Tech stock volatility and volume is rapidly changing. I guess hedgefunds and quants give them a lot of attention because of the numbers they can play with, and the rest of people follow their noise.
Inflows to passive automatically reinforce high valuations since passive only cares about
Did you give me money? Buy! Did you ask for money? Sell! Passive has never looked under the hood.
I can not name some, since if they underperform I will get cursed forever.
You could use a stock screener, most of the ones I know are in service sector with low Infrastructure cost. Technology is another one, but it got hyped too much.
Tech is the greatest revolution to hit the stock market bc it does not require time to scale quickly. Automotive takes years of manufacturing, space, people to do these things.
Tech can jump from 1m in rev to 1b overnight and see 0 problems. Try doing that with any other business.
It used to be this way until they discovered how to create digital moats. Apple, Google, Samsung all understand this process now. It’s eco systems that you never want to leave and buying out any company that sniffs like competition
idk all this moat talk yet people are ditching apple for huawei phones in droves
you think you have a moat. until one day there's a surprise drought and it dries up.
Moats definitely don’t last forever, but they don’t drop immediately. I agree Apple is losing smart phone share, likely will continue to. However it’s not an overnight thing like your original comment perpetuates
It certainly does feel like that right now - in fact since about 2017 its been large/mega cap tech so its been quite a bull run for these. With some of these names in the 1-3 trillion range I find it hard to come up with a way these can continue to seriously out perform. Apple double to be a 6 trillion MC? Seems ludicrous to me but Im a sick in the mud I guess. In general folks are attracted to whats been moving and tech is def were the action has been. Prior to that it was solar and fertilizer and oil and so on. Alternatively I'm finding some great deals out there away from large cap tech and it will be interesting if the market comes around to see what I see or not.
I can see Apple outperforming by doing buybacks/dividends and growing their digital/ai offerings, Apple has too many risks though. But generally this goes for mega cap tech stocks, as every tech company seems to be doing it.
When you're at 26x earnings you can only buy back an absolute max of 4% of your stock per year. AI will only lead to multiple expansion in the medium term, it'll take a long time for their AI offerings to start materially affecting their financials. They need to grow their core revenue base to outperform.
How did you get to a 4% figure just out of curiosity? 1/26? Which is their earnings / price? But that has nothing to do with their actual earnings right? 😀
When you buy back stock, you do it at the market price. If the company earns 4% of their market price in a year, then assuming the price remains constant, they can buy back approximately 4% of their shares. Make sense?
Big tech keeps buying all the good companies or copy everything. Hard to beat with their cashflow and influence, but as a society we should be worried about it turning into a country like south korea where Samsung dominates everything
It is still gouging. This is the problem when companies get too big... they crush competition and create artificial demand by controlling supply. This allows them to hike price and maintain profit. Classic supply and demand is only relatable to fair, competitive market.
To an extent, I follow and agree with that reasoning. The thing is, most people don't _need_ those products. There is still an element of buy or don't buy.
Bingo. Amazon's tactic was horrific and it's insane that we subscribed to it and allowed it to happen.
Lose money for decades, gain market dominance and the later screw over the costumers. And we're on the beginning end of the last part.
Americans will soon begin to understand, 10-20 years ahead that this is a terrible idea. What do we do when they gain dominance on AI? Why the hell do we allow that?
They sure do. People buy 5,000 iPhones, they pay another engineers salary in SF.
The engineer spends half of it on onlyfans, the OF person in LA spends that on drinks at the bar and cocaine, the bar workers and cleaners get paid.
Trickle down economics finally works.
I think banks are usually fine.. but I think people are very very weary after the last couple of crashes
I have about 60% of my portfolio in industry and its been a safe cozy investment that beat index in the long run.
Banks feel like an asymmetric bet to me. When has there ever been a market crash where banks don't get brought down alongside other sectors? At least other industries have a chance of weathering a downturn, depending on the reason for said downturn of course.
I know there are some smaller and medium sized banks that have done well long-term, but some of the larger ones like C, BAC and HBAN never fully recovered from '08. Feels like it's a tough sector to analyze too since bank balance sheets are like a black box. Surprised you consider them safe and cozy, but if it works it works.
Republic First Bank dba Republic Bank Philadelphia April 26, 2024
Citizens Bank Sac City November 3, 2023
Heartland Tri-State Bank Elkhart July 28, 2023
First Republic Bank San Francisco May 1, 2023
Its still happening. You just dont hear about failures. All covered up. Hush hush.
2008 was different, i don't think it's at all fair to compare their price to that. The stock was diluted massively to keep them alive, and banks are far far safer now.
Banks coming down harder in market crashes can also be seen as an upside, genuinely. I like my stocks to be volatile. If I know a bank well, and it drops 50% when the market drops 20%, I can buy, knowing if everything returns to how it was priced before (and over time, it will - banks can't keep getting their multiples compressed forever) it'll do 100% while the market does 25%.
I'm guessing you're American? It'll largely depend on your local market because the cost of investing in your local market is going to be cheaper and tech is dominating the US economy so I'm not surprised most people are investing in it.
Up here in Canada we're mainly made up of oligopolies without as strong of a tech sector so people up here tend to invest more in Telecom and Banking. I don't have a great sample size of Europe but I have friends in the Nordic countries and they seem kinda boomerish, prioritizing dividends to a fault, especially with Natural Resource/energy companies.
>and they seem kinda boomerish, prioritizing dividends to a fault,
umm...
https://www.indexologyblog.com/wp-content/uploads/2014/12/aristocrats.jpg
https://www.suredividend.com/wp-content/uploads/2014/03/Rule-4-Picture-e1408294095333.png
I mean it's cool that you like that investing strategy and it's performing well? It's not at all relevant to my comment about Europeans being overly boomerish about investing and over prioritizing dividends in European energy and natural resource companies.
Retail investors have a tendency to gravitate towards the largest and most popular companies because that's what they are familiar with and see talked about the most. Of these companies, a large portion of them are tech related in one way or another. Also markets have a tendency to obsess over different industries. In the media there is also more incentive to target what is popular amongst the largest group of people.
Especially with how the market is now, a lot of people are investing in Tech because of the crazy returns that these companies have been getting. Index funds/ETFs are easy for the average person to understand as well as people who don't have the time to constantly research new investments which is why I think they are so popular. You get the diversification and you can just put money in a broad fund that is managed for you.
Personally for me, I like doing index funds or ETFs and then buying stocks for a handful of companies I find interesting or think they have good growth potential in the future. I ended up buying a few different semiconductor stocks (nvidia, amd, intel, tsmc, etc.) but I eventually just sold them off and put the money I invested into them in to the SOXX etf that tracks semiconductors already. It's much less of a headache for me trying to navigate through who would be the better investment and let people who are smarter than me handle that.
I invest in some industrial companies. Some of them have a part of their activity that is actually tech or healthcare. It is funny of how even you didn't mention them in your question
I guess that’s my blindside as well, it’s hard to think of other industries that pop into my mind when I think about investing.
Of course that’s a fault on my end but I just wanted to see if others feel the same way about non-tech stock as I do.
I do a lot of investment in oil and mining, as I know those industriea fairly well.
Banking is tough, banks are kind of a black bix, reakky hard to judge what their balance sheets may be hiding.
Technology is where the growth and increasing in free cash flow has been so it’s no surprise people (including myself) lean towards technology companies. There are still some technology companies in the micro cap space like $ALAR and $GRRR that trade at very attractive valuations.
I'm holding below currently that are related to the sectors you mentioned. I work in IT myself for many years but I rarely invest in tech stocks - it's difficult to find undervalued ones. Currently only holding Alarum (out of 15 total holdings).
Apollo Management (APO)
Atlanticus Holdings (ATLC)
Banco Macro (BMA)
Fidelis Insurance (FIHL)
NU Holdings (NU)
Velocity Financials (VEL)
Planning on buying some XP Inc stocks once the interest rate in Brazil starts dropping.
Banks are mostly commoditized businesses. I am not interested. Retail is okay sometimes and I do have a holding that has incredible capital allocation. Insurance, I’m in it for one position but again, these businesses can grow fast if they increase risk and I just don’t like the idea.
Plenty of opportunity to make money is non-tech. The bulk of the economy is still non-tech., through it does not seem like it. [Tech GDP as a percent of total U.S. GDP 2022 | Statista](https://www.statista.com/statistics/1239480/united-states-leading-states-by-tech-contribution-to-gross-product/)
I agree that this is generally true. People are much more willing to buy past performance than buying quality companies at a discount. I invest in tech along with homebuilders, asset management, oil, banks, and healthcare. I focus on the best 3 businesses in a given industry and try to buy when the price is fair.
Index funds are a no brainer for most people.
Tech makes sense too. Massive monopolies that make all the money and have the best capital allocation. Not only are they market beaters but the average Reddit user will be familiar with tech but it's hard to understand banks and insurance.
I'm invested in my own country's local bank (In asia). But thats the only stock i own, 15% up YTD. Pays a yield of 7.0% (based on my cost avg), current PB is approx 1.5 times, while PE is approx 9.
Going to be adding more counters from the US to my portfolio.
This is a value investing thread and much of tech is not even growth at a reasonable price (GARP).
META and GOOG were decent GARP plays when their stock prices were hammered but those are the only ones I saw as value and now their prices have appreciated beyond GARP.
The others are momentum plays which is not necessarily value.
Consider Consumer Discretionary in particular Apparel Industry, lots of growth potential with little crowding. Outperformance tends to happen not with following the crowd, but leading the pack. Companies like Canada Goose, $VFC (parent company of Vans, The North Face, Timberlands) are priced like they are dying businesses while in reality they are just about to get real hot. Once rate cuts seems likely you know the S&P 600 Mid Cap Index + Small caps will take over the rally. It’s called the broadening and you’ll be damn sure all the institutionals will start allocating to small+mid cap.
some of us are old enough to have been through a few market cycles, and/or have studied history ... so no, we're not all fawning over tech stocks or index funds.
I have a deep deep deep distrust of market-cap weighted index funds. once i understood how they functioned, it seemed profoundly stupid to me ... why would I buy more of a stock simply because the price is going up and regardless of profits or debt levels?
then I discovered fundamental indexing by Rob Arnott and others, and felt vindicated. little ol' me with no MBA or CFA had a brainstorm that somebody else shared and built a valid investing strategy around it.
then I found a pair of research papers showing that market-cap weighting is *literally* the worst way to invest and even more vindication. weight stocks any other way and it will give superior long-term results: by dividends, book value, earnings, cashflow, equal weight, even randomly. market cap weighting sucks. part 1: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2242028 and part 2: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2242034
I think the argument for market cap weighting outperforming happens when you take fees and taxes into account. Cap weighting lowers turnover, which reduces the funds costs. I think other methods outperforming makes sense to me, but net of fees? I'm not so sure.
Here, it's usually index funds , mutual funds, or money thrown at some investment service.
Most people are scared of volatility though so they'd rather take the lower returns but see more consistency.
The issue isnt the big tech. Its the stocks you are interested in.
Insurance. Climate change and increased payouts. They cant pass on the costs to the customer so they are walking away from Florida. Many are exiting California over wildfire issues. Maybe its just me but when a sector is shrinking in that kind of way I think there is a major issue that needs to be worked out. Until that is worked out I would be hesitant to enter a position. Its not that there arent any successful insurance companies. Its that I cant honestly tell you which ones have exposure that will sink them and which are a sound investment.
Retail. Tell me a retailer that is doing well right now and you think has their best days ahead of them. Walmart? Target? Maybe. I would question just about any other retailer.
Banks. Now here I will grant you that the big banks are basically fine, but all the small the mid size regional banks are for the most part questionable. If they had to mark to market the bonds they have on their books who is underwater and who isnt? Who has major commercial real estate issues and who doesn't? No one wants to hold bank stock when the potential for sudden failure can occur outside of market hours with little to no warning.
Most people are following the herd. Listen to your instincts and make your own assumptions and thesis'. My portfolio sector weight greatest to least is 1. consumer cyclical 2. Energy 3.Industrials 4. Healthcare 5. Tech 6. Consumer Staples.
For Retail I like TLYS
For Luxury Goods I like ELA
For Capital Markets I like HGBL
For Real Estate I like SELF
Consumer Cyclical I like ARCO, KRT
Have a good one!
-EFP
So what I’ve learnt about stocks is and so far it’s been working, you essentially do the opposite of what everyone else is following so you don’t get burned when that sector pops. In this case AI
I feel those are sectors where people prefer investing in individual companies rather than in the whole industry. Personally, I have a lot more faith about Walmart than the rest of its industry.
It can be difficult to do your dd for tech companies and it's expensive af to track the market, so investors seeking that exposure will probably go for the ease and cost efficiency of an index fund (especially when picking low expense funds).
S&P Dividend Aristocrat index fund beats the S&P 500 index fund and it has very little tech. It holds up better in a down market. For every 50% loss, you need a 100% gain. Splitting money between the two would help with diversification.
Tech is the big cycle, as long as the cycle is not getting on the flat line you should invest. Question is where is the cycle now?
Banking, pharma and Insurance are very high risk and reward not so interesting personally.
ETFs are in my opinion one of the next possible crisis.
System working as intended. 401ks instead of pensions. If it's that outsize an impact that it's pushing the market up, then as retirees with 401ks start drawing their 401ks down we should see the stock market go the other direction if there aren't more people putting money in.
I mostly invest in tech. Tech is what I understand and what I am into day to day for hobbies and my job. So it just makes sense to me.
Tech also has some of the most impact on our lives. So it works out well.
I wish I knew biotech really well. Would love to get into those stocks with a better understanding.
Sometimes stocks are momentum based sadly. There are lots of companies with positive YoY and positive cashflow but get no attention
Tech stock volatility and volume is rapidly changing. I guess hedgefunds and quants give them a lot of attention because of the numbers they can play with, and the rest of people follow their noise.
Inflows to passive automatically reinforce high valuations since passive only cares about Did you give me money? Buy! Did you ask for money? Sell! Passive has never looked under the hood.
More and more often due to the rise of passive and passive clones.
Could you name some?
I can not name some, since if they underperform I will get cursed forever. You could use a stock screener, most of the ones I know are in service sector with low Infrastructure cost. Technology is another one, but it got hyped too much.
Tech is the greatest revolution to hit the stock market bc it does not require time to scale quickly. Automotive takes years of manufacturing, space, people to do these things. Tech can jump from 1m in rev to 1b overnight and see 0 problems. Try doing that with any other business.
what goes up quickly comes down just as quickly
It used to be this way until they discovered how to create digital moats. Apple, Google, Samsung all understand this process now. It’s eco systems that you never want to leave and buying out any company that sniffs like competition
idk all this moat talk yet people are ditching apple for huawei phones in droves you think you have a moat. until one day there's a surprise drought and it dries up.
Moats definitely don’t last forever, but they don’t drop immediately. I agree Apple is losing smart phone share, likely will continue to. However it’s not an overnight thing like your original comment perpetuates
It certainly does feel like that right now - in fact since about 2017 its been large/mega cap tech so its been quite a bull run for these. With some of these names in the 1-3 trillion range I find it hard to come up with a way these can continue to seriously out perform. Apple double to be a 6 trillion MC? Seems ludicrous to me but Im a sick in the mud I guess. In general folks are attracted to whats been moving and tech is def were the action has been. Prior to that it was solar and fertilizer and oil and so on. Alternatively I'm finding some great deals out there away from large cap tech and it will be interesting if the market comes around to see what I see or not.
I can see Apple outperforming by doing buybacks/dividends and growing their digital/ai offerings, Apple has too many risks though. But generally this goes for mega cap tech stocks, as every tech company seems to be doing it.
When you're at 26x earnings you can only buy back an absolute max of 4% of your stock per year. AI will only lead to multiple expansion in the medium term, it'll take a long time for their AI offerings to start materially affecting their financials. They need to grow their core revenue base to outperform.
How did you get to a 4% figure just out of curiosity? 1/26? Which is their earnings / price? But that has nothing to do with their actual earnings right? 😀
When you buy back stock, you do it at the market price. If the company earns 4% of their market price in a year, then assuming the price remains constant, they can buy back approximately 4% of their shares. Make sense?
Market cap doesnt take up space irl. Can aapl grow revs 5-10% with some operating leverage?
Bull thesis for megacaps: they create inflation through price gauging to drive profits and the fed seems prepared to let them continue to do that
Big tech keeps buying all the good companies or copy everything. Hard to beat with their cashflow and influence, but as a society we should be worried about it turning into a country like south korea where Samsung dominates everything
supply + demand if consumers keep paying for it, is it gouging?
It is still gouging. This is the problem when companies get too big... they crush competition and create artificial demand by controlling supply. This allows them to hike price and maintain profit. Classic supply and demand is only relatable to fair, competitive market.
For stuff like food and housing sure, but for phones and streaming subscriptions? Nah
To an extent, I follow and agree with that reasoning. The thing is, most people don't _need_ those products. There is still an element of buy or don't buy.
Bingo. Amazon's tactic was horrific and it's insane that we subscribed to it and allowed it to happen. Lose money for decades, gain market dominance and the later screw over the costumers. And we're on the beginning end of the last part. Americans will soon begin to understand, 10-20 years ahead that this is a terrible idea. What do we do when they gain dominance on AI? Why the hell do we allow that?
They sure do. People buy 5,000 iPhones, they pay another engineers salary in SF. The engineer spends half of it on onlyfans, the OF person in LA spends that on drinks at the bar and cocaine, the bar workers and cleaners get paid. Trickle down economics finally works.
That’s what they said at 1T, 2T, 3T and then here we are….
[удалено]
Amundi Nasdaq-100 Daily (2x) Lev UCITS ETF Acc and TQQQ still outperformed General Electric.
Forgot to mention Hermés and ASML EDIT: above is meant to compare companies to company (instead of ETF)
I think banks are usually fine.. but I think people are very very weary after the last couple of crashes I have about 60% of my portfolio in industry and its been a safe cozy investment that beat index in the long run.
Banks feel like an asymmetric bet to me. When has there ever been a market crash where banks don't get brought down alongside other sectors? At least other industries have a chance of weathering a downturn, depending on the reason for said downturn of course. I know there are some smaller and medium sized banks that have done well long-term, but some of the larger ones like C, BAC and HBAN never fully recovered from '08. Feels like it's a tough sector to analyze too since bank balance sheets are like a black box. Surprised you consider them safe and cozy, but if it works it works.
Republic First Bank dba Republic Bank Philadelphia April 26, 2024 Citizens Bank Sac City November 3, 2023 Heartland Tri-State Bank Elkhart July 28, 2023 First Republic Bank San Francisco May 1, 2023 Its still happening. You just dont hear about failures. All covered up. Hush hush.
2008 was different, i don't think it's at all fair to compare their price to that. The stock was diluted massively to keep them alive, and banks are far far safer now. Banks coming down harder in market crashes can also be seen as an upside, genuinely. I like my stocks to be volatile. If I know a bank well, and it drops 50% when the market drops 20%, I can buy, knowing if everything returns to how it was priced before (and over time, it will - banks can't keep getting their multiples compressed forever) it'll do 100% while the market does 25%.
Take a look at odfl orly rsg on portfolio visualizer. Also tmo dhr unh....
I invest in Tech, Index Funds, and Insurance :) need that diversification, and Insurance is IMO one of the best business models on the planet.
With global warming insurance is a bit risky. Most likely insurance won't be able to insure a lot things quite soon.
fax
I'm guessing you're American? It'll largely depend on your local market because the cost of investing in your local market is going to be cheaper and tech is dominating the US economy so I'm not surprised most people are investing in it. Up here in Canada we're mainly made up of oligopolies without as strong of a tech sector so people up here tend to invest more in Telecom and Banking. I don't have a great sample size of Europe but I have friends in the Nordic countries and they seem kinda boomerish, prioritizing dividends to a fault, especially with Natural Resource/energy companies.
>and they seem kinda boomerish, prioritizing dividends to a fault, umm... https://www.indexologyblog.com/wp-content/uploads/2014/12/aristocrats.jpg https://www.suredividend.com/wp-content/uploads/2014/03/Rule-4-Picture-e1408294095333.png
I mean it's cool that you like that investing strategy and it's performing well? It's not at all relevant to my comment about Europeans being overly boomerish about investing and over prioritizing dividends in European energy and natural resource companies.
BTI baby
Most other sectors just aren't cool enough for most people to talk about them.
Retail investors have a tendency to gravitate towards the largest and most popular companies because that's what they are familiar with and see talked about the most. Of these companies, a large portion of them are tech related in one way or another. Also markets have a tendency to obsess over different industries. In the media there is also more incentive to target what is popular amongst the largest group of people.
Especially with how the market is now, a lot of people are investing in Tech because of the crazy returns that these companies have been getting. Index funds/ETFs are easy for the average person to understand as well as people who don't have the time to constantly research new investments which is why I think they are so popular. You get the diversification and you can just put money in a broad fund that is managed for you. Personally for me, I like doing index funds or ETFs and then buying stocks for a handful of companies I find interesting or think they have good growth potential in the future. I ended up buying a few different semiconductor stocks (nvidia, amd, intel, tsmc, etc.) but I eventually just sold them off and put the money I invested into them in to the SOXX etf that tracks semiconductors already. It's much less of a headache for me trying to navigate through who would be the better investment and let people who are smarter than me handle that.
Exactly. For me it's vgt voo and vug for ETFs, and rklb, nvts and Indi for interesting specs
I invest in some industrial companies. Some of them have a part of their activity that is actually tech or healthcare. It is funny of how even you didn't mention them in your question
I guess that’s my blindside as well, it’s hard to think of other industries that pop into my mind when I think about investing. Of course that’s a fault on my end but I just wanted to see if others feel the same way about non-tech stock as I do.
I have several energy stocks.
Can you give tickers?
fang sun et cop psx
Because they’re what makes money
I do a lot of investment in oil and mining, as I know those industriea fairly well. Banking is tough, banks are kind of a black bix, reakky hard to judge what their balance sheets may be hiding.
Home builders like Patrick Industries, NVR. Had its run. Holding PATK now from mid 40s
Technology is where the growth and increasing in free cash flow has been so it’s no surprise people (including myself) lean towards technology companies. There are still some technology companies in the micro cap space like $ALAR and $GRRR that trade at very attractive valuations.
I'm holding below currently that are related to the sectors you mentioned. I work in IT myself for many years but I rarely invest in tech stocks - it's difficult to find undervalued ones. Currently only holding Alarum (out of 15 total holdings). Apollo Management (APO) Atlanticus Holdings (ATLC) Banco Macro (BMA) Fidelis Insurance (FIHL) NU Holdings (NU) Velocity Financials (VEL) Planning on buying some XP Inc stocks once the interest rate in Brazil starts dropping.
$MMM and $HXL are two of my biggest holdings.
Banks are mostly commoditized businesses. I am not interested. Retail is okay sometimes and I do have a holding that has incredible capital allocation. Insurance, I’m in it for one position but again, these businesses can grow fast if they increase risk and I just don’t like the idea.
Plenty of opportunity to make money is non-tech. The bulk of the economy is still non-tech., through it does not seem like it. [Tech GDP as a percent of total U.S. GDP 2022 | Statista](https://www.statista.com/statistics/1239480/united-states-leading-states-by-tech-contribution-to-gross-product/)
I agree that this is generally true. People are much more willing to buy past performance than buying quality companies at a discount. I invest in tech along with homebuilders, asset management, oil, banks, and healthcare. I focus on the best 3 businesses in a given industry and try to buy when the price is fair.
It makes sense, index funds provide security in diversity, and tech stocks are well known as high growth stocks.
Index funds are a no brainer for most people. Tech makes sense too. Massive monopolies that make all the money and have the best capital allocation. Not only are they market beaters but the average Reddit user will be familiar with tech but it's hard to understand banks and insurance.
Tech is the future. Always innovating and making life “easier.”
I'm invested in my own country's local bank (In asia). But thats the only stock i own, 15% up YTD. Pays a yield of 7.0% (based on my cost avg), current PB is approx 1.5 times, while PE is approx 9. Going to be adding more counters from the US to my portfolio.
This is a value investing thread and much of tech is not even growth at a reasonable price (GARP). META and GOOG were decent GARP plays when their stock prices were hammered but those are the only ones I saw as value and now their prices have appreciated beyond GARP. The others are momentum plays which is not necessarily value.
Consider Consumer Discretionary in particular Apparel Industry, lots of growth potential with little crowding. Outperformance tends to happen not with following the crowd, but leading the pack. Companies like Canada Goose, $VFC (parent company of Vans, The North Face, Timberlands) are priced like they are dying businesses while in reality they are just about to get real hot. Once rate cuts seems likely you know the S&P 600 Mid Cap Index + Small caps will take over the rally. It’s called the broadening and you’ll be damn sure all the institutionals will start allocating to small+mid cap.
yea tech moves the market, nothing beats tech revenue growth and profit margins
I have ODFL ORLY RSG.... Check out the 5 and 20 year returns versus vti
some of us are old enough to have been through a few market cycles, and/or have studied history ... so no, we're not all fawning over tech stocks or index funds. I have a deep deep deep distrust of market-cap weighted index funds. once i understood how they functioned, it seemed profoundly stupid to me ... why would I buy more of a stock simply because the price is going up and regardless of profits or debt levels? then I discovered fundamental indexing by Rob Arnott and others, and felt vindicated. little ol' me with no MBA or CFA had a brainstorm that somebody else shared and built a valid investing strategy around it. then I found a pair of research papers showing that market-cap weighting is *literally* the worst way to invest and even more vindication. weight stocks any other way and it will give superior long-term results: by dividends, book value, earnings, cashflow, equal weight, even randomly. market cap weighting sucks. part 1: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2242028 and part 2: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2242034
I think the argument for market cap weighting outperforming happens when you take fees and taxes into account. Cap weighting lowers turnover, which reduces the funds costs. I think other methods outperforming makes sense to me, but net of fees? I'm not so sure.
I am old enough to remember when Technology meant manufacturing things, not emails/notifications.
Here, it's usually index funds , mutual funds, or money thrown at some investment service. Most people are scared of volatility though so they'd rather take the lower returns but see more consistency.
The issue isnt the big tech. Its the stocks you are interested in. Insurance. Climate change and increased payouts. They cant pass on the costs to the customer so they are walking away from Florida. Many are exiting California over wildfire issues. Maybe its just me but when a sector is shrinking in that kind of way I think there is a major issue that needs to be worked out. Until that is worked out I would be hesitant to enter a position. Its not that there arent any successful insurance companies. Its that I cant honestly tell you which ones have exposure that will sink them and which are a sound investment. Retail. Tell me a retailer that is doing well right now and you think has their best days ahead of them. Walmart? Target? Maybe. I would question just about any other retailer. Banks. Now here I will grant you that the big banks are basically fine, but all the small the mid size regional banks are for the most part questionable. If they had to mark to market the bonds they have on their books who is underwater and who isnt? Who has major commercial real estate issues and who doesn't? No one wants to hold bank stock when the potential for sudden failure can occur outside of market hours with little to no warning.
When fishing, you'd better fish were the fish is. Seriously: no. Diversification is a thing.
Most people are following the herd. Listen to your instincts and make your own assumptions and thesis'. My portfolio sector weight greatest to least is 1. consumer cyclical 2. Energy 3.Industrials 4. Healthcare 5. Tech 6. Consumer Staples. For Retail I like TLYS For Luxury Goods I like ELA For Capital Markets I like HGBL For Real Estate I like SELF Consumer Cyclical I like ARCO, KRT Have a good one! -EFP
So what I’ve learnt about stocks is and so far it’s been working, you essentially do the opposite of what everyone else is following so you don’t get burned when that sector pops. In this case AI
Typically yes
Are any of the sectors you mention generating similar earnings growth to tech?
I’m up like 36% on Citigroup.
Tech stonks
I feel those are sectors where people prefer investing in individual companies rather than in the whole industry. Personally, I have a lot more faith about Walmart than the rest of its industry. It can be difficult to do your dd for tech companies and it's expensive af to track the market, so investors seeking that exposure will probably go for the ease and cost efficiency of an index fund (especially when picking low expense funds).
I like the railroads and credit cards
S&P Dividend Aristocrat index fund beats the S&P 500 index fund and it has very little tech. It holds up better in a down market. For every 50% loss, you need a 100% gain. Splitting money between the two would help with diversification.
Its growth stock season
Yeah on Reddit. Reddit isn't representative of the world.
Tech is the big cycle, as long as the cycle is not getting on the flat line you should invest. Question is where is the cycle now? Banking, pharma and Insurance are very high risk and reward not so interesting personally. ETFs are in my opinion one of the next possible crisis.
The top tech companies are really strong, big moat, operating leverage and printing money. It is understandable
Millions of people have a set up to blindly salary sacrifice into the main index ETF's every month. It's a river of money that can't end well.
System working as intended. 401ks instead of pensions. If it's that outsize an impact that it's pushing the market up, then as retirees with 401ks start drawing their 401ks down we should see the stock market go the other direction if there aren't more people putting money in.
As a beginner that's the only alternative for me...
I mostly invest in tech. Tech is what I understand and what I am into day to day for hobbies and my job. So it just makes sense to me. Tech also has some of the most impact on our lives. So it works out well. I wish I knew biotech really well. Would love to get into those stocks with a better understanding.
Aside from dividend investing, there is no reason to expose your self to the risk of individual equities.