When is the time to move to high-quality growth stocks? What do you all think?
Jim
Not yet. We are in the market to buy a house and I told my wife, Just now Fed started the rate increase, and they have to get few hikes in place and start QT. So give it at least 6 months for the reality to set in. Few names have come down a lot but we could go lot lower. I may end up buying some and hedge it with going short SPY.
When is the time to move to high-quality growth stocks?
Ha, ha, ha!!! If any of us knew that we would be rich beyond imagination!
Seriously, the equities market has typically been a leading indicator. The recovery in growth equities precedes the turnaround in the economy. Trying to time the turnaround is a fools errand. My appetite for growth stocks is getting bigger and bigger. I am of the belief it is better to be early than late…so I’m looking for ways to buy growth now.
Lee
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I am with Abidjan but am more on the side of what, not when. I have never been able to time things well so I would be of a mind to slowly add to the best companies.
For me, the trick is where to add. Solid industrials who are growing but slowly. Industrials who are in good industries and are growing. GARP type companies with good growth rates, or the very fastest growers who have been decimated but have not slowed their growth at all.
Obviously that leaves out the companies that were growing fast but have hit the pause for some reason or other. I definitely think it is too early for those.
What type of growth company are you thinking of Jim?
Randy
What type of growth company are you thinking of Jim?<<<
I am not Jim, but my middle name is James. Let me throw out a couple names for comments -
- GARP
GOOG
AAPL
MELI
PYPL?
- Good Industries
LOW
HD
- Solid slo-gro
JNJ
- The decimated
TTD
Vince
(Ducks)
Hey, Randy,
I was looking at some of the big tech bellwethers, including GOOG and AMZN. I’m most interested in those big tech names that still seem to have a lot of growth left in them. Remember in 2018 and Apple was trading at 10x earnings or whatever? MSFT could be slotted in here, too. I’d like to pick up some high-quality blue chips such as these when the time is ripe.
Also, I follow a few SaaS names but don’t think it’s anywhere near time to buy them, given the Fed’s projected rate hikes in 2022. Mostly I just watch these names to gather the market’s sentiment over a given period.
Of course, I continue to be opportunistic with thrifts, as appropriate.
Jim
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I have been adding to my favorites this week. Most of what I own is dividend payers and ETF’s.
I was thinking about adding to google but just have not done it.
I did here somebody on a news show somewhere say we are not to the market average PE yet, that is 3500 for the S&P, we are at 4000 now.
Now with that said, keep in mind I Farm and Ranch for a living in dry area of the Dakotas. So, I may not be the sharpest spoon in the drawer. 
Hey, Balto,
I think it’s useful to consider the historic P/E levels for some sense of depth. That can be valuable to understand where we are.
I think it’s also important to remember, too, that if we’re looking at historic multiples from literally decades ago, then we’re comparing different quality businesses and other conditions. The (relatively) capital-light tech businesses of today are better businesses – they scale, they generate good margins, and labor has less bargaining power today. The physical economy businesses of 40 years ago required lots of tangible capital to maintain their positions, etc etc. Those old businesses should trade at lower multiples, and today’s should trade at higher multiples – but by how much? Anyway, I’m always trying to remember this and think of the historic P/E as a guidepost. Of course, the market could drop well below historic levels, too, especially in the short term.
It would be a lot like comparing today’s football players to those of the 1970s (or whatever). They’re just not the same.
Best,
Jim
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Thanks for the reply Jim
your comment
The (relatively) capital-light tech businesses of today are better businesses – they scale, they generate good margins, and labor has less bargaining power today. The physical economy businesses of 40 years ago required lots of tangible capital to maintain their positions, etc etc. Those old businesses should trade at lower multiples, and today’s should trade at higher multiples – but by how much?
Got me to thinking do I think tech companies are better businesses and are worth more? I am being honest for the sake of discussion and the risk of being ate alive on a public board. they are worth maybe a small premium if any. I see competition as much tougher in tech.
I sleep better with my BRKB 5 year total return 90% and my CP 5year total return 134%
Then I do my goog 5 year total return 149%
I get it more return with google so thus the premium, but then potential downside is IN MY OPINION much larger.
Basically I see the Railroad that hauls the commodities my local Elevator trades as more stable.
Remember I still own google One of the very few tech stocks I currently own.
I should also add I do not trade often, I usually average one buy a year. When I bought google was in 2015 I did add a few tech companies in my Roth in the covid panic (facebook paypal…some others ) then sold out because the valuations just seemed crazy.
I wish you the best and appreciate you man, stay safe.
One other thing My wife and I retired dec 31 2021 at 52 and 53 years old from our insurance business. So we could go to work with our kids, grandkids and my Mom on the family farm. You the motley fool and a lot of others are the reason Why.
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Thank you, Balto! I’m glad to hear that you’re able to retire and spend time with your loved ones and do the things you really enjoy!
Over time, the Fool has been a great place for me to study investing and connect with other investors. All the best for you during many years of happy retirement!
Jim
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