Pretty miserable day for the S&P. Worst since the start of the pandemic. Got to see this as an opportunity, but Iām annoyed that I started investing in the last year and have put my allocated cash in already (Iām down a decent chunk at the moment of course), so I canāt take advantage of the low prices until payday, and then not for too significant an amount
Now, if only I had a crystal ball so I could see where the bottom is and buy in thenā¦
Look on the bright side, stuff is gonna get so cheap and if youāre patient youāll become well off. Instead of regretting timing the market, realise the opportunity that will arise and that others will take advantage of (there are millions of bagholders too who will get turned off investing for life at the time where they want to start)
Edit: I would also suggesting to be patient, cos the bottom imo will stick for a while until we reroute alot of global networking. (which is of benefit if the cash trickles in)
Tesla all by itself might be skewing it somewhat, I think itās lost Ā£500 per share in just a couple of weeks. Interesting graph though, thanks for sharing.
ESG was a good idea that has morphed into a useless corporate contortionists guide designed to quell CEO & investor guilt. For a small extra fee you get a nice green fuzzy feeling, providing you donāt look to the details.
No company is perfect but sure keep the environmental and digital polluters Exxon & Facebook in your Environmental, Social and governance index.
If you just started investing 6 months ago congratulations, things are getting cheaper and the majority of your money will be invested after a bubble burst in the coming years. Companies getting cheaper is good news.
The people who will be hurt most are those who have invested over the last 10 years in US stocks with abnormal returns and may see a lost decade as a result as prices adjust downwards toward the norm.
Investing is a long term game, and the days of easy money are over.
This kind of flawed thinking drives some newbies into buying low quality companies and high risk stock because the share price is in pennies. When the share price drops the company does not (necessarily) become cheaper. The share price might go down but whether it is cheap or not depends on the business fundamentals and its future prospects. Some companies share prices have risen in the past couple of years because investors were willing to pay for growth and this went hand in hand with the macroeconomic environment. The fact that some of these share prices have dropped in itself does not make them good investment opportunities. A quick glance of the share price of Vodafone:
makes the point more concretely. Is Vodafone cheap because its share price has dropped from its 2000 price? No, in fact it may even be āexpensiveā now because its prospects are poor (according to some measures).
I think this is the reason that most people should just VWRL/VUSA/IWDG and chill. But no, some people thinks thatās not exciting at all. Investing is not exciting indeed.
I wasnāt recommending buying individual companies indiscriminately because they have fallen in price?!?!? I also wasnāt suggesting that share price falling indicates value.
If you need clarification: Companies getting cheaper in aggregate (i.e. a bear market) is good news for investors at the start of their journey as they have the majority of their investments ahead of them. If they are buying they should not be wishing for higher prices in aggregate right now, though of course everyone likes to buy during a rising market and people hate buying on falling prices.
Yeah I agree, I shake my head every time I read that someone holds a stock and hopes it goes down āso I can buy Moar!ā
I want my stocks to go up. If it drops 50% that mean it need to rise 100% just to get back to where it was. To imply that it is cheap just because the price went down implies that you know something that no one else in the market knows.
On the other hand, if they are getting cheaper by other metrics such as price/earnings ratio thatās more of a good thing. That can happen without the share price dropping if earnings go up. Now thatās more like what Iād want to see.
This is what is happening right now to most US stocks and also many UK stocks (for example UK banking) and PE is directly dictated by the share price vs past earningsā¦
Again it is not necessarily an indication of value as the falls are in anticipation of future earnings falling caused by a recession, but sometimes it is and Iād maintain that if the entire market is falling that is actually a good thing for long term investors starting out as the market tends to overshoot in both directions and their accumulation period is mostly ahead of them, not behind.
What share prices falling in aggregate does mean is that investors starting their journey will get more of a good company or index that they previously did when it was overpriced in a buoyant market and some companies may even become undervalued by the market as fear replaces FOMO. That is something to look forward to.
Yeah some P/E ratios were very high especially in the US market, the opportunity to buy at more reasonable valuations is probably a good thing. I sold a lot of shares in early april because I want to pay off my mortgage. I mostly dumped US shares and kept a lot of my FTSE ones because the valuations seemed more reasonable. Turned out to be a good move. the FTSE 100 has hardly dropped where the S&P 500 is in bear market territory
thatās the thing. In a new macroeconomic environment will these businesses grow at the same rate? If not (I mean lower), then their share prices should drop. And that doesnāt make the stock a better buy. IMO, āreasonable valuationā is determined by the market - so in a sense it is always reasonable.
The idea that the āmarkets should fall is good for new investorsā is prima facie a red herring.
Yeah thatās true, P/E ratios are a rearward looking metric. If earnings fall along with the share price itās not getting cheaper. I guess the expectation of the market is that earnings growth will not be as good going forward and that these companies with High P/E ratios are not going to grow into them. At least in the short/medium term
The thing I donāt really understand about this whole model of valuing things on growth is that if they grow into their potential then thereās no upside. If earnings increase eventually the p/e will need to come down as it matures so the price should at best stay stable rather than growingā¦ If on the other hand they donāt meet their expectations there is a very real downside.
There must be something Iām overlooking though?
On a side note - chasing perpetual growth like that also doesnāt feel like a smart move for humanity long termā¦