All things STOCKS

#12,356
#12,356
Strange yield curve for sure.

I have been feeling an urge to buy TIPS while the real yield is positive. I am so used to "free money" that I just think it's normal [I am saying here I think conditions go back to the way they were]. Tips auction tomorrow which might drag the prices down a little, I don't know. Bond market timing, I have demonstrated I can't do it.

Tips yields are hugging right around 2% + inflation for several maturities, for 2 to 3 years out, but there's a second bump up in 2041 to 2048 dates that is about 2%. I'm not sure what to do; if rates go back down, you'd be thrilled with the longer ones.
 
Last edited:
#12,358
#12,358
Velo Vol said:
Regarding the VIX, Bob Pisani at 8:30 in this video helped me understand it a bit better. It's essentially the put/call implied volatility in the next 30 days, so you need to hone in on uncertainty within that time frame. A VIX that remains at or above 32 is actually high because it is suggesting daily 2% swings for the next 30 days.

Click to expand...

Yep...and that's in either direction. It frequently gets called "Wall Street's Fear Gauge" or something like that, especially outside of the business press, which is a bit of a misnomer.

The VIX at 32 is high on an absolute basis, but IMO given the uncertainty in the markets over the last several months that still feels low to me. The highest the VIX has gotten during this year's decline is just shy of 39, which honestly is just not all that high when you talk about previous corrections or bear markets.
 
#12,359
#12,359
Go aeiou said:
Buy companies that actually make money!
Click to expand...
A few months ago I listened to a podcast where the guest who seemed generally well-informed said he was intrigued by Carvana's prospects. Possible gamechanger.

I googled the company, not knowing much about it, and came across some consumer commentary which, suffice it to say, was not very favorable regarding their business model.
 
#12,361
#12,361
Velo Vol said:
A few months ago I listened to a podcast where the guest who seemed generally well-informed said he was intrigued by Carvana's prospects. Possible gamechanger.

I googled the company, not knowing much about it, and came across some consumer commentary which, suffice it to say, was not very favorable regarding their business model.
Click to expand...

The guy and his son that control the company are very shady.
 
#12,362
#12,362
Two of you have said Carvana's business model is "bad", and I think maybe thunder said he "hated it" Care to elaborate? I'm curious. It all seems very simple and vanilla to me.

Perhaps it's already too late for them to make it. The company is 10 times the size it was and proportionally not really turning profitable fast enough. But I don't know that their philosophy, or what part of it, was really the problem.
 
#12,364
#12,364
They announced a big increase in revenue. I didn't read about it, though. Figured it's too late for me to be worrying about it.
 
#12,365
#12,365
Firebirdparts said:
Two of you have said Carvana's business model is "bad", and I think maybe thunder said he "hated it" Care to elaborate? I'm curious. It all seems very simple and vanilla to me.

Perhaps it's already too late for them to make it. The company is 10 times the size it was and proportionally not really turning profitable fast enough. But I don't know that their philosophy, or what part of it, was really the problem.
Click to expand...

It became way overvalued. It’s a used car dealer with a fancy elevator at their handful of physical dealerships that has a website and spends a fortune on advertising. Plus the guys that run it have a questionable background. Smoke and mirrors. They have about 3 dozen physical locations (while they claim to serve about 10x as many locations) and were once valued at about $30B. Now that the market cap it about $1.5B it is reasonable. But they lose money (CarMax is profitable) and are controlled by the Garcia family - the patriarch is a convicted felon. No thanks. There also aren’t significant barriers to entry.
 
#12,366
#12,366
Firebirdparts said:
Two of you have said Carvana's business model is "bad", and I think maybe thunder said he "hated it" Care to elaborate? I'm curious. It all seems very simple and vanilla to me.
Click to expand...
I should have said "way of doing business" rather than model.

I can't find it now, but earlier I saw a site detailing issues people were having with dealers. I don't remember specifically, but I think they mirror some of the stuff in this recent story about a dealership being suspended: people were having trouble getting titles, etc.

Michigan Carvana Dealership Suspended for Being Awful (Update)

Also, they fired a bunch of people earlier in the year, some on Zoom.

Not necessarily a fair and balanced view of the company, but it was enough to turn me away from putting the stock on a watch list at the time.
 
#12,367
#12,367
Velo Vol said:
It seems to me that an already-battered NFLX should weather a recession better than some of the other big techs.
Click to expand...

The story with NFLX is that they are cracking down on password sharing and possibly cannibalizing their own base of more expensive plans with the new, cheap, ad supported tier. They are going to quit reporting subscriber numbers and instead emphasize revenue. I tend to like their new strategy. Advertising could be a huge source of revenue. But they will always have the very expensive cost of acquiring programming hanging over their financials. They spend a fortune on content, but unlike Disney and Time Warner they don’t own the rights to that content. They rent it. Still, the stock falling by about 80% was probably overdone and it can double from here ($270).
 
#12,370
#12,370
Thunder Good-Oil said:
The story with NFLX is that they are cracking down on password sharing and possibly cannibalizing their own base of more expensive plans with the new, cheap, ad supported tier. They are going to quit reporting subscriber numbers and instead emphasize revenue. I tend to like their new strategy. Advertising could be a huge source of revenue. But they will always have the very expensive cost of acquiring programming hanging over their financials. They spend a fortune on content, but unlike Disney and Time Warner they don’t own the rights to that content. They rent it. Still, the stock falling by about 80% was probably overdone and it can double from here ($270).
Click to expand...
Yes. What I was getting at is that it seems in a recession its subscriber base will hold up better than Google/FB advertising rates, etc.
 
#12,371
#12,371
Velo Vol said:
Yes. What I was getting at is that it seems in a recession its subscriber base will hold up better than Google/FB advertising rates, etc.
Click to expand...

I don’t think of NFLX as being easy to compare to Meta or Alphabet. NFLX was 100% subscriber based revenue while FB and GOOG were dominated by advertising revenue on a free platform. NFLX may not have as robust data on their ad targets (users). GOOG and Facebook have collected and analyzed massive data on their users and are able to charge a huge premium per every 1,000 impressions as the ads are so highly targeted. NFLX might end up pushing ads for feminine hygiene to old men and Chik-Fil-A and Roadhouse to vegans (or simply broadcasting advertising like OTA TV networks). Advertising is essential for businesses so I wouldn’t expect a huge drop off for GOOG and FB unless the recession is extreme and lots of businesses close.

Of course, we focus on stock prices that are generally determined based on looking out 6-9 months. So all three could thrive, although IMO Facebook has made serious missteps with their partisan political leanings and related activity and their questionable privacy practices. I think that GOOG is as politically biased, but not as blatant in their business practices.

I won’t be in NFLX long term. Content eats into too much of their profits. But they could have several good years left in the stock. Google kind of reminds me of AT&T before they were broken up. Facebook’s platform could have serious competition from Elon’s Twitter at some point. Instagram (Meta) could surpass Facebook for Meta as the younger demo seems to not use FB nearly as much as Boomers. Snap Chat, Reddit, and Pinterest could ultimately end up as FB or TWTR brands. MicroSoft and Apple are always lurking around as well. There’s no telling what the space will look like in 5 or 10 years. AOL, Yahoo, and even Novell were all highly involved, huge players in social media/networking in the 1990s and are now largely irrrlevant (comparatively speaking) today. AltaVista was once the best search website before Google came out of nowhere.
 
#12,372
#12,372
Velo Vol said:
It seems to me that an already-battered NFLX should weather a recession better than some of the other big techs.
Click to expand...

I've had some success shorting big pops in earnings during this beark market. I did it last Q with LULU. We'll see. I'll cut losses at 10% and it's long dated. Not much risk.
 
#12,373
#12,373
Thunder Good-Oil said:
GOOG and Facebook have collected and analyzed massive data on their users and are able to charge a huge premium per every 1,000 impressions as the ads are so highly targeted. NFLX might end up pushing ads for feminine hygiene to old men and Chik-Fil-A and Roadhouse to vegans (or simply broadcasting advertising like OTA TV networks).
Click to expand...
This is a huge problem with Twitter, too.

Regarding Facebook, you didn't mention TikTok, which may be their biggest competitor with the young demographic.
 
#12,375
#12,375
Velo Vol said:
This is a huge problem with Twitter, too.

Regarding Facebook, you didn't mention TikTok, which may be their biggest competitor with the young demographic.
Click to expand...
If TikTok somehow goes public, I'll be buying day one on that offer. Missed out on the other IPOs of social media.
 
New posts
You must log in or register to reply here.

VN Store



Back
Top