It stops with large enterprises being taken over by the government, managed by the government or a union or workers' council, or broken up, and a central economic plan developed by a workers' government in negotiation with small business owners.
 
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