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The move lower that we will see is not a correction
TheRoarOfTheCrowd
Member, Swaye's Wigwam Posts: 1,730 
It will be a revaluation lower that reflects the actual value of normalized "new world" earnings revenue and growth rates from a historical perspective,
on the way down this may turn into a -20-35% changepoint, but as this settles out I'm guessing -20%.
Its not a penalty, it doesn't mean that anything is "wrong", especially as it relates to "old world" technology, it simply means that normalized fair market
value is lower than the current prices.
Just as bond prices will move lower as a consequence of normalized interest rates, equity prices will move lower as a result of normalized
economic realities. JMO, but in the real life business world, I bet this turns out to be true.
on the way down this may turn into a -20-35% changepoint, but as this settles out I'm guessing -20%.
Its not a penalty, it doesn't mean that anything is "wrong", especially as it relates to "old world" technology, it simply means that normalized fair market
value is lower than the current prices.
Just as bond prices will move lower as a consequence of normalized interest rates, equity prices will move lower as a result of normalized
economic realities. JMO, but in the real life business world, I bet this turns out to be true.
Comments
Interesting point... consider this... i read the other day that almost 40% of US securities are foreign owned... I think the data was describing the US equity market and its easy to understand why that matters... if the dollar drops dramatically vs other currencies AND you see a wholesale drop in the value of US equities, the net loss to foreign investors is further leveraged by the drop in currency exchange, an exodus away from the dollar AND US equities which is disproportionate to other markets can further ensue. [breathlessly stating the obvious I know...]
Probably in everybody's best long-term interest for that to happen.
What do you think will be the catalyst? A critical mass of investors sidelining like @Baseman described in his post? Something else?
How do you think the expected economic euphoria post COVID (I assume we all agree this will end eventually) will affect markets?
Google, Amazon, and Dominos pizza are close to undervalued now if you take a long term view.
Facebook on fundamentals and projected growth is a buy. Potential regulation, however, gives me pause.
* Covid virus mutations means that economies are stuck for another 1-2 year period
* Middle east disturbance of oil distribution such as bombing the terminals and causing long term infrastructure damage
* rapid sell off in the bond market causes equity investors to head for the exits
* government income, capital gains and corporate taxation policies damage the business environment and reduce business and household discretionary spending
* rising level of US interest rates creates debt affordability issues which decreases disposable income
* the dollar loses it's sovereign status as the method of paying for oil around the world [this is already happening]
* we don't see the hoped for rebound in service related US business which is 60% of US business
* the tech bubble bursts [and takes everything with it] because even though the growth rate is fabulous, the valuation is 50% too high even given the most optimistic long term assumptions
tech has proven how essential they are during the pandemic ... I could well be wrong. a tech burst would hurt right now.
Yep, the business of tech everything and anything is going gangbusters now and will continue... the question is what the Tech revolution valuation is really worth, and does that mean a pullback of size in the tech valuation which drags the rest of the market down with it ~ which is really what is actually happening now.
Hell Yes!
Psychology plays into things so much. But with that said, 8 years isn't that long, and so if I ran the world, I'd have the pull-back happen now rather than in five years.
Dominos out performed Amazon over the past decade by a wide margin.
10,000 in Dominos 10 years ago is worth $245,000 today with an effective current yield of 23% on your original investment.
In comparison, 10,000 in Amazon is worth $172,000 and pays no dividend.
Dominos forecasts yearly sales increases between 8-10% a year over the next three years and they've reached an inflection point where most of the additional revenue falls to the bottom line.
Historically they've blown away earnings estimates. Management executes.
Unlike Starbucks, Dominos franchises their stores. This burden of startup costs falls on the franchisee but don't weep for them because the average payback on startup costs is less than 2 years and the owner can expect over 50% a year return on cash.
The pizza is meh but it's affordable and their technology and loyalty program generate return business. Their wings are damn good and rival buffalo wild wings and cost less.
In any event, I like the company and they're shareholder friendly. They use free cash flow to back stock and increase their dividends, 20% on average the past few years.
$14 billion market cap and still plenty of growth opportunity for new stores.
That's my thesis for going long, anyway. And yeah, it hits the spot when inebriated
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