Stocks and shares

chewmylegoff

The internet is full of stories about people who made millions buying some dubious AIM stock which went from 2p to £40 a share. Unfortunately the odds of striking it big are almost zero. For every person who actually did make a massive profit (and isn't just making it up) there are thousands of others who invested in the same way and lost their shirt.

The only way you will make huge returns is by taking huge risks. Personally it seems to me that it makes more sense to drip feed money into a couple of different low cost tracker funds over a long period of time.

If you want to invest in a handful of tech IPOs then you better be prepared to lose all of your money because that is a more likely outcome than hitting it big.

chewmylegoff

Generali wrote: »

It's a great time to be selling this sort of crap because you're measuring your 3 and 5 year performance against the depths of 2010 and 2012.

They only charge 1 & 15! In the good old days we got 2 & 20 and wished we could have charged more.

x & y is a x% management fee charged on the whole of your investment plus a y% bonus based on making a profit for your clients. There is no evidence that high fee hedge funds will do anything other than destroy value over time after fees and taxes versus managed funds and index trackers.

My favourite is the fund of hedge funds model. Take another 2 & 20 for doing nothing more than putting your investors money in another hedge fund and toddling off to the golf course meanwhile unless the returns as massive the investor loses more than half their returns in fees.

Physics

padington wrote: »

Why would you track an index in the face of rising interest rates ? Surely it's time to be more targeted ?

Because it's all priced in. Unless you think you have some edge over the professionals, I don't see how you can hope to beat the market as a whole.

cells

Generali wrote: »

Uber for $50bn!!! An illegal minicab company with a nice app 'worth' $50,000,000,000 at the last fund raising round. Even Toyota is only worth 4x more than that, plus some change, at current market cap (that is price per share x number of shares).

It isn't really about an app its about getting enough market share that you are by far the no 1

A bit like how rightmove is king follwed by a hundred other property sale websites that have little to no business

you could try to guess the minicab market.
I think in England there is 250,000 cabs.
Multiply by 100 x just to guess how many there would be in the world maybe 25 million cabs

if uber (or uber like) companies could charge say $2k per cab per year for their services that would give them revenue of $50B. It should be a v.high margin business as its a bit of fairly simple software. So if $20B of that $50B is profit that could make uber or whichever one wins out a tech company on the size and scale of Google


of course there are a lot of assumptions on that.
can they really extract $2k per cab (could be more)
Can they get 100% of the market (definitely not but windows and google have more than 50% of their markets


Right now probably too much uncertainty and risk as they could end up the yahoo or MySpace and someone else take market leadership.


(If I were Samsung id strongly look into making my own cab service and pre install it on Samsung devises). Hell maybe there is even a business idea tjere somewhere for samsung or the like to give out free phones/hardware and pay afor it via such apps (pre install samsung cabs, samsung real estate, Samsung you tube, etc)

cells

paddyrg wrote: »

Generali - completely agree. Insane valuation. The thing that upsets me most is that that valuation WILL affect pension funds etc., some of which will track 'key' stocks.

And for an illegal cab operation, oh very much agree. Just calling something 'ride sharing' does not make it so, it's every bit as much ride sharing as that dodgy bloke who hangs around outside nightclubs with a Datsun Cherry. The sheer arrogance of 'we don't need to obey local laws because 'murica and bald eagles and guns and !!!!' is vile. And it's a couple of arrogant kids behind it, behaving like arrogant kids... It has to all come a-tumbling at some point...

Hailo at least you get a black cab, all legit. They even are offering £20 'welcome back' free travel just now (if you have an old account, log in!).

The valuation represents EVERY SINGLE ADULT in the WORLD making $100 worth of taxi travel through UBER before any overheads.

if a company can make a profit of $2B a year its valuation would be in the order of $50B

$2B a year is only about $80 a cab (assuming 25m cabs worldwide). Or say $250 a cab of which $80 is underlying profit. Were I a cab driver it would be a simple case of is uber or a competitor going to get me more business than the cost and the answer is probably yes

Uber could also potentially become a true car/van rental business. Just 30p a mile park it where ever you like. Imagine a fleet of 1 million uber rental cars in the UK. Get your smartphone and walk to the nearest car (probably on your street) go to it and your smartphone opens the car. Drive to where you need to go and just leave the car there. 5 miles trip...thats just £1.50 please.

I think that there is a lot of potential far far more than cabs in a car rental app that gets to a critical mass. It would have almost all the cost benefits of a self drive car (only your doing the driving)

cells

Generali wrote: »

Uber may be okay, good or super awesome. That doesn't make them worth $50bn necessarily.

I just don't see Uber being massively profitable as it's just too easy to compete with them on a local scale. I don't care that I can order a minicab in a thousand cities on a single app because I spend almost all my time in one city, as do most people.

What Uber will force through is cab companies becoming a bit nicer and a bit more efficient.

The network effect for Uber that is much touted I really have my doubts about.

Even Amazon can't make substantial profits because there are too many companies around that would simply undercut them with the support of publishers.

All the times I've used cabs I've first had to do an Internet search to find their numbers and then call them. I don't really use cabs now but if i did I suspect I would have uber or the like installed and just use that (rather than spend 5-10 mins trying to find the local ones call them up and explain where it is I am and want to go).

also I think uber or a competitor acting as a per mile car rental company could completely replace the idea of car ownership. If there were say 5 million uber cars on the streets of England I doubt I would buy another car I would just rent off them. There would be so many that whateber street you were on there would be one.

No need to mess around with insurance mot maintiannce buying selling cleaning just pay 30p a mile

cells

chewmylegoff wrote: »

The internet is full of stories about people who made millions buying some dubious AIM stock which went from 2p to £40 a share. Unfortunately the odds of striking it big are almost zero. For every person who actually did make a massive profit (and isn't just making it up) there are thousands of others who invested in the same way and lost their shirt.

The only way you will make huge returns is by taking huge risks. Personally it seems to me that it makes more sense to drip feed money into a couple of different low cost tracker funds over a long period of time.

If you want to invest in a handful of tech IPOs then you better be prepared to lose all of your money because that is a more likely outcome than hitting it big.

Why would a small company who had a brilliant idea or business plan enrich the shareholders?

Why wouldn't bob the director just leave and set up bob ltd and take the idea forward and all the rewards for himself?

Thrugelmir

chewmylegoff wrote: »

The internet is full of stories about people who made millions buying some dubious AIM stock which went from 2p to £40 a share.

You need to get in at the ground floor before the Company even gets a listing. Odds are though that you will be wiped out more often than you make profitable return.

IronWolf

cells wrote: »

Why would a small company who had a brilliant idea or business plan enrich the shareholders?

Why wouldn't bob the director just leave and set up bob ltd and take the idea forward and all the rewards for himself?

Usually because he needs money to invest in order to grow the business. Either that or he wants access to some cash. If you own a private company you can't realise any of that value beyond dividends, whereas if you hold shares in a listed company you can sell off shares if you want some money.

Thrugelmir

cells wrote: »

Why would a small company who had a brilliant idea or business plan enrich the shareholders?

Shareholders provide the risk capital.