Not Investment Advice

[dscher]

But so many Millennials are entering the household formation phase of adulthood. I can't see demand falling that much unless there is a real rough inflation with massive job losses.

Ultimately every generation is beholden to the world/economy it's living in. If banks aren't lending because they aren't making money into a no organic growth environment(ie Fed go brrr), I don't know if it matters...even if there is demand from some millennials. The banks always create the supply through new lending..and with how high prices have gone, it might take that deflation to normalize prices for the consumer/millennials..instead of new growth from home building.

 

[Folster]

Ultimately every generation is beholden to the world/economy it's living in. If banks aren't lending because they aren't making money into a no organic growth environment(ie Fed go brrr), I don't know if it matters...even if there is demand from some millennials. The banks always create the supply through new lending..and with how high prices have gone, it might take that deflation to normalize prices for the consumer/millennials..instead of new growth from home building.

Can you give me a chart of US home prices with an average trend line spanning a couple decades? I'm not sure if I'm asking for the right thing, but I want to see a line that shows where home prices would be if the growth rate was consistent over time in comparison to actual prices. Maybe using a long term average growth rate for housing prices

 

[dscher]

Can you give me a chart of US home prices with an average trend line spanning a couple decades? I'm not sure if I'm asking for the right thing, but I want to see a line that shows where home prices would be if the growth rate was consistent over time in comparison to actual prices. Maybe using a long term average growth rate for housing prices

So I got the Schiller National home price index here I found...throw it on a chart and you can see the obvious Fed liquidity pump from 2020 and on. That looks like the parabolic look from Sven's tweets from earlier. Usually in TA a big idea is usually for price to reconnect with its 20 period MA at some point for a mean reversion..I overlayed the 20 month MA on there to give ya a baseline. I think the 50 MA would also be good to look at in this case because of the excess from the Fed input. I don't know if this is what you were looking for or not.. :-/

You must be registered for see images attach

 

[BigRedRage]

Homebuilders are also taking a tumble. Going to analyze the big dogs and see if I can find an opportunity.

I find this one fascinating just because it is more of ibuy/isell and nothing to do with building. I think these services are the future, 100%, especially with millennials and gen z when they start buying homes. Open door may best out as the "apple of real estate" in the future.

Turning a horrible, stressful process into something simple and easy is a big deal. Kinda like buying a Tesla online in 2 minutes vs 4 hours at the dealer.

Or it'll bust. But, I teresting either way.

 

[dscher]

Also:

Median Sales Price of Houses Sold for the United States

Graph and download economic data for Median Sales Price of Houses Sold for the United States (MSPUS) from Q1 1963 to Q2 2024 about sales, median, housing, and USA.

fred.stlouisfed.org

This is a good one and will give ya actual value and just by a glance looks like things started getting nutty to the upside after 2000 (shocker) or so based on just the eyeball test.

 

[Folster]

I find this one fascinating just because it is more of ibuy/isell and nothing to do with building. I think these services are the future, 100%, especially with millennials and gen z when they start buying homes. Open door may best out as the "apple of real estate" in the future.

Turning a horrible, stressful process into something simple and easy is a big deal. Kinda like buying a Tesla online in 2 minutes vs 4 hours at the dealer.

Or it'll bust. But, I teresting either way.

I think you are right that these services are the future. As Boomers pass on their children are going to either keep or liquidate their property. No way am I messing around with contractors and repairs trying to get my parent's house in order to sell when they eventually pass.

It's a tough, regional industry with tight margins and large assets that require expensive repairs and the ability to organize needed resources and labor locally.

Is Open Door the winner? Who knows. The question is, what is a fair value to pay for OPEN. They are currently unprofitable but have rapidly growing revenue. But fast growing revenue doesn't justify any price. Eventually they will have to make money and the market has not been too kind to unprofitable companies of late

 

[elindholm]

I bought OPEN right after Z bowed out of the transaction market. I got suckered into the narrative that one of Z's competitors would benefit from their departure, but instead, the market viewed Z's failure as bad news for the entire online realty concept. Probably the guys pumping OPEN in their little articles were actually shorting it so that they could make a killing off of morons like me.

I still hold it, but my only hope at this point is that it picks up enough of a pulse that one of the big guys (maybe GOOGL?) buys it out for something more than its market value, allowing me to salvage an acceptable loss. As things currently stand, it's an unmitigated disaster. If I read one more commentary calling it a "ten-bagger" I may have to drive a knife through my monitor.

 

[Folster]

I finally cut bait on GE after a particularly rough day, and I wanted to free up some money to drop into XOP to get a some more diversified energy exposure. I had been holding since 2017 which was before I discovered true value investing and started running a DCF model. I think I bought it because it was near its 52 week low and GE was a traditionally great company with a new CEO coming on board who was going to turn things around. How much lower could it go? A lot was the answer.

It was less than 1.5% of my retail stock account and figured every day I keep holding it, I am basically buying it. I no longer had any discernable thesis to keep holding it. My DCF model of GE showed me their financials were a mess. Who knows if they ever turn things around after they divide up the company. It's possible the sum of the 3 businesses are worth more than one, but it's just blind hope at this point and a sunk cost. I would never buy it now at its current price so I was just holding and hoping to make my money back.

Of course I got to see the remaining fractional shares be the top performing stock in my account for a couple days after I liquidated. Never fails. It's up 7.7% since I sold. It was an emotional decision to finally sell it, but the feeble conviction was long since gone. I realized a 60% loss.

It's important to learn from your bad investments regardless of whether your initial investment was sound.

 

[elindholm]

It was less than 1.5% of my retail stock account and figured every day I keep holding it, I am basically buying it. I no longer had any discernable thesis to keep holding it. My DCF model of GE showed me their financials were a mess. Who knows if they ever turn things around after they divide up the company. It's possible the sum of the 3 businesses are worth more than one, but it's just blind hope at this point and a sunk cost. I would never buy it now at its current price so I was just holding and hoping to make my money back.

It's important to learn from your bad investments regardless of whether your initial investment was sound.

Amen! The only reason I'm still holding OPEN is that it's gotten so low, there's nothing else interesting I could do with the money.

 

[BigRedRage]

Amen! The only reason I'm still holding OPEN is that it's gotten so low, there's nothing else interesting I could do with the money.

time to average down hahahahaha

been there done that man, probably would have made the same gamble.

Their revenue keeps going up so there is still a chance.

 

[Devilmaycare]

I'm trying to understand TSLA's stock dividend news that came out on today. Why do it over just doing a split? From the articles and a couple videos it sounds like you end up owning the same total market value either way but the dividend is a taxable event. I'm not sure if I'm missing something in the mechanics though. This is how I've been reading things. Please correct any mistakes. This is the first time I'd ran into this.

- Company does a 6-1 split. (hypothetical numbers)
- You get 5x your current shares.
- The other 1x of shares is the pool used to pay the dividend.
- You get a portion of that pool based on your number of shares.
-- I believe this is a taxable even since it's new shares like when you get a cash dividend. It doesn't have to be paid though until it is sold.
-- Since it's "new" shares the capitol gains clock starts when they're issued, not the original purchase date like the split shares.

Do I have the gist of what happens correct? If so, what's the advantage over a straight 6-1 split to outweigh the CG clock on the dividend shares?

 

[Folster]

I'm trying to understand TSLA's stock dividend news that came out on today. Why do it over just doing a split? From the articles and a couple videos it sounds like you end up owning the same total market value either way but the dividend is a taxable event. I'm not sure if I'm missing something in the mechanics though. This is how I've been reading things. Please correct any mistakes. This is the first time I'd ran into this.

- Company does a 6-1 split. (hypothetical numbers)
- You get 5x your current shares.
- The other 1x of shares is the pool used to pay the dividend.
- You get a portion of that pool based on your number of shares.
-- I believe this is a taxable even since it's new shares like when you get a cash dividend. It doesn't have to be paid though until it is sold.
-- Since it's "new" shares the capitol gains clock starts when they're issued, not the original purchase date like the split shares.

Do I have the gist of what happens correct? If so, what's the advantage over a straight 6-1 split to outweigh the CG clock on the dividend shares?

I'm not sure I comprehend what is being proposed. The end result is the same. TSLA's share price will be 1/6th of its previous value either way. Their market cap will not change.

With a traditional stock split, shareholders get 6 shares for their one and the value of each share is 1/6th of its previous value.

With a stock dividend, the value of one share is diluted the same, and the shareholder is not as they get 5 shares paid as a dividend. My understanding is that a stock dividend is not taxable as long as the shareholders do not have the option to receive the dividend in cash.

I don't get the difference assuming both are not taxable. Maybe the stock dividend is beneficial to the company, but you'd think more companies would do it if that were the case.

 

[Devilmaycare]

I'm not sure I comprehend what is being proposed. The end result is the same. TSLA's share price will be 1/6th of its previous value either way. Their market cap will not change.

With a traditional stock split, shareholders get 6 shares for their one and the value of each share is 1/6th of its previous value.

With a stock dividend, the value of one share is diluted the same, and the shareholder is not as they get 5 shares paid as a dividend. My understanding is that a stock dividend is not taxable as long as the shareholders do not have the option to receive the dividend in cash.

I don't get the difference assuming both are not taxable. Maybe the stock dividend is beneficial to the company, but you'd think more companies would do it if that were the case.

Ok, good. I'm not the only one. I'm glad to hear that you don't comprehend it either.

All day I've been trying to figure it out and it feels like I'm missing something. Maybe it'll be clearer when it's approved and they release the details. Right now it seems like at the end of the day I'm at the same spot from a valuation standpoint that I was to start the day. It feels like it's semantics on a split over being a regular dividend where at the end of the day I have x more dollars in my account.

Saying it was a taxable event wasn't the correct terminology on my part. You don't have to pay a tax on the shares right away like if it was cash. You just have to pay capital gains when you sell it. What I meant was that it appears to slightly affect long term/short term. The way I read things earlier it appears that the shares from the "dividend" are dated when you receive them and not with the original purchase date like the split shares. So if your current shares are over a year old and you liquidate all shares right after the dividend payout you'd have a mix of short and long term gains.

 

[Folster]

The way I read things earlier it appears that the shares from the "dividend" are dated when you receive them and not with the original purchase date like the split shares. So if your current shares are over a year old and you liquidate all shares right after the dividend payout you'd have a mix of short and long term gains.

That would make sense and reward long term share holders and allow them to sell the lots at the higher price.

There has to be a catch though. It seems like a massive tax avoidance loophole if 5/6ths of your shares magically got a higher cost basis without any realization of gains or tax on dividends. I have to be missing something.

 

[Devilmaycare]

That would make sense and reward long term share holders and allow them to sell the lots at the higher price.

There has to be a catch though. It seems like a massive tax avoidance loophole if 5/6ths of your shares magically got a higher cost basis without any realization of gains or tax on dividends. I have to be missing something.

Me too on the missing something. FYI, the 6:1 thing was a hypothetical. I haven't seen any real numbers on it yet. I might have miss explained it earlier too since you've said the 5/6 a couple times now. The description I read had the numbers flipped from the way you've been saying them. If it was a 6:1 then the split that the user sees is 5:1 like a normal split. That extra 1x of shares is the pool that would then pay out 1/6 of a share for each of your shares. I guess we're going to have to wait until they announce the details for the vote. Hopefully the info for it will clear things up for us.

 

[Folster]

Me too on the missing something. FYI, the 6:1 thing was a hypothetical. I haven't seen any real numbers on it yet. I might have miss explained it earlier too since you've said the 5/6 a couple times now. The description I read had the numbers flipped from the way you've been saying them. If it was a 6:1 then the split that the user sees is 5:1 like a normal split. That extra 1x of shares is the pool that would then pay out 1/6 of a share for each of your shares. I guess we're going to have to wait until they announce the details for the vote. Hopefully the info for it will clear things up for us.

That would make more sense. I've seen stock dividends but never implemented as a split. I guess shareholders will have to wait and see.

 

[jf-08]

American Consumers Are Starting to Hit Their Breaking Point

Evidence is mounting that the days of pandemic-era profligate spending may be over in a bad sign for stocks and corporate bonds.

www.bloomberg.com

Signs are emerging that the resilience of American consumers is rapidly waning, potentially undermining one of the few remaining pillars supporting the bull market in equities.

U.S. households have until recently mostly absorbed higher prices on everything from coffee to chicken to clothes, helping companies maintain fat profit margins despite higher input. But that doesn’t mean consumers were happy about paying more for the same goods, which is why the University of Michigan’s sentiment index has steadily deteriorated to the lowest since 2011.

 

[BigRedRage]

I'm trying to understand TSLA's stock dividend news that came out on today. Why do it over just doing a split? From the articles and a couple videos it sounds like you end up owning the same total market value either way but the dividend is a taxable event. I'm not sure if I'm missing something in the mechanics though. This is how I've been reading things. Please correct any mistakes. This is the first time I'd ran into this.

- Company does a 6-1 split. (hypothetical numbers)
- You get 5x your current shares.
- The other 1x of shares is the pool used to pay the dividend.
- You get a portion of that pool based on your number of shares.
-- I believe this is a taxable even since it's new shares like when you get a cash dividend. It doesn't have to be paid though until it is sold.
-- Since it's "new" shares the capitol gains clock starts when they're issued, not the original purchase date like the split shares.

Do I have the gist of what happens correct? If so, what's the advantage over a straight 6-1 split to outweigh the CG clock on the dividend shares?

to my knowledge, the rumors are, that it is just a split. It is being voted on at the shareholder meeting and then we should learn more.

 

[Folster]

American Consumers Are Starting to Hit Their Breaking Point

Evidence is mounting that the days of pandemic-era profligate spending may be over in a bad sign for stocks and corporate bonds.

www.bloomberg.com

The market sure has been ripping over the past couple weeks. The NASDAQ 100 (QQQ) is up 16.7% off it's March 14th low. The S&P 500 is up 11% since then as well.

 

[elindholm]

The market sure has been ripping over the past couple weeks. The NASDAQ 100 (QQQ) is up 16.7% off it's March 14th low. The S&P 500 is up 11% since then as well.

Yeah, it feels like a streak of good luck, that's for sure. My portfolio of individual stocks is actually up for the year now. My mutual funds, not so much, partly because the bond market has been a disaster. I should have balanced with cash instead.

 

[Devilmaycare]

The market sure has been ripping over the past couple weeks. The NASDAQ 100 (QQQ) is up 16.7% off it's March 14th low. The S&P 500 is up 11% since then as well.

I blame you for everything being red today

 

[BigRedRage]

I just yolo'd some GME calls after the stock split announcement....

 

[Folster]

At $306, Home Depot (HD) has taken a tumble from their high of $420. That might look appealing to an investor looking to get in at a lower price and notices it's near its 52 week low, but my analysis suggests it's still not a deal yet.

Sub $240 would be a price that would get me to take another look if I didn't own Lowes already. My model spit out a target price of $215 with debt factored in. It dropped to $153 during the Covid crash for some perspective.

This shows you how inflated HD got during the pandemic. It's a stock that might get thrown out with the bath water if and when a recession hits.

 

[elindholm]

At $306, Home Depot (HD) has taken a tumble from their high of $420. That might look appealing to an investor looking to get in at a lower price and notices it's near its 52 week low, but my analysis suggests it's still not a deal yet.

Sub $240 would be a price that would get me to take another look if I didn't own Lowes already. My model spit out a target price of $215 with debt factored in. It dropped to $153 during the Covid crash for some perspective.

This shows you how inflated HD got during the pandemic. It's a stock that might get thrown out with the bath water if and when a recession hits.

I don't rely all that heavily on Morningstar, but I do pay attention to their perspective. Their model gives a fair value estimate of $255 for HD, which is enough to keep me away. I think HD definitely enjoyed an artificial Dow-30 bump from all of the money pouring nondiscrimately into index funds.

The outlier among the Dow-30, from my perspective, is Salesforce (CRM). I'll bet it has the lowest name recognition among the Dow-30, except maybe for Amgen. I've spent a little time on CRM's website and haven't figured out what makes them distinctive or why anyone should be attracted to them. They're down to 184 from their peak of 312, and Morningstar loves it at this price, but I haven't been tempted. I considered it at 223 back in May, but it's good that I stayed away, since I wouldn't have been smart enough to sell at the right time. Of course, that was shortly before my fiasco with Melco, and almost anything would have been better than that decision.

 

[Folster]

The outlier among the Dow-30, from my perspective, is Salesforce (CRM). I'll bet it has the lowest name recognition among the Dow-30, except maybe for Amgen. I've spent a little time on CRM's website and haven't figured out what makes them distinctive or why anyone should be attracted to them. They're down to 184 from their peak of 312, and Morningstar loves it at this price, but I haven't been tempted. I considered it at 223 back in May, but it's good that I stayed away, since I wouldn't have been smart enough to sell at the right time. Of course, that was shortly before my fiasco with Melco, and almost anything would have been better than that decision.

CRM has always been on my radar since I use it at work and they own LinkedIn, but I haven't been able to get past their P/E ratio and lower than projected growth rates. I just know it will be a waste of time to run the DCF on them. It's probably better to look at P/S with a company like CRM, but the market is not especially kind to companies selling based on sales multiples of late.

Pharmaceuticals are tough. You can't just look at revenue and cash flows. You actually have to read some analysis or their 10K to get an idea of what drugs they have in the pipe as well as their current drugs that are coming off patent. That industry is not a core competency of mine so I have stayed away.

I think JNJ would be a smart play in theory provided valuation is good because of their pharmaceuticals business is paired with a solid consumer staples business to provide stability but even JNJ is spinning off their pharma business.