Investing Thread

[MU82]

How top-heavy has the S&P 500 gotten? This from Yahoo Finance:

The stock market's rally remains hyper-focused on a few key stocks known now as the "Magnificent Seven."

In a note on Wednesday, Torsten Sløk, chief economist at Apollo, noted the price-to-earnings (P/E) ratio for the S&P 493 — which excludes Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) — has been steady at around 19 all year.

For the Magnificent Seven, however, their collective P/E has risen more than 50%, to 45 from 29.

[Skatastrophy]

The top heaviness of the S&P500 is a feature, not a bug. If they wanted to, as far as investing goes, there are equal-weight the investment vehicle vs weighted by market cap if you're interested.

Over the past 10 years your return would suffer by about 50%, and you wouldn't have any diversification/risk upside.

[MU82]

The top heaviness of the S&P500 is a feature, not a bug. If they wanted to, as far as investing goes, there are equal-weight the investment vehicle vs weighted by market cap if you're interested.

Over the past 10 years your return would suffer by about 50%, and you wouldn't have any diversification/risk upside.

Reasonable take.

[Pakuni]

Peter Thiel is an FBI informant.

https://www.businessinsider.com/peter-thiel-fbi-informant-charles-johnson-johnathan-buma-chs-genius-2023-10

[JWags85]

Peter Thiel is an FBI informant.

https://www.businessinsider.com/peter-thiel-fbi-informant-charles-johnson-johnathan-buma-chs-genius-2023-10

Well not anymore now that he's been burned.  But one could argue he's probably been an informant for far longer given FBI's usage of Palantir.

[tower912]

'We dug our own grave with the cybertruck'.


Poof.   Another $16 billion out the window.

[Uncle Rico]

'We dug our own grave with the cybertruck'.


Poof.   Another $16 billion out the window.

At first I laughed at the design, however, the practicality of its features intrigue me.  Tesla also has a devoted following, so I’ll believe the demise when I see it.

The stainless steel body durability will be my biggest concern

[tower912]

Tesla the car company is going through inevitable growing pains.   They need to get going on next generation batteries.    Their chargers are being adopted as the standard and that will help them through this phase.


Still, $16 billion in a day.

[MU82]

The biggest "hater" on Tesla the last couple days has been Musk, which is pretty funny.

If the Cybertruck ever comes to market, it's hard to see too many contractors and other professionals who actually use their truck for work preferring it to a "real" pickup truck.

Ford had such an opportunity here because the Lightning could have been the absolutely, positively go-to EV truck. But they effed it up royally and it remains to be seen if they can salvage it.

[Skatastrophy]

At first I laughed at the design, however, the practicality of its features intrigue me.  Tesla also has a devoted following, so I’ll believe the demise when I see it.

The stainless steel body durability will be my biggest concern

I laughed when Apple released the airpods, they weren't better than the other stuff on the market and you had to carry the battery on your pocket in addition to your phone.

Then, slowly, everyone started buying them after the initial flop.

It's not easy to predict consumer trends. The average consumer is an irrational idiot.

[jesmu84]

The biggest "hater" on Tesla the last couple days has been Musk, which is pretty funny.

If the Cybertruck ever comes to market, it's hard to see too many contractors and other professionals who actually use their truck for work preferring it to a "real" pickup truck.

Ford had such an opportunity here because the Lightning could have been the absolutely, positively go-to EV truck. But they effed it up royally and it remains to be seen if they can salvage it.

What makes you say Ford effed it up? Or why do you think it hasn't been successful?

[MU82]

What makes you say Ford effed it up? Or why do you think it hasn't been successful?

First, they were unable to deliver it to dealers. And then the few they delivered weren't able to achieve anywhere near the range that was advertised, especially when towing anything. Lots and lots and lots of truck owners are contractors, landscapers, boat owners, RV owners, ATV owners, etc. They need to be able to tow pretty heavy loads. The Lightning can't do it for very long.

https://www.motortrend.com/reviews/ford-f150-lightning-electric-truck-towing-test/

"The towing range of the electric F-150 is dismal. In MotorTrend testing, an F-150 Lightning Platinum saddled with a camper that nearly maxed out its 8,500-pound towing capacity couldn't even cover 100 miles. Range improved when we hooked up a significantly lighter trailer, but not by as much as you might expect."

Ford had a golden opportunity here - Cybertruck was stuck in neutral for years, and who knows how many will ever be produced - but they effed it up.

I don't know much about Rivians but a guy who owns one just moved into our neighborhood, so I'm gonna ask him a little about how it does in real-world driving. Unlike the Cybertruck, it's not ugly beyond words; and unlike the Lightning, it's actually been on the street for a bit. 

[jesmu84]

First, they were unable to deliver it to dealers. And then the few they delivered weren't able to achieve anywhere near the range that was advertised, especially when towing anything. Lots and lots and lots of truck owners are contractors, landscapers, boat owners, RV owners, ATV owners, etc. They need to be able to tow pretty heavy loads. The Lightning can't do it for very long.

https://www.motortrend.com/reviews/ford-f150-lightning-electric-truck-towing-test/

"The towing range of the electric F-150 is dismal. In MotorTrend testing, an F-150 Lightning Platinum saddled with a camper that nearly maxed out its 8,500-pound towing capacity couldn't even cover 100 miles. Range improved when we hooked up a significantly lighter trailer, but not by as much as you might expect."

Ford had a golden opportunity here - Cybertruck was stuck in neutral for years, and who knows how many will ever be produced - but they effed it up.

I don't know much about Rivians but a guy who owns one just moved into our neighborhood, so I'm gonna ask him a little about how it does in real-world driving. Unlike the Cybertruck, it's not ugly beyond words; and unlike the Lightning, it's actually been on the street for a bit.

Production issues are 100% on Ford.

The towing issues are not on Ford. Maybe, slightly on Ford, if you consider marketing/PR shortfalls. But towing with any EV is super difficult. When towing, at best, you'll probably only get 50% of max range. Consumers should be told this upfront or know it through their own research.

It's really no different than some EV owners being shocked/surprised when highway or cold weather driving significantly lowers their range.

I contend, beyond production issues, Ford did exactly as expected with an EV truck.

Edit: it's no different than ICE trucks having poor mpg compared to other cars. That mpg reduces further in cold and when towing

[JWags85]

I laughed when Apple released the airpods, they weren't better than the other stuff on the market and you had to carry the battery on your pocket in addition to your phone.

Then, slowly, everyone started buying them after the initial flop.

It's not easy to predict consumer trends. The average consumer is an irrational idiot.

I was gonna say it’s not the best example of that phenomenon, due to the cult of Apple (which I’m a part of though not a giddy release fool like so many), but that probably also applies to Tesla.

It’s funny, I still don’t love AirPods, and I think the newer models are even uglier.  But I will say, I have a better wireless pair I use when traveling, but the best part of AirPods are how fast and seamlessly they sync to my iPhone or iPad.  It’s been hit or miss otherwise.  My wife got a new generation pair of AirPods through work and I use her older ones fairly often cause it’s so quick when I’m not putzing around.

I don't know much about Rivians but a guy who owns one just moved into our neighborhood, so I'm gonna ask him a little about how it does in real-world driving. Unlike the Cybertruck, it's not ugly beyond words; and unlike the Lightning, it's actually been on the street for a bit. 

YMMV but of the 3 people I know who have owned a Rivian.  2 of them got rid of them and 1 owns multiple trucks but it’s not a regular usage vehicle for him.  They didn’t love them and the cost didn’t justify what they got, in their opinion.

[MU82]

Production issues are 100% on Ford.

The towing issues are not on Ford. Maybe, slightly on Ford, if you consider marketing/PR shortfalls. But towing with any EV is super difficult. When towing, at best, you'll probably only get 50% of max range. Consumers should be told this upfront or know it through their own research.

It's really no different than some EV owners being shocked/surprised when highway or cold weather driving significantly lowers their range.

I contend, beyond production issues, Ford did exactly as expected with an EV truck.

Hmm

YMMV but of the 3 people I know who have owned a Rivian.  2 of them got rid of them and 1 owns multiple trucks but it’s not a regular usage vehicle for him.  They didn’t love them and the cost didn’t justify what they got, in their opinion.

Thanks for the info.

[MU82]

From the WSJ:

The average individual-investor stock portfolio has risen about 150% since the beginning of 2014, according to investment research firm Vanda Research, which began tracking the data nine years ago. That performance beats the S&P 500’s roughly 140% during the same period. Vanda analyzed individual investors’ brokerage-account trading activity in U.S.-listed single stocks, but excluded ETF and mutual fund purchases as well as transactions made through retirement accounts or investment advisers.

[MU82]

GM had a horrible earnings report, and is getting hurt badly by the UAW strike. Beyond that, it is proving to be not much of a challenger to Tesla in the EV realm.

From the NYT's DealBook:

G.M. abandoned a goal to build 400,000 electric vehicles by mid-2024, citing slower-than-expected growth in sales. The company, which has bet its future on its E.V. transition, also recently delayed an effort to expand electric pickup production. ...

And finally … the carmaker’s Cruise autonomous vehicle division was kicked out of California. State regulators ordered Cruise to stop its driverless taxi service after a series of traffic mishaps. It’s bad news not only for G.M., which poured $700 million into the division in the most recent quarter, but also for the autonomous vehicle business more broadly.

The other interesting reports after yesterday's market close involved AI. Microsoft has done a much better job out of monetizing it than Google has; MSFT is well up before the bell, and GOOGL is well down.

[jesmu84]

GM had a horrible earnings report, and is getting hurt badly by the UAW strike. Beyond that, it is proving to be not much of a challenger to Tesla in the EV realm.

From the NYT's DealBook:

G.M. abandoned a goal to build 400,000 electric vehicles by mid-2024, citing slower-than-expected growth in sales. The company, which has bet its future on its E.V. transition, also recently delayed an effort to expand electric pickup production. ...

And finally … the carmaker’s Cruise autonomous vehicle division was kicked out of California. State regulators ordered Cruise to stop its driverless taxi service after a series of traffic mishaps. It’s bad news not only for G.M., which poured $700 million into the division in the most recent quarter, but also for the autonomous vehicle business more broadly.

The other interesting reports after yesterday's market close involved AI. Microsoft has done a much better job out of monetizing it than Google has; MSFT is well up before the bell, and GOOGL is well down.

It's unfortunate regarding the EV stuff. Especially because, although the sales might be slow, it isn't typically the whole story.

No surprise when you're only making luxury priced vehicles that demand isn't great. Add to that dealers marking up by $10k or more...you get this result.

[MU82]

It's unfortunate regarding the EV stuff. Especially because, although the sales might be slow, it isn't typically the whole story.

No surprise when you're only making luxury priced vehicles that demand isn't great. Add to that dealers marking up by $10k or more...you get this result.

True.

[MU82]

Naturally, the market is down premarket because there was too much good news: The economy continues to defy gloom-and-doom predictions, growing at a 4.9% annual rate.

https://apnews.com/article/economy-growth-inflation-gdp-consumers-spending-38dfeeee5f65b138ff98f6885d432865

[tower912]

Yes, with all the growth and all the jobs, need to fear rate hikes.

[Skatastrophy]

REIT pop?

https://www.morningstar.com/news/marketwatch/20231027198/white-house-opens-45-billion-in-federal-funds-to-developers-to-covert-offices-to-homes

$45B in debt facilities offered to RE companies converting commercial to residential. They say it's going to be low rate, but I can't find anything about the rates in a casual look around the internet. IMO the rates will predict whether this program is a success or a flop.

[jesmu84]

https://finance.yahoo.com/news/great-wealth-transfer-isn-t-100000946.html

[MU82]

https://finance.yahoo.com/news/great-wealth-transfer-isn-t-100000946.html

There will be a wealth transfer of a different kind when we boomers start kicking off at a bigly clip. Though this nugget was in the article:

A survey from Alliant Credit Union finds that half of millennials think they’re inheriting at least $350,000 from their parents, while half of boomers report say they’ll give away less than $250,000.

[Tortuga94]

There will be a wealth transfer of a different kind when we boomers start kicking off at a bigly clip. Though this nugget was in the article:

A survey from Alliant Credit Union finds that half of millennials think they’re inheriting at least $350,000 from their parents, while half of boomers report say they’ll give away less than $250,000.

One thing I focus my practice on is wealth transfer. There will be very large amounts of money changing hands over the next few decades and seeing that a large amount is in pre-tax retirement accounts(roughly 37 trillion). That money will eventually be taxed and with tax rates going up in 2026 with the sunsetting of the tax cuts in the TCJA and the elimination of the lifetime stretch IRA to only 10 years, there will be some serious tax implications for a lot of Americans in the next few decades.
Anyone who is living comfortably in retirement and has excess retirement savings should be looking to see if Roth conversions make sense or possibly if their health allows to buy 2nd-to die life insurance to leverage their dollars and leave their beneficiaries a pile of tax-free money.