All things STOCKS

#11,001
#11,001
Thunder Good-Oil said:
I think that it happens more from government meddling than an internal decision. I doubt that Bezos gives in to shareholder pressure - he’s not been pressured into paying out a dividend yet. Of course they haven’t been profitable for all that long to make the case for that. And they’re still investing in lots of CapEx.
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Their management team certainly has a lot of equity (no pun intended) built up with shareholders given the returns they've been able to generate over time. However, I still could see it if the stock continued to underperform over a longer period of time.

The underperformance of the stock post-COVID has been kind of surprising. Aside from a false breakout last summer, the stock really didn't go anywhere from July 2020 until this most recent decline started, while the market as a whole (Naz in particular) continued to make new highs. I know that isn't a long period of time in the grand scheme of things, but Wall Street is not patient.
 
#11,002
#11,002
GoDucks349 said:
I went to 15% cash late last year. Been sitting looking for a good value, TGT is starting to look pretty good. Been watching TGT CEO Brian Cornell on Squawk Box this morning. He makes sense. I'm not in a big hurry to get that cash back in the market, but I may get serious after the close of the third quarter. TGT might be very interesting at that point.
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I did similar in Jan/Feb but increased cash to almost 35%, but I'm 70 yo . Put some in Bonds 3%/3YR. Buying back slowly into stocks.
 
#11,003
#11,003
05_never_again said:
Their management team certainly has a lot of equity (no pun intended) built up with shareholders given the returns they've been able to generate over time. However, I still could see it if the stock continued to underperform over a longer period of time.

The underperformance of the stock post-COVID has been kind of surprising. Aside from a false breakout last summer, the stock really didn't go anywhere from July 2020 until this most recent decline started, while the market as a whole (Naz in particular) continued to make new highs. I know that isn't a long period of time in the grand scheme of things, but Wall Street is not patient.
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Oil prices have impacted Amazon’s retail side. Not just in their supply chain, but also through consumer spending. Fuel is one thing that they aren’t selling.

If they spin out AWS, then looked at as a whole, they probably get hit hard with federal income taxes. Losses generated by CapEx spending on the non-AWS side off-set the AWS profits. Spinning off AWS likely results in substantially higher tax expense on the sum of the parts versus taken as a whole. It would make sense to hold off on a split until both parts are profitable (which might be soon - I haven’t looked up the profitability of AMZN without AWS). I also haven’t looked to see if they have a substantial tax loss carry forward asset on their B/S and how much remains.

It’s also interesting that Bezos has recently made hostile comments directed at the left.
 
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#11,005
#11,005
Thunder Good-Oil said:
Oil prices have impacted Amazon’s retail side. Not just in their supply chain, but also through consumer spending. Fuel is one thing that they aren’t selling.

If they spin out AWS, then looked at as a whole, they probably get hit hard with federal income taxes. Losses generated by CapEx spending on the non-AWS side off-set the AWS profits. Spinning off AWS likely results in substantially higher tax expense on the sum of the parts versus taken as a whole. It would make sense to hold off on a split until both parts are profitable (which might be soon - I haven’t looked up the profitability of AMZN without AWS). I also haven’t looked to see if they have a substantial tax loss carry forward asset on their B/S and how much remains.

It’s also interesting that Bezos has recently made hostile comments directed at the left.
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All of what you're saying makes perfect sense. I'm just saying Wall Street will craft a narrative that would say basically "Look - AMZN is a company made up of a fast-growing, high margin technology business and a "boring," slower-growing, low margin retail/logistics business. They don't belong together, shareholder value could be unlocked by spinning one of the businesses off, yada yada yada" and if the stock continued to languish, a lot of people would buy it. That narrative would be missing key components of the picture which you correctly laid out, but it is narratives and PR that seem to drive a lot of those decisions.
 
#11,008
#11,008
05_never_again said:
All of what you're saying makes perfect sense. I'm just saying Wall Street will craft a narrative that would say basically "Look - AMZN is a company made up of a fast-growing, high margin technology business and a "boring," slower-growing, low margin retail/logistics business. They don't belong together, shareholder value could be unlocked by spinning one of the businesses off, yada yada yada" and if the stock continued to languish, a lot of people would buy it. That narrative would be missing key components of the picture which you correctly laid out, but it is narratives and PR that seem to drive a lot of those decisions.
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Spinning off AWS also means that AMZN dot com loses a huge advantage in cost and innovation of their own platform. If they separate into independent operations, then Walmart, Target, and online retailers are granted equal access to AWS. Previously I’ve thought that spinning off AWS is a great idea. I’ve flipped on that strategy (at least in the next decade or longer). AWS also generates cash to invest in the e-commerce platform and also keeps their cost of capital down by supporting the share price. But again I’m speculating on that last point rather than researching it. I don’t know if they are purchasing shares or selling treasury stock right now.
 
#11,011
#11,011
I don't think this gets really interesting until we break last Thursday's low. We're still a couple of percent above the low for this move at the moment.
 
#11,013
#11,013
I think that there are 4 really big issues dragging down markets and interest rates aren’t necessarily one of them.

1). The pandemic. It seemed to stimulate a bunch of names benefitting from work-at-home/stay-at-home rather than doing enough damage to equity markets as such a huge economic event should have. The COVID market crash was way too quick. Stock prices should have been depressed for at least a year and probably two.

2). The ridiculous benefits paid out to not work. It would have made a whole lot more sense to spend on an economic stimulus plan that actually invested in productivity instead of rewarding the people to sit on their butts while making $30k in annual cash benefits. There were always jobs available. That amount of spending should have been invested in infrastructure first.

3). Energy policy. With little more than the stroke of a pen, we went from a net exporter to a net importer. It is also stupid from a green perspective to ship in crude from far away instead of piping it in from our backyard.

4). Threatening to hike taxes on corporations by a third. That will entice manufacturers and corporate HQs to move off shore again after that trend was reversed with the earlier tax reform.

Interest rates still are historically mild and I’d rather see borrowers use leverage because it’s needed rather than simply because debt is inexpensive to tap into. However, even slightly higher rates can be very disruptive when the country owes over $30 trillion.
 
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#11,014
#11,014
Thunder Good-Oil said:
I think that there are 4 really big issues dragging down markets and interest rates aren’t necessarily one of them.

1). The pandemic. It seemed to stimulate a bunch of names benefitting from work-at-home/stay-at-home rather than doing enough damage to equity markets as such a huge economic event should have. The COVID market crash was way too quick. Stock prices should have been depressed for at least a year and probably two.

2). The ridiculous benefits paid out to not work. It would have made a whole lot more sense to spend on an economic stimulus plan that actually invested in productivity instead of rewarding the people to sit on their butts while making $30k in annual cash benefits. There were always jobs available. That amount of spending should have been invested in infrastructure first.

3). Energy policy. With little more than the stroke of a pen, we went from a net exporter to a net importer. It is also stupid from a green perspective to ship in crude from far away instead of piping it in from our backyard.

4). Threatening to hike taxes on corporations by a third. That will entice manufacturers and corporate HQs to move off shore again after that trend was reversed with the earlier tax reform.

Interest rates still are historically mild and I’d rather see borrowers use leverage because it’s needed rather than simply because debt is inexpensive to tap into. However, even slightly higher rates can be very disruptive when the country owes over $30 trillion.
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I think it's way more simple than that...the market is transitioning from a maximum liquidity at all times environment to an environment that, to an extent that is still somewhat unknown, less than maximum liquidity. Markets have been addicted not just to liquidity, but max liquidity at all times since 2008, and nobody really knows how they will behave without it. The current inflationary environment I think is going to preclude a taper tantrum from actually changing the Fed's stance. This liquidity did not allow what you mentioned in #1 to occur (markets remaining depressed after the COVID crash).

The initial move the markets are making is to preemptively bring valuations down until we see the impact on earnings and the economy, and the early indications aren't real positive.
 
#11,015
#11,015
05_never_again said:
I think it's way more simple than that...the market is transitioning from a maximum liquidity at all times environment to an environment that, to an extent that is still somewhat unknown, less than maximum liquidity. Markets have been addicted not just to liquidity, but max liquidity at all times since 2008, and nobody really knows how they will behave without it. The current inflationary environment I think is going to preclude a taper tantrum from actually changing the Fed's stance. This liquidity did not allow what you mentioned in #1 to occur (markets remaining depressed after the COVID crash).

The initial move the markets are making is to preemptively bring valuations down until we see the impact on earnings and the economy, and the early indications aren't real positive.
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I think in a very basic form, it’s productivity and an absence of a high work ethic culture which stimulates consumerism. US consumers still drive the economy. A couple of generations ago even minimum wage jobs were competed for. Now those entering the work force aren’t interested in entry level jobs paying half again as much as minimum wage. We’re spoiled.
 
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#11,016
#11,016
I also think that it’s pretty stupid that TARGET triggered this much of a one day sell off. They really haven’t ever impressed me as a business. Their inventory never seemed to have that much variety and their stuff always seemed like cheap junk to me. But the trading algorithms never fail to overshoot in both directions.

Target was also benefiting from selling cheap crap from China. In the long term I think that that is far from ideal for American commerce.
 
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#11,017
#11,017
Thunder Good-Oil said:
I also think that it’s pretty stupid that TARGET triggered this much of a one day sell off. They really haven’t ever impressed me as a business. Their inventory never seemed to have that much variety and their stuff always seemed like cheap junk to me. But the trading algorithms never fail to overshoot in both directions.

Target was also benefiting from selling cheap crap from China. In the long term I think that that is far from ideal for American commerce.
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Target is an up-market Wal-Mart and is super popular with Millennial women. I did not realize how popular it was with that demo until I met my now-wife.
 
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#11,018
#11,018
Go aeiou said:
What do you think is the difference in a "Correction", "Crash", and "Bear Market"?
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A correction is a 10 to 20% down swing Followed by recovery within 2 to 3 weeks And it holds Above previous resistance A bear market will Will hold between somewhere between 25 and 35% For a period of time Usually 4 to 6 montMonths.Which could be formed as a recession

A crash goes beyond the 35 to 45% mark
 
#11,021
#11,021
Here’s the delima - for those of us who got nervous this year and moved a significant amount into cash when do we jump back into the market. I’m losing to inflation getting 2% but it beats losing to inflation while also taking a beating on equities as of late. I’m not comfortable the carnage is over yet
 
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#11,022
#11,022
walkenvol said:
Here’s the delima - for those of us who got nervous this year and moved a significant amount into cash when do we jump back into the market. I’m losing to inflation getting 2% but it beats losing to inflation while also taking a beating on equities as of late. I’m not comfortable the carnage is over yet
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History has shown that being on the sidelines for just a handful of the best up days will have a huge negative impact on returns in the long haul. If this pullback hadn’t been so violent I’d be inclined to sit it out a bit longer. But with such a huge pullback in so many names, many off 40, 50, 60% - the bottoms could already be in in those. If it wasn’t an election year I’d be more inclined to wait. Short of Putin using a nuke, I think that most of the really bad news has been priced in. Good time to be a stock picker. There are a lot of great companies on sale.
 
#11,024
#11,024
mrorange211 said:
I would say you are discounting the inability of people to purchase tech products of ANY KIND when they have trouble putting fuel in the car, buying food for the house, or paying for the energy to heat the water of their shower. Combined with the already high multiples puts me at valuing Apple rn at no more than $90 a share.
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I just watched a video that said AAPL is pretty fairly valued, assuming an 11% growth rate, which its been doing.

Could the price drop more? Sure. But you're forecasting a major trajectory change for that number.
 
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