Just buy an index fund and sit back and not worry. Most stock pickers underperform in the long run vs just buying and holding the market.
That said, seems like every asset class is overvalued these days, so even buying index funds will deliver a mediocre return over the next 10 years.
On the peloton business model, i think it’s great. A subscription business in a growing market is a good model.
It’s also fine as a public company - and it’s perfectly normal for private companies to go public to deliver returns to shareholders, so nothing unusual there.
There’s an old saying “good company, bad stock”. If a stock has a lot of short sellers, that doesn’t mean the company has a poor business model. It could simply be that the current valuation is overpriced.
A tremendous amount has happened. In the early post IPO days many equated Peloton as just another fitness company. This is sort of like saying Covid-19 is just like the common cold or flu. What this characterization, and all the financial forecasting that went along with it, failed to reflect is the richness of the user experience and what that could equate to in terms of user adoption, usage and new customers. There are other examples we have all experienced along similar lines, such as Instagram and the iPhone. As we all know, these are not yet just another photo posting service or communicating device.
As time moved on (even pre-Covid), what Peloton #s showed was that, not only was this user engagement going viral, but it had the possibility of grabbing the #1 market position with very attractive financials. And, while Covid certainly opened the flood gates for near term demand, of equal, if not larger significance, is that investors are coming to realize just how large a market there is for the company’s products and the huge barrier to entry in it has built in many areas.
So as to whether $70/share is fair, that depends on your view of many things, including market size of current and future product offerings, competition, and your time horizon.
Yes. Treasury notes, even out to 30 years, are close to zero. As such, there is a ton of money looking to be invested in the market. The companies to watch for market directionality are the FAANG stock around $1.5-$2T each. They will drive both NASDAQ and S&P500 and probably have effect downstream on companies like Zoom and Peloton.
#thistimeisdifferent
Very much so. This is not post 9/11 or the Great Recession. The pandemic is fundamentally changing business and consumer behavior.
IPOs serve many purposes. In addition to providing liquidity for investors and employees, they provide cash and name brand awareness to the company. It’s these latter 2 areas that represent the biggest opportunity for the company and greatest risk to competitors.
Sorry…I should have been more clear. What I had meant is that I dont see how IPOs have an impact other than their obvious goal of getting people to give the company money.
I still stand by my other statement though…I think the stock market has a very negative impact on society, and serves no constructive purpose.
Anywho…sorry, don’t mean to derail your thread. The stock market is just a bit of a pet peeve of mine.
I was thinking about buying TSLA when it was at $370. Now it’s at $1544.
In-home fitness, especially cycling, is only going to grow from here on out. Even with spin gyms reopening (and recently reclosing down here in Socal), attendance has been abysmal. So I think PTON stock is just going to keep going up long term.
When trying to rationalise market prices good to bear in mind the case of Hertz. Filed for Chapter 11, bonds trading at 30-40c on the dollar, equity in all reasonable cases worthless. Yet the stock went on a tear and the company looked to sell $1bn of stock until the SEC suggested otherwise. Markets are not efficient and the prices quoted are not always a fair reflection of intrinsic value, otherwise I’d be out of a job.
Haha, well in this case really the players are economic policy makers. So sure, I’ll hate them
Just to elaborate a bit, instead of just whining randomly…and also this does connect in a bit with part of the discussion above…
The stock market is not in any way connected to reality, and doesn’t serve a constructive purpose. If’s effectively a used trading card shop. Value is determined demand, and demand is created by perception, not value. But that is sort of besides the point.
The reason stocks exist in the first place…their constructive value, is to create funding for entrepreneurism. I mean judging by the conversation above I’m sure I’m not saying anything that is news to anyone in this thread. Trading on the stock market, post IPO, at best is legalized gambling, at worst, like in the case of computerized transactions taking place countless times a day, is simply stealing from the population.
Stealing how? And good luck IPOing in the first place if you have no means of selling / monitising your investment (ie a secondary mkt).
And how would someone wanting to participate in the economic upside in fraction ownership of companies (aka stocks) be able to do so without a secondary mkt (aka everyone with a pension / 401k)? It would only serve to entrenched the haves and have nots.
The stock market is not just important, but it is a necessity, for companies of ALL sizes. While it indeed serves its purpose for entrepreneurs (and their companies and their investors at IPO as I described earlier), it is also a critical vehicle for public corporations to raise funds, whether through the issuance of additional securities or corporate bonds. It is these latter financial vehicles that provide additional “fuel” for corporate growth (e.g. product, market, geographical expansion) in additon to corporate earnings or to bridge the gap during difficult economic periods (e.g. 9/11, the Great Recession or Covid-19).
To give you one example that may [or may not] resonate with you: “the internet”. The US government (DoD) funded the research effort for the development of the Advanced Research Project Agency (ARPA) network. Subsequent to ARPAnet’s success, almost the entire internet has been built by companies that were funded by investors. The backbone and access portion became what was know as the public switched telephone network (PSTN) over which all voice (and later data) transversed. And that was replaced all over again in the 90s by a packet switched network built by companies funded by investors - both institutional and retail. Virtually every modern service you use today using voice, video and/or data, from iPhone/Android-based to computers (e.g. TrainerRoad, the Forum we are on, Netflix, etc) makes use of the internet and that doesn’t scratch the surface of other industries, such as banking and the overall financial services industry, retail, agriculture, health care, etc…
True, although I’ve also read that only a very small fraction of the internet is used for these day-to-day operations; the rest is utilised by “dark web” type activity (not all nefarious). So perhaps ‘the net’ is much larger than it actually has to be, but that’s kind of like arguing there are too many books and libraries, so…
As for the value of the stock market, I can only say that perhaps the most valuable business deal in US history was a private equity deal (no, it wasn’t PTON).
The internet scaled in major steps. For example, the change from the use of IPv4 to IPv6 for addressing increased the # of addressable devices from 2 to the 32nd power (~4.3M users) to 2 to the 128th (a lot). Switch capacity is done similarly although not in such huge increments.
Note: Somewhat similarly to the energy network (“the grid”), its not only average load that needs to be managed, but surge (e.g. all of us at home watching evening Netflix).
As for Peloton’s IPO, that was quite modest in size relative to others, particularly if you look at China. And as for global financial transactions outside of IPOs, those can get into the 10s and even 100s of billions.
In regards to stealing - because it serves as a vehicle for wealth transfer from workers to the wealthy. There is not a requirement for contribution to society to benefit from the stock market, only that one ALREADY has wealth. In addition to wealth redistribution, I would almost label the current construction of the stock market racist and sexist, when taking into account current income gaps between white males and other demographics.
Regarding the secondary market and return on investment - obviously eliminating the secondary market, at least in its current form, would be a deterrent to investment, or at the very least to widespread short term speculation. I fail to see how this change would be a bad thing. Investors would still always be able to sell stock back to the company for profit, if the company is successful, obtain dividends, or perhaps sell to another party through a trade facilitated by the company itself. But I fail to see how rampant speculation on the secondary market benefits anyone other than those seeking to accumulate and consolidate wealth at the expense of the companies workers and the rest of the population.
