*Investors Blog*
- Thread starter Warstud
- Start date
I did as well, but not directly. I put what pittance I had back then in the Janus Mercury fund - which was supposed to invest in only the best large cap tech stocks. I think it shut down in 2005.....
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Most of you know my career was in SEMI, or Semiconductor Mfg Equipment. These companies are key in processing wafers into chips. I have this crazy belief that computers are not going away. After hours, Applied Materials announced strong 1st qtr results and bright outlook. AMAT jumped 12% in the aftermarket; my company LRCX is up $44 or almost 5%. Could open about $958, depending.
Bring home the groceries! Tech is a roller coaster, but... Here's the Lam 5 year run; perhaps a relevant range for shorter term investors.
Bring home the groceries! Tech is a roller coaster, but... Here's the Lam 5 year run; perhaps a relevant range for shorter term investors.
Most people don't understand the plumbing in their house, let alone the market.
When money comes in to the market, stocks rise, When money goes out of the market, stocks decline. If you sealed market inflows and outflows - individual stocks may go up and down , but the overall market would be constant. Its truly that simple.
Ever wonder why they raised the 401K/IRA minimum distribution age in 2019 and made it so people over 50 could put their entire paycheck in their 401K? Hint - it wasn't because the IRS is benevolent - it was because market inflows were turning negative. Look at a stock chart for late 2018.
So in 2019 more money rolled into the market, and the printing of 2020 juiced it. Names like TSLA, META, NVDA and LRCX were in the headlines so they got most of the juice. Same thing for .com. 401K's really got rolling in the 90's. The internet was going to change the world. I already posted about CSCO and Lucent. Look at INTC - still in business, still a household name, still in almost every PC - but they have since never come close to their 2000 peak. Adjusted for inflation there likely 1/3 (guess, I haven't done the math).
Additionally, stock buy backs are just another form of inflow. Not only do they lesson the number of shares, but they bring new money into the market - from profits or debt or whatever. Buy-backs help the whole market, not just the stocks buying back.
So maybe its different this time. Or maybe all the boomers still sitting on a million in AMZN will grow a brain cell and buy the 10UST @ 4.2%. If they don't, Janet will convince them, she needs the bid.
When money comes in to the market, stocks rise, When money goes out of the market, stocks decline. If you sealed market inflows and outflows - individual stocks may go up and down , but the overall market would be constant. Its truly that simple.
Ever wonder why they raised the 401K/IRA minimum distribution age in 2019 and made it so people over 50 could put their entire paycheck in their 401K? Hint - it wasn't because the IRS is benevolent - it was because market inflows were turning negative. Look at a stock chart for late 2018.
So in 2019 more money rolled into the market, and the printing of 2020 juiced it. Names like TSLA, META, NVDA and LRCX were in the headlines so they got most of the juice. Same thing for .com. 401K's really got rolling in the 90's. The internet was going to change the world. I already posted about CSCO and Lucent. Look at INTC - still in business, still a household name, still in almost every PC - but they have since never come close to their 2000 peak. Adjusted for inflation there likely 1/3 (guess, I haven't done the math).
Additionally, stock buy backs are just another form of inflow. Not only do they lesson the number of shares, but they bring new money into the market - from profits or debt or whatever. Buy-backs help the whole market, not just the stocks buying back.
So maybe its different this time. Or maybe all the boomers still sitting on a million in AMZN will grow a brain cell and buy the 10UST @ 4.2%. If they don't, Janet will convince them, she needs the bid.
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I highly recommend this book:
The Psychology of Money
The Psychology of Money
You forgot to mention that dividends, which are often reinvested, are another form of inflow.
Not really though
They are either neutral or outflow
Think about it
Where do dividends come from?
Not to mention tech is critical to defense.
When i started in Silicon Valley high tech in the 80's, there were hundreds of companies in SEMI around here.
There were the biggies:
- Applied Materials made almost the full suite of tools, surface prep, deposition, etch and metrology
- Lam Research was big in metal etch, now plasma etch
- KLA and Tencor were #1 in metrology; they merged to become KLA-Tencor
- Novellus was big in deposition and developed copper interconnects which put us on the map. Lam finally bought Novellus; I left after the 3 year "merge".
- There were many many niche companies
What was more important was everything was actually manufactured here, not just developed. Heck, Intel bought so much equipment it was money hand over fist, and the semiconductor chips were fabbed right here in Santa Clara. Fabs 2, 1A, D2 made most of the chips in the world. AMD was also in Santa Clara.
Now most manufacturing is off-shore, but current will is to re-onshore.
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DRIP is inflow. They don't issue new stock to fill your DRIP order, nor sell stock to pay for it.
Company pays dividend from earnings - goes to your broker. They fill your DRIP order at market. Or some version of that - not exactly sure of the plumbing but you can either take your dividend or put it back into company stock.
Inflow.
Nope.
The earnings are part of the stock price good or bad
When stock goes ex-dividend the price self adjusts downward more or less the amount of the dividend - dependent on selling for stocks and CEFs - and NAV for mutual funds and ETFs
If taken as cash it’s outflow
If drip then neutral
For the shareholders especially in tax advantaged accounts nice to drip get more shares sending basis lower
In taxed accounts depends on bracket, time holding, etc and of course tax status of dividend
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I agree the math is not linear, and a bit fuzzy - but a dividend is paid outside the market - it has nothing to do with the number of shares or the amount of money currently invested in shares overall.
When the stock drops ex dividend thats just price action. People decided they no longer wish to hold that stock at that price on that day.
Might be easier to think of inverse. If a dividend is paid, and I cash it out of my brokerage account, pay taxes, and spend it - that money was never in the market anyway - so it was not an outflow. It was never there.
So I get a dividend from company A into my brokerage account, then I invest that amount into company B. Thats a inflow into Company B and the market overall. It wasn't money that was in the market before. Its the same if I automatically reinvest in the same company - new money into the market
In the end its probably rounding error in the grand scheme either way.
WMT breaks new high (at least intraday)today.
Hoping *LOL* it's a run up and not a smack for Feb 20th earnings release. Though the 3 for 1 split 2 days later may soften any disappointment. Hope they dont make me regret buying more a few days ago, so far so good. Dont get me wrong, I dont expect WMT to skyrocket in any sense of the word.
Just hoping it's a new floor (or close to it) like the last time I bought it, share price in the 90s and still own those.
Hoping *LOL* it's a run up and not a smack for Feb 20th earnings release. Though the 3 for 1 split 2 days later may soften any disappointment. Hope they dont make me regret buying more a few days ago, so far so good. Dont get me wrong, I dont expect WMT to skyrocket in any sense of the word.
Just hoping it's a new floor (or close to it) like the last time I bought it, share price in the 90s and still own those.
Good points on share price change- I edited my post to clarify
As for money in the market- depends on how you are calculating
It’s interesting though- I and others have a tendency to go for dividend paying stocks vs using that cash for business building, acquisitions. That’s not inflow or outflow yet company value could grow. More value for shareholders and larger net $
Your absolutely correct in its really fuzzy. You can't really even track inflows and outflows all that well. Some technicians try. Also, stock is priced at the margin - so in reality you could have the market cap go up with outflows for some period of time. It just doesn't work for too long.
However if more people are cashing stocks out to put into bonds or spend or whatever, than people are adding new money into stocks, the market will decline over time.
This part intuitively makes sense to me.
Tracking and calculating it is another matter entirely.
Buy the rumor, sell the news.
Yes, I love that saying. Ive hung in with WMT for over 3 or 4 years now? whenever it was in the 90s .. through thick and thin it seems to do well as a long term safe investment to me. But I agree with all of us in here. Our economy is a scam but maybe it's less of one than the rest of the world. I dont know. I do know that just like that saying you posted which turns out so true I learned to not fight the market.
Anyway if I seem brave, Im not even though I was buying into the down market on Monday, I really DO NOT want to give any of this back. I now have this spec account in only two stocks. and the vast majority is WMT and about 1/4 to 1/3rd GM
What do I know, heck maybe the index did just as good or better. But there have been times, like Covid that WMT outperformed (Im pretty sure) all of them.
I love the rooting!! hahahahaha
I go do some real work and things change rapidly ? S&P down for the week, 10 year back @430 basis, crude near 80.
Russel 2000 flat for the week. I actually own a little of that. Its definitely a trade, not an investment. 30% of those companies are zombies.
Next week will be interesting to be sure.
Russel 2000 flat for the week. I actually own a little of that. Its definitely a trade, not an investment. 30% of those companies are zombies.
Next week will be interesting to be sure.
