Kirun
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ROFL if you think Twitter cares about making money when its use is as a government propaganda tool.
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Investing General Discussion
- Thread starter Furious
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Guest, it's time once again for the massively important and exciting FoH Asshat Tournament!
Go here and give us your nominations!Who's been the biggest Asshat in the last year? Give us your worst ones!
Sanrith Descartes
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x-posting this. People "should" have seen this coming. Companies overpaid to get inventory to the shelves and then priced it up to cover the cost of getting it. Surprise. People aren't buying now.
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Sanrith Descartes
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I posted at the same time. They have inventory they cant move. They over paid to get it and now will have to discount it to sell it.
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Big Phoenix
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Sanrith Descartes
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Sanrith Descartes
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In my opinion, this is why you really need to be using 5-year charts in addition to your shorter timeframe charting. The Corona period has absolutely fucked with fundamentals. Looking at TGT you can think "man its deeply discounted". Then you expand out to the 5-year chart and go... nah, not really. At $100-$110 I would be interested because over the longer term I think that is where it should be. Look back over 10 years and its historical PE is around 8-10. Its over 13 with yesterday's close. At a price 0f $100 the PE would be 8.3 and at $110 the PE would be 9.2
I know some folks disregard metrics like PE, but I do not. Every bit of data has some value.
I know some folks disregard metrics like PE, but I do not. Every bit of data has some value.
Mist
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Well, if you want inflation to come down, companies have to be punished for marking up prices too much.
That's how markets work.
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Sanrith Descartes
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Im pretty sure the only way to get inflation to come down is to remove cash from the money supply and increase the savings rate. Both of these things are accomplished by raising interest rates.
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Jysin
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The PE argument is important because some stocks currently seem discounted from a PE perspective, but once Earnings start getting revised down and / or poor earnings roll in Q2, suddenly those PE ratios start looking heavy again. As
Sanrith Descartes
said, zoom out a bit on those charts and look for pre-covid perspectives.
Sanrith Descartes
said, zoom out a bit on those charts and look for pre-covid perspectives.
Sanrith Descartes
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This is actually another reason I "generally" avoid hyper growth companies with negative earnings. No earnings; no PE ratio.The PE argument is important because some stocks currently seem discounted from a PE perspective, but once Earnings start getting revised down and / or poor earnings roll in Q2, suddenly those PE ratios start looking heavy again. As
For anyone who doesn't know, the rations like PE are living calculations. They change with the share price so its easy to calculate on the fly during severe price movements. Example:
PE (Price:Earnings) is literally share price/EPS (earnings per share). So in the case of TGT, the closing price of $159.67 / the EPS of 12.06 gives you a PE ratio of 13.24 (as seen in the quote). To figure out the share price of the historical PE (lets use a PE of 10 for simplicity) just shift the formula around. target share price = EPS * target PE so share price = 12.06 * 10 = $120.60. If you wanted the price at a PE of 9 then its 12.06 * 9 = $108.54
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Mist
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While that's true broadly, that's handwaving away the specifics of actual pricing strategies by individual companies. The ultimate price of goods is what the market will bear. If the market will no longer bear the inflated prices set by X company, because the free money is running out at the strata of your average shopper at X company, the prices will come down.
Ultimately, consumer prices are an aggregate of individual pricing decisions made by individual companies every day, vs individual buying decisions made by individual people every day. The market will find its level.
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Sanrith Descartes
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So is "broadly true" similar to "technically correct"? This is why we have macro and micro. Individual companies setting pricing is micro. Interest rates, inflation and the money supply are macro. They are connected, but not the same animal.
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And don’t forget that 2019 was a peak year in a healthy economy bull market. The guys above 2019 with no major change to their businesses like target might have significant downside even at 2019 levels in a recession.
Price increases was driven by a few things, huge supply restrictions in Asia that even now aren’t solved and rising overheads both in fuel and labor. Wage inflation among the low skilled retail workers was insane over the last few years.
I literally sat in meetings last fall on how much to increase prices so we slow sales enough that we don’t run out of product before Christmas because the supply chain was so fucked you couldn’t get anything in. We are still in that environment but it is better on the supply side and the sales are now slowing naturally due to the recession so retailers won’t need or be able to raise price themselves to hit that sweet spot on the demand curve.
Very bearish for retail considering fuel and employment costs have remained high and they are about to lose their pricing power.
Price increases was driven by a few things, huge supply restrictions in Asia that even now aren’t solved and rising overheads both in fuel and labor. Wage inflation among the low skilled retail workers was insane over the last few years.
I literally sat in meetings last fall on how much to increase prices so we slow sales enough that we don’t run out of product before Christmas because the supply chain was so fucked you couldn’t get anything in. We are still in that environment but it is better on the supply side and the sales are now slowing naturally due to the recession so retailers won’t need or be able to raise price themselves to hit that sweet spot on the demand curve.
Very bearish for retail considering fuel and employment costs have remained high and they are about to lose their pricing power.
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Sanrith Descartes
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This is a good point and why individual industries and market sectors need examined apart. The economy doesnt treat all industries equally.
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Mist
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You're thinking way too much like a Marxist. Macroeconomics is ultimately an aggregate of what happens at the microeconomic level. Yes, a lot of top-down fuckery happened in a short period of time, but eventually as all the free money that got handed out trickles upwards from the average consumer into fewer and fewer hands, there will be less money at the bottom to purchase goods, and the market will no longer be able to bear the inflated prices on consumer staples.
Big Phoenix
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Jysin
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Sanrith Descartes
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