Investing General Discussion

Blazin said:

I'm still sticking with that current EPS estimates for 2021 are too high at $165-170 on the S&P. If we end up at $150 through a 20 multiple on that because of zero rates and you end up with a price target of 3,000 . If we see 3-4 qtrs of GPD decline instead of recovery and we start ratcheting that EPS down to $130 and the market only pays a 18 multiple for slowing growth then we see a revised level of 2,340. If you bet on the bearish scenario and are wrong you'll be sitting on a pile of cash earning nothing stuck deciding if you want to buy the S&P at 3400 after a 60% run off the low.

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Sanrith Descartes said:

The market is acting like the worst is over. New highs probably next year but maybe this year. Or the market finds out is was wrong and we drop 20%. Or it was somewhere in between and we go sideways in a trough for 6-12 months.

The bet is on you. Its really a case of what's the best worst case. If you put cash in thinking we keep going up cause the worst is over and its not then you cash is in and we go back down. Or your cash is in and we go sideways.

If you dont put cash in and we go up then you can miss out on gains you probably won't see again anytime soon. Or it goes down and you buy in not knowing where the bottom is. We can still end up going sideways after we go down so still no gain.

Them is your options. Either way the market and companies are realizing they can get along just fine minus 5, 10 or even 40% of their work force. This might bring us to a much leaner company design. Good for profits bad for former employees. Leaner more profitable companies can drive the market higher.

Up, down or sideways? No one can know for sure. The question is which fucks you the least. If you need your money in a year or two, you got a real tough decision. If you have a much longer time horizon, then who cares if it goes down, it will go back up. If we drop 20% tomorrow, I am still green in about half of my investments I bought on the way down. If you buy in on Monday and we drop 20%, then you are back about 4 weeks. That's it, four weeks. Its not like last year where 20% wiped out a year's worth of gains. If we drop 30% next week you are backwards about 6 weeks. This truncated drop and recovery is unprecedented.

Just don't buy shitty companies. Bull market or bear, a shitty company is still a bad investment. There are still lots of quality companies in most sectors that while no longer in the bargain basement are still decently priced. If we get an infrastructure bill this year, industrials and materials will fucking rip. Tech and Healthcare are the two sectors that really arent cheap right now because they led the recovery.

Examples:
CAT - still decently discounted with a 3% dividend
URI - still decently discounted
RTX - just finished merger with UTX
GD - still discounted with a decent dividend yield
ABBV - should close the deal with Allergan this summer and jump. Has 20% upside at least.
PFE - still discounted with a 4% yield. If it wins the Coronachan vaccine race it shoots to the moon
V - not cheap but still has a good 15-20% upside
JPM - oversold due to risk of defaults on the loan side. A bargain at its current price if you have some patience.
GOOG - the problem here is one of management not earnings. They make so much money they piss it away on projects trying to hit homeruns instead of just running lean and making a fortune for shareholders. Even with bad management they make 50$ a share in profit. A good 20% of upside left in it at its current price.
INTC - not really cheap but has a solid 15% upside left and pays a decent dividend for a tech company.


That is a quick list. None of those are gambles or longshots. Every single one has a stellar balance sheet and earnings even with Coronachan. You can also gamble on airlines, cruiseships, casinos, car manufacturers and commercial real estate reits.

There are lots of plays available if you dont want to sit on cash and pray for a retest of the lows.

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