minor quibble- Ultimately huge increases in earnings of the companies they “own” are are of no direct tangible value to stockholders. The only money you can spend is what is in your bank account. IOW dividends or proceeds from sales of shares. Going backwards from dividends you go to earnings then to sales then to future estimates based on things like TAM ,CAP etc. Which all must have been very high for Nokia at one time, about when I owned my last one. So it is all a game that works because people Believe in it. Come the next inevitable Bear (I have no idea when) the Belief will vanish.
Many of us were “lucky” enough to catch on to these fast growing stocks years ago, long before the ever backward looking Wall Street analysts did. Was there skill involved there too? Yes. But you can never be sure how much luck and skill play in the stock market, especially over such a short time.
Trying not to be Fooled by Randomness, and having made lots of profit, all I really need, I am gradually starting to withdraw from this risky game. Partly that is due to advanced age, partly due to prudence, partly due to thinking I know when enough is enough.
“Momentum”, you mean in business fundamentals? Because that is what it is. It is not some technical artifice - it is based on real world business fundamentals.
For those who say it is a bubble, the market has made some drastic discrimination calls dropping the likes of Talend, Cloudera, Nutanix etc to tiny multiples.
On the other hand stocks like Mongo or Zscaler that look expensive are not. I’m sorry, I don’t value a business on one year forward. No better than one year backwards.
Others like Elastic have become very cheap, except for those who only look one year forward or backward. Is there a reason for this? The market certainly has not bit Elastic up. Yet another distinction made by the market.
Recent IPOs? Yeah they may be momentum as much of it is technical, trying for easy money in buying frenzies
However, this”momentum” investing is actually investing in the best fundamentals. Nothing technical about it but real world business success.
Pet peeve of mine. “Momentum” investing is buying based upon so preconceived technical basis. Not what I do or will ever do.
Just be careful that you don’t confuse the earnings that we are making because the “market” continues to increase its desire for the shares with the likelihood that these companies will make enough “distributable” profits in the foreseeable future to justify their current prices.
Twisting business financial principles to match market results doesn’t mean that it is different this time.
Let the good times roll, but keep an ear to the music and make sure you know the location of the chairs as our current situation is VERY dependent on low interest rates and, should they move upwards, this market could quickly grow teeth. There is nothing illegal, immoral or fattening about selling high and re-buying the same shares at a lower price.
I was too young at the y2k (dot com) bubble, so I only heard/read about it, that everyone was so excited about the new economy, throwing money into the markets like crazy. Your enthusiasm plus the valuation of the companies like Okta, zscaler etc. sounds a bit like the times back then.
So my question is: What exactly is different this time?
Please familiarize yourself with the “additional info” panel located on the right side of this message. You will find the post from Saul “Why it really is different”. Please read all the linked columns and get up to speed with the board… take your time and read each post as often as you need to commit to memory. Also, re-read Sauls June review again very carefully, he goes into great detail and lengths to explain.
The results and these companies speak for themselves. One only needs to go back and read every portfolio review Saul has posted over the last 3 years.
Please alert us to the optimal point in time for selling at the zenith and buying at the nadir. If you can do this with success it doesn’t even need to be a “Saul” stock. Any reasonably volatile stock will do.