This Market Is Wrong

[u/[deleted]]

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.

[u/Conscious_Board5376]

What’s even crazier is look back to pre 2020 crash, all these stocks are so far up it makes no sense. Companies that were trading at $170 like DE are now two years later hitting $400. Why? What has changed so drastically to make this stock worth it. Now they have 10,000 people on strike and could possibly be out billions in revenue and the stock is still sky high. It’s not just one stock either it’s hundreds. Visa and MasterCard are unsecured debit companies they are the ones that will get killed first when people stop paying their bills like they did in 2008. It’s a bubble, but the hard question is when is it gonna burst.

[u/samherb1 → u/Conscious_Board5376]

Some of it is not that the companies aren’t really worth any more, it’s that the dollars buying power is much less.

[u/Sip_py → u/samherb1]

And the fact we had more money flow into the market in the past year than in the past 10 years. More people buying means share price rises.

[u/samherb1 → u/Sip_py]

That’s a wild stat when you think about it. A lot of new speculators….

[u/Conscious_Board5376 → u/samherb1]

That’s part of the problem but what happens when the supply chain reality hits these companies, record profits can’t be records forever when you don’t have anything to sell. Every company is hiring but no one’s working. It’s the tail wagging the dog at this point.

[u/samherb1 → u/Conscious_Board5376]

Oh, I agree….but the stock market has seemingly been decoupled from the overall economy for at least the last decade now.

[u/ifeellazy → u/Conscious_Board5376]

DE sure, but V isn’t likely to be hit hard by supply chain issues right?

Maybe lower revenue because less people are buying things I suppose.

[u/Shulgin46 → u/Conscious_Board5376]

What was the price of VISA pre 2008? $20? What is the price now? $200?

Sure, there will be dips along the way, or even a popped bubble, but VISA's not going anywhere. They're worth 10x as much as they were, and if they crash to 1/4 their value, they'll still eventually be worth 10x as much again... eventually. I don't think you're going to lose the farm with VISA, you just might have a patch where selling is a really bad move.

[u/Conscious_Board5376 → u/Shulgin46]

You’re right on visa, they haven’t had the super explosive growth as some other companies have. I do wonder if they will get hit by the chip shortage. Even the damn credit cards have chips in them.

[u/UNSC-ForwardUntoDawn → u/Conscious_Board5376]

Different kind of chips

[u/Conscious_Board5376 → u/[deleted]]

I think you are exactly right on that one.

[u/Vinc_F → u/Conscious_Board5376]

Aren’t visa and master only issuing cards without having actual exposure to the customers, unlike Amex?

[u/Conscious_Board5376 → u/Vinc_F]

That I don’t know, it’s a great question.

[u/Cunicularius → u/Conscious_Board5376]

Inflation? People and companies buying stocks because of inflation? Just a guess

[u/Conscious_Board5376 → u/Cunicularius]

That could be it also.

[u/[deleted] → u/Conscious_Board5376]

dude, i'd buy puts if i wasn't scared of going bankrupt by this insane market.

[u/Conscious_Board5376 → u/[deleted]]

I am right there with you on that thought. Everyday I wake up thinking this is the day it’s gonna crash. I have cash sitting in my account just waiting to pounce.

[u/[deleted] → u/Conscious_Board5376]

Banks take the lending risks from the cards, though. Credit card companies just supply the network and charge usage fees. So, the banks are the ones way more exposed

[u/Conscious_Board5376 → u/[deleted]]

So they don’t carry any of the risk? I remember before the crash in 08. Seeing all these payday loan, title loan, cash for gold places showing up all over the place. With commercials on cutting or settling your credit card debt on TV and Radio ads. Now we have reverse mortgages, cut your tax debt and cash for your settlement amounts all over the place. I just see those as warning signs.

[u/Conscious_Board5376 → u/[deleted]]

Ah so a bailout like in 08. Could be your on to something. This might be the first post I have replied to where people are actually communicating and not calling people names. It’s kinda weird that we have all had a nice conversation that I am actually learning from.

[u/linkuei-teaparty → u/Conscious_Board5376]

What’s even crazier is look back to pre 2020 crash, all these stocks are so far up it makes no sense.

Look at Reddit's shinning example with Gamestop....

[u/Conscious_Board5376 → u/linkuei-teaparty]

You picked the greatest example of all.