Losses on investments in shares

adindas

GB12 said:

adindas said:

Prism said:

GB12 said:

I believe the FAANG's and you can throw in Microsoft and in particular Tesla plus Chinese big tech companies are grossly over priced and will eventually have there share prices rebased by as much as 50% (on average). When it happens they will bring down the rest of the market which will recover. 

You know that Tencent and Alibaba have already had their fall down around 40% and 60%. Both trade at a PE for less that 20. You think they are going to drop by half again?

Of the FAANGs, Microsoft is the only one I have some confidence in with 

S&P 500 performance are drivend by the performance of Mega Caps stocks such as by FAANG is already overheated.

Hence the rest of the companies are not overpriced and the crash in the mega caps will bring down the market including those that are not overpriced. They will recover.

It could be the case for high growth companies with very small amount of debts. If they have a lot of debts, they might be hit by the interest rate hikes. The FED has announced they will increase the interest rate at least three times this year.

GB12 said:

I am of the belief that inflation is a transitory. AI and Robotics will snuff it out in the medium term. In the short term its a supply side phenomenon, businesses will deal with it fairly quickly....please!

It might be the case but the FED at least believes that it not transitory but it is there to stay. For that reason they have made decision to raise interest rate three times this year. AI and Robotics might be hit by the global chip shortages which many believe it will still continue this year.

RogerIrvine

Well there you go..Tesla up 10% today.

Thrugelmir

RogerIrvine said:

Well there you go..Tesla up 10% today.

An illustration of the speculation in the stock markets. A barely profitable manufacturing company increasing in value over by a $100 billion. 

sevenhills

Thrugelmir said:

An illustration of the speculation in the stock markets. A barely profitable manufacturing company increasing in value over by a $100 billion. 

Is the growing use of SIPPs affecting how much shares increase, that and low inflation, so people with money don't want to leave it in the bank/building society?

Thrugelmir

sevenhills said:

Thrugelmir said:

An illustration of the speculation in the stock markets. A barely profitable manufacturing company increasing in value over by a $100 billion. 

Is the growing use of SIPPs affecting how much shares increase, that and low inflation, so people with money don't want to leave it in the bank/building society?

Understandable that people are getting sucked into investing into the stock markets. My personal concern is that many ultimately are going to get their fingers burnt due to a lack of broader comprehension. The next bear market is likely to be savage. 

eskbanker

sevenhills said:

Thrugelmir said:

An illustration of the speculation in the stock markets. A barely profitable manufacturing company increasing in value over by a $100 billion. 

Is the growing use of SIPPs affecting how much shares increase, that and low inflation, so people with money don't want to leave it in the bank/building society?

Growth in popularity of a UK-specific investment vehicle wouldn't register on a list of reasons for Tesla's share price to increase.  Inflation has been low in historical terms in recent years, but that's turned around in the past few months, and anyone seeing investing in shares as an alternative to saving in deposit accounts is likely to have a rude awakening at some point in the future!

jimjames

sevenhills said:

Thrugelmir said:

An illustration of the speculation in the stock markets. A barely profitable manufacturing company increasing in value over by a $100 billion. 

Is the growing use of SIPPs affecting how much shares increase, that and low inflation, so people with money don't want to leave it in the bank/building society?

Tax efficient savings in the USA might impact Tesla but UK investor purchases will have a negligible impact on US share prices. Maybe more down to hedge funds and other geared purchasing that drives the prices.

adindas

RogerIrvine said:

Well there you go..Tesla up 10% today.

Tesla crushes the delivery expectation. The news just comes out today ...

https://finance.yahoo.com/m/aa0447b2-572a-32ae-8db5-6578cee14f08/dow-jones-futures:-tesla.html?.tsrc=fin-srch

adindas

IMO, down 30%+ in high growth stock is not uncommon due to high volatility. But if they recover they could up 100% in a quite short period. Due to high Volatility the price swing of 30%+ in high growth stock is not uncommon.

At one point Amazon was down 90%. See where they are now ... high growth stocks are making loss are not profitable most of the time in the early days all the time because the reinvest the revenue to to grow the business, rather than distributing is as dividends,

https://www.cnbc.com/2018/12/18/dotcom-bubble-amazon-stock-lost-more-than-90percent-long-term-investors-still-got-rich.html

If the only reason you close your position in "hight growth stock" because you get scared it is down 30%+, your original thesis has not changed there is still high possibility it will recover, then probably investing in high growth stock is not for you.

If the only reason you close your position in "hight growth stock" because you get scared it is down 30%+, your original thesis has not changed there is still high possibility it will recover, then probably investing in high growth stock is not for you. Due to high Volatility the price swing of 30%+ in high growth stock is not uncommon.

Position sizing is also very important so you do not put high percentage of your money in one stock which will lead you to be emotionally attach. And you could still play with another stock while waiting this stock to recover.