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Post by blakeg4mvp on Nov 23, 2018 20:48:44 GMT -8
Should I sell all my fang stocks or keep it ? It’s been going down the last 3 months and I’m starting to worry . Any advices ?
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Post by corkscrew on Nov 23, 2018 22:50:11 GMT -8
— Amazon pays no dividend and at 85 times earnings is a potential bubble.
— Netflix, even worse, pays no dividend and at 95 times earnings is a potential, maybe probably, bubble.
— Facebook cannot continue doing business the way it has, it will have to change its business model, maybe get broken up, maybe get heavily regulated. Huge uncertainty for the future, huge risk.
— Google is the only reasonable one to own — barely reasonable.
If I owned any of them, I would wait until the group recovers a bit then get out (though I would not own any to begin with.)
Maybe think about VFINX? Have a look at its long term performance — over 5, 10 years — at very minimum risk. You’ll sleep better and slowly get very rich… Slowly…
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Post by prince2250 on Nov 24, 2018 5:36:43 GMT -8
I always find it cool how you guys can trade so easily on the market in the US and Canada. It's a bit limited in the Bahamas. Essentially we've had to go through mutual funds here, so with no say on what securities we'd like our money invested in.
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Post by gilp5 on Nov 24, 2018 13:04:12 GMT -8
— Amazon pays no dividend and at 85 times earnings is a potential bubble. — Netflix, even worse, pays no dividend and at 95 times earnings is a potential, maybe probably, bubble. — Facebook cannot continue doing business the way it has, it will have to change its business model, maybe get broken up, maybe get heavily regulated. Huge uncertainty for the future, huge risk. — Google is the only reasonable one to own — barely reasonable. If I owned any of them, I would wait until the group recovers a bit then get out (though I would not own any to begin with.) Maybe think about VFINX? Have a look at its long term performance — over 5, 10 years — at very minimum risk. You’ll sleep better and slowly get very rich… Slowly… We are looking at a very high chance of a recession in the next 12-18 months. If that happens stocks could go down 30% or more from current levels. If the recession is due to corporate bond shenanigans (as many are predicting) it could cause another crash. It's time to be defensive and think about whether you are comfortable with your portfolio in such a circumstance. If not, you should take risk off the table. |
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Post by clippers1121 on Nov 24, 2018 15:14:40 GMT -8
I sold my SP500 mutual fund a month ago just because it contained FAANG stocks. And yes the fifth part of FAANG is Apple. The dollar is too strong and foreign markets are too weak to support our companies who have the bulk of their sales tied up in international markets. Plus, all the tariffs are not doing us much good. I concur with Corkscrew and Gilp5 that there still is a lot of risk in these stocks and they may have further to go on the downside. But selling after a 20 to 40% drop is a bummer. Dow theory suggests that there will be a 60% bounce off their lows. If you get that bounce than you might want to sell as Corkscrew suggested. These stocks are held and favored by many mutual funds so there could be a lot of selling now for tax loss purposes. I think I hold onto these stocks at these prices unless you get that 60% bounce off their losses. Sell Amazon at 1750. FB at 170. Google at 1200. Netflix at 300. Apple at 195. Otherwise hold'em.
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Post by nuraman00 on Nov 24, 2018 22:59:04 GMT -8
Glad you found us, blakeg4mvp . I think you were on the old ClipperTalk boards. I don't think you posted much the past few years, but glad to have you here. |
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Post by Deleted on Nov 26, 2018 12:47:48 GMT -8
I'm an old-time finance guy who got an MBA and worked on Wall Street. I've been trying to figure out how to value stocks in our current environment. The valuation methods I was taught in school don't seem to apply today. The most aggressive valuation method I've used is PE/G, which assumes that the Price/Earnings multiple should equal the long-term annual growth rate. With this assumption, every correctly priced stock should have a PE/G multiple of 1.0. Here is my valuation of the FAANG stocks (plus MSFT) at Friday's closing price (Source: Zacks.com).  Facebook seems to be the most overpriced stock. All of the stocks have further room to decline. Of course, the market is just supply and demand and does not follow any strict pricing formulas. Good luck with your investments! |
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Post by clippers1121 on Nov 26, 2018 14:05:30 GMT -8
A formula that values Facebook at $1.23 a share when they are earning $7.35 a share per year makes no sense. So I guess if their earnings were declining they would pay you to own the stock since the value would be negative. Truth is growth stocks do get higher multiples rewarded to them. But stocks with any earnings even without growth usually get at least a 4 or 5 PE awarded to them. So in this case if you said Facebook was not going to grow anymore you would still come up with at least a $35.00 valuation for it ($7.00 X 5). I don't think FB is the most overvalued. I would give that to Netflix. It will not keep growing at 57%.
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