Joe Beets can't argue the point, so diverts to another issue. Joe may have a job, he may be unemployed. Do the math.
Joe Beets can't argue the point, so diverts to another issue. Joe may have a job, he may be unemployed. Do the math.
Ghost of Igloi wrote:
Econ 101,
OK, but non-GAAP is the Vegas number and GAAP is what X does.
Igy
it's not nearly that simple, igy eh?
GAAP is one way to do accounting,. That's it. It works mainly for oldline industrial companies. It isn't a law handed down by God to CFOs everywhere.
Non GAAP accounting can give a MORE clear view into many biznesses.
Ghost of Igloi wrote:
Joe Beets can't argue the point, so diverts to another issue.
Oh, the irony!
That is not my narrative and I don't understand why you insist that it is.
agip,
Agreed that it is not that easy, but that standard can be applied as well to the critics of traditional value oriented stock investing.
The explosion of non-GAAP EPS metrics, inflated forward estimates, stock buybacks, and increasing corporate debt, are but a few of the more egregious characteristic of this market era. Central bank policies drive the believe that stocks will continue to move higher because "there is no alternative" (TINA).
An closer examination of TINA is warranted, whereby investors are looking toward dividend paying stocks as a proxy to bonds. Financial analysis of bond valuation and sensitivity to interest rates includes the concept of duration. So any income stream coming from a stock must be accompanied by long duration factor, and more sensitivity to interest rates, up or down.
Investors have forgotten that by definition alone stocks are a long duration instrument, and even a small mean reversion in price can wipe years of income. Recently dividend seeking investors poured into Bristol-Myers Squibb (BMY) in the mid-70s. Some will be surprised to learn that 11 years of income were erased in weeks. A traditional valuation of a stock trading at 34 times last years earnings would have raised the price versus earnings issue. There's your trouble with TINA.
We haven't even touched the fact that dividends can be cut and have already been cut by some companies recently. Additionally companies viewed as safe, like McDonalds (MCD), are borrowing money not only to buyback stock but to pay their dividend! So the concept of TINA is just another justification to support extended valuations.
As I said, as long as the narrative is that traditional methods of stock valuation don't matter, there will be support for stocks. Of course traditional methods of stock valuation matter, and investors will once again be shocked by the result.
Igy
Econ 101,
My comment:
"The narrative that stocks are reasonably priced originate from this belief."
Read more:
https://www.letsrun.com/forum/flat_read.php?thread=5369837&page=687#ixzz4HnWxfb3F
Igy
The whole TINA thing is nonsense. Stock mutual funds have been hemorrhaging tens of billions of dollars in recent weeks. Again, you vastly underestimate the intelligence of the investor.
I say again, that is not my narrative. Please stop suggesting that it is.
Econ,
As I posted, I said nothing to infer or say it was your narrative. It is a narrative that is echoed every day on Wall Street.
Igy
Igy: "as long as your narrative dominates the conversation there will be support for stocks."
Econ: "What narrative?"
Igy: "The narrative that stocks are reasonably priced"
For the THIRD time, that's not my narrative.
Econ 101,
Got it. It is not your narrative, but it is the Wall Street narrative that justifies paying a higher multiple for stocks.
Igy
Joe,
I am not sure how current the mutual fund flow data is. However I do know that ETFs are the institutional trading vehicle of choice which says little about fundamental market views.
Igy
Late July.
Joe,
OK, what sectors or regions had the most outflows or inflows?
Igy
Are you completely helpless?
Joe Beets wrote:
The whole TINA thing is nonsense. Stock mutual funds have been hemorrhaging tens of billions of dollars in recent weeks. Again, you vastly underestimate the intelligence of the investor.
Joe,
Turns out your analysis is incomplete and probably in fact wrong. The decrease in mutual fund flows can largely be explained by increase in flows to ETFs, CEFs and UITs. Performance based moves that have nothing to do with investors lack of belief in TINA.
So sorry.
Igy
What is it about the words "recent weeks" and "late July" that you don't understand.
There are multiple stories out there documenting the large flow of assets from stocks to bonds. I know you don't want to admit it because it shows some investors are not "Muppets", but you can't argue against the truth without looking like an even bigger fool.
Joe,
As I have noted here TLT has double the performance of SPY. So there would be no surprise if there is net inflows to bonds. Performance chasing that has very little to do with investors belief or non-belief in TINA.
Igy