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How can 1 US company be worth more than the top 350 UK companies?
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Tesla is perceived as a technology company that happens to make cars - Ford is simply a car company. The expectation is that the technology developed by Tesla (self-driving ability and all the spinoffs) will be more valuable in the future that Ford simply transitioning to making electric vehicles.Middle_of_the_Road said:
Understood.GeoffTF said:
The market believes that the net present value of Tesla's earnings will be much more than Ford's. If you believe that the market is wrong, you can buy Ford and short sell Tesla. You may, however, find that the market can remain irrational for longer than you can stay solvent (as Keynes famously said).Middle_of_the_Road said:
No doubt some are. Would like to know how these two companies are valuedmasonic said:Perhaps they are overvalued.
Tesla ~ $1 tn
Ford ~ $40 bn
It does seem rather irrational that one is going to have 25 times the earnings, whilst selling 75% fewer vehicles.
The perception (at least) is that Tesla is much further along with self-driving that other companies. Similar with Uber - self-driving taxis is where the real money is - using humans is just an interim step while the self-driving tech is developed and approved. It will be a lot more profitable once you no longer have to pay drivers.1 -
Tesla was adept enough to recruit many ex Apple employees in the marketing and retail fields. In an attempt to recreate the cult status that the Apple brand has enjoyed for many decades. Customer loyalty happily overpaying to acquire the gizmo released at the latest product launch show. Apple commenced their self driving project in 2014 and scrapped it in 2024. Shows that even the companies with deep pockets and the best R&D tech departments ultimately preceive something's as being commercially unviable.Shimrod said:
Tesla is perceived as a technology company that happens to make cars - Ford is simply a car company. The expectation is that the technology developed by Tesla (self-driving ability and all the spinoffs) will be more valuable in the future that Ford simply transitioning to making electric vehicles.Middle_of_the_Road said:
Understood.GeoffTF said:
The market believes that the net present value of Tesla's earnings will be much more than Ford's. If you believe that the market is wrong, you can buy Ford and short sell Tesla. You may, however, find that the market can remain irrational for longer than you can stay solvent (as Keynes famously said).Middle_of_the_Road said:
No doubt some are. Would like to know how these two companies are valuedmasonic said:Perhaps they are overvalued.
Tesla ~ $1 tn
Ford ~ $40 bn
It does seem rather irrational that one is going to have 25 times the earnings, whilst selling 75% fewer vehicles.
The perception (at least) is that Tesla is much further along with self-driving that other companies. Similar with Uber - self-driving taxis is where the real money is - using humans is just an interim step while the self-driving tech is developed and approved. It will be a lot more profitable once you no longer have to pay drivers.1 -
FTSE all share (ie 350) funds returned ~9.3% the last year (eg. https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-uk-all-share-index-unit-trust-gbp-acc/overview), so they seem to match your 'acceptable return' requirements, if the performance continues.SneakySpectator said:
I'll watch the video in a bit but take the https://www.ishares.com/uk/professional/en/products/251807/ishares-uk-dividend-ucits-etf index as an example. The dividend yield on that fund is 5.04%. Now subtract the average annual inflation rate of 2.8% and you're left with 2.24% real return per year.GeoffTF said:SneakySpectator said:The issue isn't how stable the deep rooted the companies are, the issue is how much my money will go up if I invest in them. You will never get tech level returns on oil & gas, mining, insurance, banking etc because these are essentially zero growth stocks.
If I wanted a 4% return per year investment I'd just put it into government bonds.UK companies tend to pay out big dividends. That comes off the capital growth. If you get 4% dividends with inflationary growth of dividends and capital, you are a winner with 7% total return. There is the alternative of tech stocks with sky high valuations, but they do not have to disappoint much to lose you money. There is also the possibility that Trump will levy high taxes on your US investments, or worse:I do not know what will happen, so I spread my risk.
In what universe is this considered an acceptable return for investing in the stock market? If I'm going to risk my money in the stock market I either want a 5 % - 7% real return per year or a 5% - 7% real dividend yield per year.0 -
It's hard to break into an established market, even for companies that have a brand loyalty in other areas and deep pockets. It doesn't follow that it commercially inviable for other companies already in the field.Hoenir said:
Tesla was adept enough to recruit many ex Apple employees in the marketing and retail fields. In an attempt to recreate the cult status that the Apple brand has enjoyed for many decades. Customer loyalty happily overpaying to acquire the gizmo released at the latest product launch show. Apple commenced their self driving project in 2014 and scrapped it in 2024. Shows that even the companies with deep pockets and the best R&D tech departments ultimately preceive something's as being commercially unviable.Shimrod said:
Tesla is perceived as a technology company that happens to make cars - Ford is simply a car company. The expectation is that the technology developed by Tesla (self-driving ability and all the spinoffs) will be more valuable in the future that Ford simply transitioning to making electric vehicles.Middle_of_the_Road said:
Understood.GeoffTF said:
The market believes that the net present value of Tesla's earnings will be much more than Ford's. If you believe that the market is wrong, you can buy Ford and short sell Tesla. You may, however, find that the market can remain irrational for longer than you can stay solvent (as Keynes famously said).Middle_of_the_Road said:
No doubt some are. Would like to know how these two companies are valuedmasonic said:Perhaps they are overvalued.
Tesla ~ $1 tn
Ford ~ $40 bn
It does seem rather irrational that one is going to have 25 times the earnings, whilst selling 75% fewer vehicles.
The perception (at least) is that Tesla is much further along with self-driving that other companies. Similar with Uber - self-driving taxis is where the real money is - using humans is just an interim step while the self-driving tech is developed and approved. It will be a lot more profitable once you no longer have to pay drivers.0 -
The Cybertruck is an example of how badly wrong a company can go down the wrong road. When CEO's get it wrong. While the long promised $25,000 car quietly gets abandoned. No doubt as the Chinese are well ahead in this segment of the EV market.Shimrod said:
It's hard to break into an established market, even for companies that have a brand loyalty in other areas and deep pockets. It doesn't follow that it commercially inviable for other companies already in the field.Hoenir said:
Tesla was adept enough to recruit many ex Apple employees in the marketing and retail fields. In an attempt to recreate the cult status that the Apple brand has enjoyed for many decades. Customer loyalty happily overpaying to acquire the gizmo released at the latest product launch show. Apple commenced their self driving project in 2014 and scrapped it in 2024. Shows that even the companies with deep pockets and the best R&D tech departments ultimately preceive something's as being commercially unviable.Shimrod said:
Tesla is perceived as a technology company that happens to make cars - Ford is simply a car company. The expectation is that the technology developed by Tesla (self-driving ability and all the spinoffs) will be more valuable in the future that Ford simply transitioning to making electric vehicles.Middle_of_the_Road said:
Understood.GeoffTF said:
The market believes that the net present value of Tesla's earnings will be much more than Ford's. If you believe that the market is wrong, you can buy Ford and short sell Tesla. You may, however, find that the market can remain irrational for longer than you can stay solvent (as Keynes famously said).Middle_of_the_Road said:
No doubt some are. Would like to know how these two companies are valuedmasonic said:Perhaps they are overvalued.
Tesla ~ $1 tn
Ford ~ $40 bn
It does seem rather irrational that one is going to have 25 times the earnings, whilst selling 75% fewer vehicles.
The perception (at least) is that Tesla is much further along with self-driving that other companies. Similar with Uber - self-driving taxis is where the real money is - using humans is just an interim step while the self-driving tech is developed and approved. It will be a lot more profitable once you no longer have to pay drivers.
1 -
InvesterJones said:
FTSE all share (ie 350) funds returned ~9.3% the last year (eg. https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-uk-all-share-index-unit-trust-gbp-acc/overview), so they seem to match your 'acceptable return' requirements, if the performance continues.SneakySpectator said:
I'll watch the video in a bit but take the https://www.ishares.com/uk/professional/en/products/251807/ishares-uk-dividend-ucits-etf index as an example. The dividend yield on that fund is 5.04%. Now subtract the average annual inflation rate of 2.8% and you're left with 2.24% real return per year.GeoffTF said:SneakySpectator said:The issue isn't how stable the deep rooted the companies are, the issue is how much my money will go up if I invest in them. You will never get tech level returns on oil & gas, mining, insurance, banking etc because these are essentially zero growth stocks.
If I wanted a 4% return per year investment I'd just put it into government bonds.UK companies tend to pay out big dividends. That comes off the capital growth. If you get 4% dividends with inflationary growth of dividends and capital, you are a winner with 7% total return. There is the alternative of tech stocks with sky high valuations, but they do not have to disappoint much to lose you money. There is also the possibility that Trump will levy high taxes on your US investments, or worse:I do not know what will happen, so I spread my risk.
In what universe is this considered an acceptable return for investing in the stock market? If I'm going to risk my money in the stock market I either want a 5 % - 7% real return per year or a 5% - 7% real dividend yield per year.ISF (FTSE 100) returned an annualised 10.22% over the last 5 years:IUKD (UK high yield warts and all) returned an annualised 11.53%:IIRC iShares changed the original methodology for IUKD after it suffered a spectacular meltdown. Investing in a small market has its risks. Investing in a subset of that market is riskier still, but can pay off sometimes.The UK market has delivered handsome returns over the last five years. There was miserable period before that, and better days prior to that.2 -
I've always been told we shouldn't base our expectations off of short term history, so using the last 5% as some kind of benchmark to suggest that a UK dividend fund or FTSE100 fund is holding it's weight is a bit deceptive.GeoffTF said:InvesterJones said:
FTSE all share (ie 350) funds returned ~9.3% the last year (eg. https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-uk-all-share-index-unit-trust-gbp-acc/overview), so they seem to match your 'acceptable return' requirements, if the performance continues.SneakySpectator said:
I'll watch the video in a bit but take the https://www.ishares.com/uk/professional/en/products/251807/ishares-uk-dividend-ucits-etf index as an example. The dividend yield on that fund is 5.04%. Now subtract the average annual inflation rate of 2.8% and you're left with 2.24% real return per year.GeoffTF said:SneakySpectator said:The issue isn't how stable the deep rooted the companies are, the issue is how much my money will go up if I invest in them. You will never get tech level returns on oil & gas, mining, insurance, banking etc because these are essentially zero growth stocks.
If I wanted a 4% return per year investment I'd just put it into government bonds.UK companies tend to pay out big dividends. That comes off the capital growth. If you get 4% dividends with inflationary growth of dividends and capital, you are a winner with 7% total return. There is the alternative of tech stocks with sky high valuations, but they do not have to disappoint much to lose you money. There is also the possibility that Trump will levy high taxes on your US investments, or worse:I do not know what will happen, so I spread my risk.
In what universe is this considered an acceptable return for investing in the stock market? If I'm going to risk my money in the stock market I either want a 5 % - 7% real return per year or a 5% - 7% real dividend yield per year.ISF (FTSE 100) returned an annualised 10.22% over the last 5 years:IUKD (UK high yield warts and all) returned an annualised 11.53%:IIRC iShares changed the original methodology for IUKD after it suffered a spectacular meltdown. Investing in a small market has its risks. Investing in a subset of that market is riskier still, but can pay off sometimes.The UK market has delivered handsome returns over the last five years. There was miserable period before that, and better days prior to that.
Long term over a 20 year period and those funds have massively underperformed relative to the S&P500 or a global index.
Here's the bigger 17 picture of IUKD
Not so great eh?0 -
Why stop at 20 years in that case?Since 1986 the total return of the FTSE100 has been 8.6% annualised, c.f. 8.7% for Europe, and 9.1% for world.PS - don't forget to chart total return (ie include dividends)2
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Past performance is no guide to the future, even over the long term. Which is why diversification is important. Past performance can tell you how a historic investor fared, which in the case of the past 5 years was quite well. Says nothing about the next 5, 20, or 100 years. Japan or Austria -like returns are possible.0
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Why? You said you genuinely believe that 100% global index tracker is right, so why do you care what anyone else’s perspective is? You seem to me to just ask the same question, albeit you phrase it slightly differently, over and over again, are you seeking reassurance? Ok then, VWRP is a good fund…leave it be, you’re relatively young, just go live your life. Come back in 20 years when you have some real decisions to make…SneakySpectator said:
I'm still 100% in VWRP I'm not going to swap and change anything, I'm just having a discussion to see other people's perspectives and opinions.wmb194 said:
In the past year or so you'd have done really well in British and continental European banks and insurers. Don't forget to add back dividends when looking at their performance.SneakySpectator said:
The issue isn't how stable the deep rooted the companies are, the issue is how much my money will go up if I invest in them. You will never get tech level returns on oil & gas, mining, insurance, banking etc because these are essentially zero growth stocks.wmb194 said:
So the things you value are happening in Britain but in this thread you've be saying* that 'almost nothing but dinosaur' things happen in Britain... Try some Socratic thinking; can you think of exceptions that you can use to modify your statement?SneakySpectator said:
Of course there are but that same logic can be applied to how many US company operating in the states that aren't listed.wmb194 said:
You cannot think of any companies operating in Britain and for which people work that aren't listed on the LSE?SneakySpectator said:
The problem is the companies that make up the overwhelming bulk of our "large economy" are in no growth sectors. Banks, oil, mining etc.IanManc said:Pathfinder000 said:........ we are a small country, without any real money and a slowly sinking economy .......SneakySpectator said:
The UK is the 6th largest economy in the world, and the 9th biggest manufacturer in the world.
........ but yeah it's pretty dead on the island nowadays ........
However, it has a sizeable portion of its population which glibly talks the UK down contrary to the evidence.
Just for fun I removed banks, oil & gas, insurance, mining, and tobacco from the FTSE 350 and the market cap drops by 45%. So nearly half of the market cap is made up from those relic companies.
I removed those same sectors from the S&P500 and the market cap drops by just 26%.
The contrast is undeniable. I don't really mind if the UK stock market is fuelled by high profit no growth companies, but I better be getting a 10% dividend yield as a result.
The point is the ones that are listed, are massively dragging down the index with their 0 growth dead end sectors.
What are you trying to achieve in this thread? You don't think banking and insurance et al will exist in 100 years' time? If it's an attempt to try to decide where to invest I thought you'd settled that for yourself in another recent thread: 100% in a US S&P500 tracker.
*"The problem is the companies that make up the overwhelming bulk of our "large economy" are in no growth sectors. Banks, oil, mining etc."
If I wanted a 4% return per year investment I'd just put it into government bonds.
I'm not, but investors make their money when the index goes up so if the companies are not in the index it's irrelevant.InvesterJones said:
Despite being corrected several times, you're still confusing the economy with stock exchanges.SneakySpectator said:
The problem is the companies that make up the overwhelming bulk of our "large economy" are in no growth sectors. Banks, oil, mining etc.IanManc said:Pathfinder000 said:........ we are a small country, without any real money and a slowly sinking economy .......SneakySpectator said:
The UK is the 6th largest economy in the world, and the 9th biggest manufacturer in the world.
........ but yeah it's pretty dead on the island nowadays ........
However, it has a sizeable portion of its population which glibly talks the UK down contrary to the evidence.
Just for fun I removed banks, oil & gas, insurance, mining, and tobacco from the FTSE 350 and the market cap drops by 45%. So nearly half of the market cap is made up from those relic companies.
I thought you were an all of market tracker investor so why are you trying to pick? Buy an all world tracker or stick with your preferred S&P500 tracker.4
https://www.youtube.com/watch?v=2S7gWNxzlvE
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