More and more in Twitter comments from traders are appearing - watch for the 200 day ma, 50 day ma, some other technical analysis, and less comments from investors. And it looks, they don't look at the fundamentals of the companies, but for some patters that someone long ago decided they exist. So my question is who is driving the market, who has more power - the trading guys or the real investors? Or my question is totally wrong. Maybe my observation is not very correct but I think more and more people (especially young) are tempted to trade thinking of making fast money. So if this is the case isn't the real investor under threat?
Hi, IamM. Great questions, I wish I knew. I only know many styles work if you take the time to hone it. Over the years, I've gravitated toward fundamentals because it helps me understand the companies I own. I can't speak on trading, though many seem to be able to make it work. The main thing I've learned is whatever you decide has to match your mindset and temperament. Hope that helps at least a little bit.
No idea. I know that's not very helpful, but it's as honest as I can be. This is more than just a sector rotation away from SaaS. The breadth and depth of this drop has hit everything - stocks, bonds, crypto, you name it. The one small, sarcastic silver lining for me I guess is people no longer need to ask what it was like in 2000 or 2008 because this is pretty much it.
That being said, I don't think our underlying challenge has changed. It has always been about identifying and owning quality companies. And I still believe I own quality. Did SaaS benefit from inflated multiples in recent years? Absolutely. But those same companies also benefitted from tremendous revenue growth, excellent gross margins, strong customer numbers, and in many cases rapidly increasing cash flows and profits. The good news is many still show those very same features. It's always tough when the tide goes out this hard, but we also know (in our heads more than our hearts) that it will eventually reverse and come back in. I just want to make sure I own what I believe are the most fundamentally sound growth companies I can find when it does.
May 11, 2022·edited May 11, 2022Liked by TheStockNovice
This is painful do doubt but quality will win out in the long run. I was in the market in 2000 and 2008 but I was younger (obviously) and not in individual stocks so it seemed to bother me less. SaaS is the best business model, just need to let compounding growth do it's thing and focus on owning the best of the best.
It's sad that Saul's board has recently been over-run by naysayers who offer no useful analysis. I guess a lot of folks missed the point of the board, to discuss high growth socks - Not get rich quick, gambling, or excessive "valuation" discussions.
Agree, and it's unfortunate. The quality of posts has certainly lessened as more people join the conversation. My guess is that dynamic happens in any large group, but it's being compounded by the fact this is turning into a gut-wrenching drop for almost every asset class.
Hey, StockNovice. Great write up as always.
More and more in Twitter comments from traders are appearing - watch for the 200 day ma, 50 day ma, some other technical analysis, and less comments from investors. And it looks, they don't look at the fundamentals of the companies, but for some patters that someone long ago decided they exist. So my question is who is driving the market, who has more power - the trading guys or the real investors? Or my question is totally wrong. Maybe my observation is not very correct but I think more and more people (especially young) are tempted to trade thinking of making fast money. So if this is the case isn't the real investor under threat?
Thank you in advance for your time!
Hi, IamM. Great questions, I wish I knew. I only know many styles work if you take the time to hone it. Over the years, I've gravitated toward fundamentals because it helps me understand the companies I own. I can't speak on trading, though many seem to be able to make it work. The main thing I've learned is whatever you decide has to match your mindset and temperament. Hope that helps at least a little bit.
What's your opinion on when SaaS will come back and how do you think SaaS multiples will fair in the future?
No idea. I know that's not very helpful, but it's as honest as I can be. This is more than just a sector rotation away from SaaS. The breadth and depth of this drop has hit everything - stocks, bonds, crypto, you name it. The one small, sarcastic silver lining for me I guess is people no longer need to ask what it was like in 2000 or 2008 because this is pretty much it.
That being said, I don't think our underlying challenge has changed. It has always been about identifying and owning quality companies. And I still believe I own quality. Did SaaS benefit from inflated multiples in recent years? Absolutely. But those same companies also benefitted from tremendous revenue growth, excellent gross margins, strong customer numbers, and in many cases rapidly increasing cash flows and profits. The good news is many still show those very same features. It's always tough when the tide goes out this hard, but we also know (in our heads more than our hearts) that it will eventually reverse and come back in. I just want to make sure I own what I believe are the most fundamentally sound growth companies I can find when it does.
This is painful do doubt but quality will win out in the long run. I was in the market in 2000 and 2008 but I was younger (obviously) and not in individual stocks so it seemed to bother me less. SaaS is the best business model, just need to let compounding growth do it's thing and focus on owning the best of the best.
It's sad that Saul's board has recently been over-run by naysayers who offer no useful analysis. I guess a lot of folks missed the point of the board, to discuss high growth socks - Not get rich quick, gambling, or excessive "valuation" discussions.
Agree, and it's unfortunate. The quality of posts has certainly lessened as more people join the conversation. My guess is that dynamic happens in any large group, but it's being compounded by the fact this is turning into a gut-wrenching drop for almost every asset class.