Big Tech

[EricL]

Seems that an unrelenting flow of money just keeps flooding into the big tech names.

AAPL and MSFT are up another 2% today and again at new all-time highs.

Both market caps are now above $1.5T. 

AAPL is trading at a 28.8 PE on 2020 estimates and its yield is down to 0.92%. Expected EPS growth rate is 10-13%.
MSFT is trading at a 35.1 PE on 2020 estimates and its yield is down to 1.02%. Expected EPS growth rate is 12-15%.

Seriously considering another trim, they are both up to 1.5X sized positions again, and projected future returns just aren't there at these valuations.

[Otter]

I bought some 12/18/20 QQQ 220 Puts last Friday. Can't say it is a high conviction trade, as unlimited QE is a thing, but all time highs at the moment just seem outright silly.

[EricL]

They are both great companies, but I agree that it's getting silly.

At $1.5T market caps, the law of large numbers eventually needs to come into play, doesn't it?

[Otter]

(06-22-2020, 04:12 PM)EricL Wrote: They are both great companies, but I agree that it's getting silly.

At $1.5T market caps, the law of large numbers eventually needs to come into play, doesn't it?

I hear you, but it also depends upon, to some extent, whether the value of $1.5 trillion has changed materially due to an increase in the supply of dollars. Fed has trimmed its printing since early June (for now), so should be interesting to see how it all shakes out.

[divmenow]

(06-22-2020, 04:12 PM)EricL Wrote: They are both great companies, but I agree that it's getting silly.

At $1.5T market caps, the law of large numbers eventually needs to come into play, doesn't it?

It’s 1999 all over again lol. Way too Frosty. They will come crashing down soon enough. Eventually value will come back. Funds and insiders are hitting that sell bottom soon. MSFT is one of my biggest holdings and I’m nervous at these levels lol 

When AMZN, FB, MSFT, AAPL snd GOOG are bigger then then 32 of the biggest S&P companies combined we have a problem. That valuation gap needs to close.

[Otter]

(06-23-2020, 11:08 AM)divmenow Wrote:

(06-22-2020, 04:12 PM)EricL Wrote: They are both great companies, but I agree that it's getting silly.

At $1.5T market caps, the law of large numbers eventually needs to come into play, doesn't it?

It’s 1999 all over again lol. Way too Frosty. They will come crashing down soon enough. Eventually value will come back. Funds and insiders are hitting that sell bottom soon. MSFT is one of my biggest holdings and I’m nervous at these levels lol 

When AMZN, FB, MSFT, AAPL snd GOOG are bigger then then 32 of the biggest S&P companies combined we have a problem. That valuation gap needs to close.

RSI is over 70 again on QQQ, so I suspect a pullback is coming soon. How much of a pullback is anyone's guess.

[Otter]

Nice little drop today. Closed out my Puts for an 8% gain.

[EricL]

Shopify (SHOP) passed the $1,000 mark today, and Square (SQ) is up 11% to a new all-time high over $116.

Sooo much money flowing into tech names right now.

[fenders53]

They will fall hard but who knows from what height. It really is getting similar to 1999. Regretfully I've held very little tech outside my SPY mutual funds for the past few years. The index will not save you when the big boys eventually correct. I sold some QQQ puts a few weeks ago which were almost instantly profitable. That worked out fine but I know I am tempting fate if I make a real bet. Valuation will matter in the end. The PEG ratio's well above 2.0 for the large caps are what alarm me most, not so much the market CAP in itself. Smaller tech companies with huge PEs and near profitless are the ones that will get hammered without mercy though. Just like the tech bubble crash.

[EricL]

I have NVDA, SQ, SHOP, and TTD in my trading account and they are all doing great.

My problem is that I have no idea when to sell them, because they don't trade off valuation, just future growth.

So much different than DGI where you just buy and hold and let dividend compounding work over time.

[fenders53]

(07-01-2020, 03:04 PM)EricL Wrote: I have NVDA, SQ, SHOP, and TTD in my trading account and they are all doing great.

My problem is that I have no idea when to sell them, because they don't trade off valuation, just future growth.

So much different than DGI where you just buy and hold and let dividend compounding work over time.

Since you share your DGI port I think I know enough to state you do a good job managing your port.  I'll spare you from reading my tech bubble woes again, but if I had only prudent enough to gradually take my money off the table I would have made my retirement goals a year or two earlier.  I realize you would have missed some of the ride, but peeling a few shares of profit off and buying something boring makes me happy.  A UTE, pharma or most any Aristocrat will pay you back for the rest of your life.  I consider them free shares when it's pure profit. Those are great companies you own.  You are nervous because they are well past trading off growth prospects.  At this point you know some of the SP is just hopium or we wouldn't be having this thread.  I'm not telling you to cash out and run scared, though that might not be a crazy thought a year from now lol.  I don't know of course.  You were young then but I think you remember the tech bubble well enough.  We aren't really there yet, but it is starting to rhyme.  You'll kick yourself if you give half of it back in a week.

[EricL]

TSLA up another 13% to $1750.
AAPL up another 3.7% and is just a couple bucks away from $400.
AMZN up nearly 3% and is approaching $3,300.

Weee!