Down goes the Dow

Liking Microsoft and even at these levels, added to my position late in the day. Strong management, quite profitable, gaining market share in cloud computing, and P/E not as high as some in the tech sector. Modest dividend, as well.

Wanted to do this before earnings announcement in a couple of weeks.

Earnings Scorecard: For Q2 2018 (with 5% of the companies in the S&P 500 reporting actual results for the quarter), 89% of S&P 500 companies have reported a positive EPS surprise and 85% have reported a positive sales surprise.

If there is anyone who should realize it is different this time, it should be the ones who have been citing historical and statistical evidence on here (for the past 1 to 5 years) that a major collapse in the market is upon us.

Ghost of Igloi wrote:

https://money.cnn.com/2018/07/10/investing/stock-buybacks-record-tax-cuts/index.html

Great news.

if i remember correctly, i believe it was said that it (the major collapse) has already started.

“There is a form of spiritual faith within today’s markets that reminds of philosopher Daniel Dennet’s skyhooks. In promoting modern science over religion, Dennet differentiates between ‘cranes’ and ‘skyhooks’. Cranes are explanations that use scientific materialism, while skyhooks resort to miracles or non-material causes to explain things. Cranes would be here a metaphor for historically-tested valuation metrics and fundamentals, while skyhooks are elusive, over-fitting, ever-evolving narratives. There was a narrative for tech stocks in 2000 – they would change the paradigm - and one for real estate prices in 2007 – they never went down on a nationwide basis. In both cases large gap downside risks were ignored, in a form of blind faith in market’s efficiency.

Our take. Don’t pretend this is normal. Admit this is no proper market functioning but you follow flows until it lasts. When it stops, you expect market risks to be mutualized, again, as back then.”

Fasanara Capital

That’s an incorrect definition of ‘skyhook’.

Tech stocks did change the paradigm. Sure, there was some casualties and there were some bumps in the road. But hey, give a little credit to those of us who saw it for what it is, and stuck it out. If you wouldn't like to have loaded up on apple when it was trading at below $17 per share, well, i guess you're just a little different than me.

seattle prattle wrote:

if i remember correctly, i believe it was said that it (the major collapse) has already started.

Well, there are some that get overly excited over these 1 & 2% swings. Or, consider a 10% drop that rebounds in a few weeks a big deal.

If a sustained 60% drop that will take several years to recover from has started, it still has a ways to go.

I think you missed the point. MSFT did not regain it’s year 2000 high until recent yrars. In order to do so the company has had to triple it’s debt and buyback $Billions in stock. Yet the company’s revenue is below where it was two years ago.

So it stands true that you and others have bought into the narrative of a new paradigm.

Igy

Ghost of Igloi wrote:

seattle prattle wrote:

Tech stocks did change the paradigm. Sure, there was some casualties and there were some bumps in the road. But hey, give a little credit to those of us who saw it for what it is, and stuck it out. If you wouldn't like to have loaded up on apple when it was trading at below $17 per share, well, i guess you're just a little different than me.

I think you missed the point. MSFT did not regain it’s year 2000 high until recent yrars. In order to do so the company has had to triple it’s debt and buyback $Billions in stock. Yet the company’s revenue is below where it was two years ago.

So it stands true that you and others have bought into the narrative of a new paradigm.

Igy

The most important point is that MSFT did recover. That’s why buy-and-hold is such a good strategy.

mellon wrote:

seattle prattle wrote:

if i remember correctly, i believe it was said that it (the major collapse) has already started.

Well, there are some that get overly excited over these 1 & 2% swings. Or, consider a 10% drop that rebounds in a few weeks a big deal.

If a sustained 60% drop that will take several years to recover from has started, it still has a ways to go.

Only 60%? You are naive

Onliest wrote:

mellon wrote:

Well, there are some that get overly excited over these 1 & 2% swings. Or, consider a 10% drop that rebounds in a few weeks a big deal.

If a sustained 60% drop that will take several years to recover from has started, it still has a ways to go.

Only 60%? You are naive

And your open ended time frame started over 3 years ago shows no balls.

Ghost of Igloi wrote:

seattle prattle wrote:

Tech stocks did change the paradigm. Sure, there was some casualties and there were some bumps in the road. But hey, give a little credit to those of us who saw it for what it is, and stuck it out. If you wouldn't like to have loaded up on apple when it was trading at below $17 per share, well, i guess you're just a little different than me.

I think you missed the point. MSFT did not regain it’s year 2000 high until recent yrars. In order to do so the company has had to triple it’s debt and buyback $Billions in stock. Yet the company’s revenue is below where it was two years ago.

So it stands true that you and others have bought into the narrative of a new paradigm.

Igy

Debt issuance is an involved arrangement in which under old tax laws, it was cheaper to borrow money than repatriate assets held overseas, and thereby avoid the repatriation fees that until recently were as much as 35%. Now that the tax laws have been loosened, the expectation is that debt may decrease. IT as actually a smart accounting tacting and was widespread amongst tech companies like Apple and Microsoft and Oracle.

Stock price regarding Revenue and profit are forward looking. Yes, investors today would be believers in the new paradigm. And perhaps for good reason.

Ghost of Igloi wrote:

seattle prattle wrote:

Tech stocks did change the paradigm. Sure, there was some casualties and there were some bumps in the road. But hey, give a little credit to those of us who saw it for what it is, and stuck it out. If you wouldn't like to have loaded up on apple when it was trading at below $17 per share, well, i guess you're just a little different than me.

I think you missed the point. MSFT did not regain it’s year 2000 high until recent yrars. In order to do so the company has had to triple it’s debt and buyback $Billions in stock. Yet the company’s revenue is below where it was two years ago.

So it stands true that you and others have bought into the narrative of a new paradigm.

Igy

Yesterday you bemoaned stock buybacks purchased with cash and today you complain about those financed with cheap debt. So I guess you’re just against any type of buyback. Why is that?

Your comment is inaccurate, record stock buybacks have been financed by record corporate debt. Even your love child Apple.

Igy

“Stock price regarding Revenue and profit are forward looking. Yes, investors today would be believers in the new paradigm. And perhaps for good reason.”

Noting your stock exposure of 110% of liquid assets, you better be correct in your assumption.

It's been higher.

But thanks, and i am aware of that.