Share Picks 2022

dil87 · 08-05-2022 10:11am

https://www.boards.ie/discussion/comment/119024249#Comment_119024249

I'm not having a go at you but there should be no reason you're down 40%, take time out and study, read books and repeat. The signs were there for over 12 months, growth and all the leaders from 2020 blew up the start of 2021 and commodity/defensive plays took over, sure there have been some bounces but market internals were weakening since then signalling the growth/innovation run was over.

You're not alone, the average mututal fund is down 27% YTD. The worse this market gets the bigger the uptrend we are going to get and the bigger the opportunities we will have when it does turn. Keep your powder dry for when that does come 👍

dil87 · 08-05-2022 10:21am

https://www.boards.ie/discussion/comment/119031042#Comment_119031042

Yes Oil/Gas is extended now, there are still some opportunities in them but you may be better to have a shorter term hold and smaller position size buying them at these levels. Also, there really isn't such thing as overvalued/undervalued. Prices can go a lot higher and lower than 'analysts' determine to be overvalued.

It depends at what price you bought Microsoft. If you're under water already then I would not hold anything personally. In a bear market cash is a legit position. When Microsoft topped in 1999 it took 16 years to get back to the same price level. Holding individual stocks blindly in a bear market can sting badly, no matter how great the company appears. Individual stocks could drop another 30%+ from here, it's not an impossibility.

patsy_mccabe · 08-05-2022 11:17am

Ah some stocks are still at insane levels. Tesla is at a P/E ratio of around 120 at the moment.

Patsy167 · 08-05-2022 11:46am

For those who have been waiting for the market to drop for the past year, Would you advise starting to DCA into the market now using broad indices or wait a few more months?

dil87 · 08-05-2022 1:32pm

https://www.boards.ie/discussion/comment/119031312#Comment_119031312

If you are investing for the long term (decades) then buying broad funds/indexes when they are down is ok, but buying individual stocks in a bear market is ill-advised until you start to see some real accumulation take place.

https://www.boards.ie/discussion/comment/119031227#Comment_119031227

P/E ratio matters a lot less than most people realise. What matters more is whether the rate of change in earnings is rising or declining. Basing buy/sell decisions on P/E ratios has been proven to be a poor strategy. What appears overvalued often goes a lot lot higher, the same can be said on the downside.

Shedite27 · 08-05-2022 3:27pm

https://www.boards.ie/discussion/comment/119031711#Comment_119031711

What's the reading on "Basing buy/sell decisions on P/E ratios has been proven to be a poor strategy."

Obviously a company needs rate of change of earnings, but after that I find PER essential in seeing whether the market's got ahead of itself or not.

PER greater that 30 is a no-go for me for purchases, over 70 is a sell

dil87 · 08-05-2022 3:53pm

https://www.boards.ie/discussion/comment/119032248#Comment_119032248

Overvalued stocks can remain overvalued far longer than most realise. If you find it valuable in your strategy then that's all that matters. Personally I would not make a sell decision on a single indicator reading, there are a lot more variables to consider. I'm not trying to convience anyone of altering their strategy, simply pointing out some facts that are often overlooked.

patsy_mccabe · 08-05-2022 4:22pm

I've been studying how to evaluate companies for a while now. I'm not from a financial background so reading the financials is all new to me. I have my head around most of the simple things like share buybacks, dividends, depreciation & amortisation, debt levels etc.

What I do struggle with are the following;

Discrepancies between real and accounting depreciation. Why are 'maintenance' versus 'new investment' in plant & machinery expenditure not separated if so important for free cash flow.
Capital leases - is this not hidden debt? A lot showing up in company accounts since 2019 !!!!
If debt is really adding value or just propping up a failing company.
Measuring rates of return - return on equity versus return on invested capital. Which gives the true reflection of value added to a company?

I know it's not all about the financials, but understanding them at a very fundamental level is worth the effort.

Timing belt · 08-05-2022 10:31pm

https://www.boards.ie/discussion/comment/119032460#Comment_119032460

All that capital leases are is showing an asset (e.g building) that is owned by lessor and a liability (e.g loan/lease) by lessee

Before 2019 neither were shown on the balance sheet as the company didn’t technically own the building so the accounting rules changed.

This encouraged a lot of companies to do a sale and leaseback on a lot of their properties prior to the accounting change

Shedite27 · 08-05-2022 10:38pm

https://www.boards.ie/discussion/comment/119034124#Comment_119034124

Premisis are one of the most stupid parts of accounts. Many accounting standards allow companies to write off premesis depreciation as an expense (so boosts profits), when we all know Property value really goes in the other direction

patsy_mccabe · 08-05-2022 10:49pm

https://www.boards.ie/discussion/comment/119034124#Comment_119034124

The problem I have with it is, the lease amount (an effective debt) doesn't show up on the Long Term Debt figure. The lessee owns the asset at the end of the lease term, so it's effectively a loan to buy the asset (building as you exampled).

Timing belt · 08-05-2022 10:58pm

https://www.boards.ie/discussion/comment/119034204#Comment_119034204

Not all from finance leases transfer ownership at the end of the lease

Pussyhands · 08-05-2022 11:05pm

Just hope to feck we don't have stagflation. It'll be the worst of both worlds. Stocks going down and cash value keeps going down. Even worse again would be property soaring even further.

theboringfox · 09-05-2022 8:03am

Low interest rates biggest driver of house price inflation. Should ease off a bit as rates rise but then again the government is spending hand over fist so that props it up too. Stagflation seems inevitable but hopefully not. I struggle to see a scenario where these price rises do not bring a recession. Saying that I am staying in stocks as I believe in time in the market over timing the market

patsy_mccabe · 09-05-2022 9:16am

https://www.boards.ie/discussion/comment/119034237#Comment_119034237

From;

https://www.investopedia.com/terms/c/capitallease.asp

To qualify as a capital lease, a lease contract must satisfy any of the following four criteria:

the lessee must gain ownership at the end of the lease period.

Timing belt · 09-05-2022 10:34am

https://www.boards.ie/discussion/comment/119035025#Comment_119035025

Link to the accounting rules

https://www.iasplus.com/en/standards/ifrs/ifrs-16

Markus Antonius · 09-05-2022 11:30am

So is Powell coming to the realisation that a recession is nowhere near as bad as high inflation and is tanking the market accordingly?

retalivity · 09-05-2022 3:15pm

PLTR - Horror show

crushproof · 09-05-2022 3:24pm

Holy jaysus what a start to the week. Another hammering, why the hell do I still have got growth stocks in my portfolio

Nemeses2050 · 09-05-2022 3:44pm

You could say that for any stock today, Even Oil and Gas stocks are down close to double-digits

Pussyhands · 09-05-2022 4:02pm

At this point, I'm starting to think a market crash due to a recession is far better than a market crash due to rates rises. These rates could changing the fundamentals of the market which we may not reach ath for years and years.

Let's hope that if the recession does come, that inflation goes back to basically 0 and rates can be cut again

patsy_mccabe · 09-05-2022 4:25pm

You could trade Alibaba (BABA) at this stage, it's moving up and down so much.

Pussyhands · 09-05-2022 5:08pm

Down 5k overall now. Welp.

patsy_mccabe · 09-05-2022 7:12pm

What's going on with Twitter? Trading circa $48 today. Is the $54.40 pie in the sky?

Timing belt · 09-05-2022 8:34pm

https://www.boards.ie/discussion/comment/119037938#Comment_119037938

The risk of the deal falling through has increased

Jonnyc135 · 09-05-2022 9:30pm

https://www.boards.ie/discussion/comment/119037114#Comment_119037114

I don't think anyone wants a 70s style stagflation recession probably the worst outcome and inevitably rates will have to rise to fight it.

As you say if we get a wallop of a market sell off and it helps tame inflation then the Fed may look like great men. This would cause a recession how bad hard to tell personally I would rather this than but its like buying a good Ram he can work hard, look good and be fruitfull but can also thunk you when you turn your back on him.

Jonnyc135 · 09-05-2022 9:40pm

What's the thoughts on Wednesday US inflation data out, I am thinking the CPI to be slightly lower than last month and due to that I'd say we could see a 3% jump all around. Could end the week up but overall trend I think is downwards.

Timing belt · 09-05-2022 10:01pm

https://www.boards.ie/discussion/comment/119038567#Comment_119038567

CPI will be higher than expected but market will rally as they will claim this is the top of inflation

Pussyhands · 09-05-2022 11:57pm

Palantir down 21% today. Ouch. Reddit was all over this in it's early IPO days.

Andrea B. · 10-05-2022 11:31am

They may go up.

They may go down.

How many of us bought at bottom in March 2020, knowing it was the bottom?

I didn't, as could not have predicted the bottom, or such a recovery (outside of likely pandemic winners such as Amazon, Zoom, Moderna, etc).

Not selling, as I do not know when the upwards turn will be, but happy that I am in historically "solid" stocks.

Waiting game for me....or those that will inherit from me.

Share Picks 2022

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