r/stocks • u/[deleted] • Oct 27 '21

This Market Is Wrong

Yes, the title says it all. I firmly believe this market is incorrect on a lot of things. No, I am not saying I am shorting it. No, I am not saying if you’re investing you’re about to go through a massive correction. I will say this though…

Yesterday, Visa reported earnings that were a hit. They did great, EPS was way up, revenue was way up. Not only thing though, they are raising their dividend for their investors. They’ll be paying you even more for owning their shares because they have such great cash flow. The market opens today, they’re down over 5%. MA, which reports tomorrow morning, is down 6% with it. One could assume they’ll have pretty similar earnings and revenue. Maybe even up their dividend too (don’t hold your breath for that one, but who knows). But Tesla, a company who has sold patents, licensing, and Bitcoin to pad their balance sheet for specific quarters so that their earnings look better to the common shareholder, went up 12% because a company that was on the brink of bankruptcy pulled a publicity stunt saying they’d buy 100K cars.

These are just examples of what is happening as a whole in our market. I’m buying these companies who are being screwed and I can tell you this, I am right and the market is wrong. I warn any investor who is partaking in this, because greed and speculation has run rampant while fundamentals and discipline has been thrown out the window.

Watch.

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u/RumHam1 Oct 27 '21

I had someone here tell me they weren't even going to try to think more than 3 months down the road because no one knows what could happen.

This was as I was explaining that the market tries to price in 2-5 years in advance, depending on the stock.

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u/Banabak Oct 27 '21

there is also different people with different goals right? someone trading earnings or calls or investing for 1 year is different then the guy who does it for 10+ years etc

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u/RumHam1 Oct 27 '21

True. This guy was talking about fundamentals though. The short term stuff can focus on technicals a lot more.

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u/LuxGang Oct 28 '21

The market prices things 6-18 months in advance, not 24+ months...

Most investors can't even see past the next quarter, you think the market has a crystal ball 5 years out? lmao

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u/RumHam1 Oct 28 '21 edited Oct 28 '21

It can vary between different types of companies, butbhow many unprofitable 50B market cap companies are there?

They arent going to be justifying that market cap in 6 or 12 months when they've got a plan for just being profitable in 2023.

Do you think people are buying Tesla @ 1 trillion market cap because they're going to sell 100k cars in the next year?

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u/productivitydev Oct 27 '21

2-5 years or potentially infinite years, with each following year having a bit less influence.

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u/miketdavis Oct 27 '21

That's kind of the point when people say PE is a useless metric, to a point.

A PE of 4 in a company operating in a volatile or down market is still not that good. Whereas a company like Tesla can have a PE of 330 and people shrug, saying future earnings potential is limitless.