EPAM systems: down 46% today.
It hurts, but Facebook paved the way to pain for me.
Can you imagine what it could be for an investor from Russia? I mean, EPAM systems operates partly in eastern Europe but also in other countries. Imagine what it could be for a company operating only in Russia...
Life will pretty soon become hell in Russia, whatever Putin tries to do. That economy is going through a sewer system.
I'm not interested in dirty industries or "politically sensitive" stocks (tobacco, guns, lotteries, casinos...).
But I guess that General Dynamics and Raytheon (two aerospace and defense companies) could be good investments until there's a nuclear bomb rain all over the earth.
We're currently in the worst situation ever between Russia and Western countries (maybe the missile crisis in the 60's was worse, but not by far). Putin is now talking about the possibility of using nuclear equipment. I guess he won't because for one bomb used toward NATO, he'll probably receive 10 bombs. He simply can't beat NATO. But he could destroy a few european cities before he precipitates his country into hell.
The besy solution for everybody, including the russian people, is if russians would start a revolution and chop Putin's head or if someone close to Putin puts a bullet in his head. If it comes from inside, everybody will win. Us and them.
We all hope it will happen sooner than later. But until then, NATO will spend a lot of money on defense. And these two companies, while having so-so margins, OK valuation and OK ROE should perform well whatever the level of inflation we're facing.
Since the beginning of the year, my portfolio has melted like an Iceberg in the Sahara. I actually never lost that much money in all my life. Which is a bit dramatic if we exclude the fact that I never had as much money as I had at the end of 2021.
I have to admit that I may have overpaid for some stocks. And when you overpay, market drops are harder on you. However, my biggest stakes weren't that expensive.
How can we explain that many companies recently released great earnings and are still down a lot? Many stocks have beaten expectations by a wide margin and are down 10 or 15% since then.
That's a tough period. But we've lived in wonderland for many years. Maybe it was time for some difficulties, just to epurate the market from all these speculators that are around. Like all these people that tripled their money in 6 months with a stock they knew jack shit about.
That fucking Putin probably gets a lot of money from all this crisis. Who benefits the crime? That's always the fucking question that we should ask. Agatha Christie told us that.
President Biden knows how to worry people. He spoke lately about the necessity of getting all US diplomats out of Ukraine because of the fear of a russian invasion. In that case, defending US diplomats or US citizens against Russia could cause a third world war.
I don't see how such a war could happen given the fact that Russia simply isn't strong enough against NATO. How could anybody think that Russia could win a war against USA, Canada, Germany, France and UK plus all other smaller countries? That would be a blood bath of course, but russians probably use planes from the first world war and bows and arrows. These guys have a very large army, but they have the GDP of Spain. Napoleon kicked their ass, Hitler kicked their ass. They can only rely on General Winter when things get bad.
So far, the market doesn't seem too worried about a potential invasion of Ukraine by Russia. It could happen, but it looks like everybody knows that there would be too much too lose on any side for a declaration of war.
However, a third world war would probably be the only thing that would give a meaning of our unsignificant lives spent on a couch, with a phone on our hands. Every year, we're close and closer to the state of primats that we once were.
Nothing like a great war and hundreds of nuclear bombs to wake up all these sleepy people that we are.
Who the fuck is crazy enough to buy shares of Disney?
Current PE is about 130 and forward PE is higher than 30. That's completely crazy. It's not an high-tech stock selling stuff like there's no tomorrow.
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A lot of people (including me not so long ago) thought that Disney was super expensive. However, it appears that it's a case where current PE doesn't say everything.
The answer is simple: Disney has been badly hurt by COVID. The stock is currently so "expensive" because earnings decreased a lot during COVID.
Here's DIS EPS from 2015 to 2021. As we can see, if Disney's earnings go back to 2018 level, the stock would today be sold for less than 18 times earnings.
| 2021 | $1.09 |
| 2020 | $-1.58 |
| 2019 | $6.64 |
| 2018 | $8.36 |
| 2017 | $5.69 |
| 2016 | $5.73 |
| 2015 | $4.90 |
That's a company that should grow by more than 30% on an annual basis given estimates. Let's be conservative and let's say that earnings will "just" grow by 15%. Even with that growth rate, a PE of 18 is low for such an high quality stock.
As we can see by yesterday's results, the company is doing great with parks and Disney +. Expectations were beaten by a wide margin.
It's now possible to pay a very reasonable price for Disney if we look 2-3 years in the future. That's probably why some investors are super bullish on that stock (Pat Dorsey put 11% of his portfolio on Disney. He's usually super bullish on very high growth stocks).
A few weeks ago, a guy wrote to me, suggesting to write about Members of Congress VS Standard and Poor's.
Why do the interest rates don't go up like they should? We probably have a part of the answer above. Because, frankly, with such high inflation, rates should go up by at least 1%.
Which makes me think about how little we know about a lot of things around the stock market. Many companies try to pump their stocks with super positive news which are probably less positive than they make us believe. And sometimes, the opposite happens. For instance, Facebook last results weren't as bad as it seems but call transcript looked like Facebook was going down. Does Facebook going down or does Zuckerberg and his communication team want make us believe that things are worse than they are just to push the stock lower and then, initiate a massive buyback?
I may be wrong, I may be right. But one things is sure, we never see the whole iceberg. There's a lot of other things going on and most of them are not pretty.
Cocaine, teen boys, easy and quick money, bullshit earnings... What a wonderful world.
At least we have friends around us. Oh I forgot. With COVID we lost almost all of our friends. What a wonderful world.
If someone has been waiting for months or years to start investing on the stock market, I think that it's the right moment.
There are many wild movements these days. Giga caps stocks are going up or down 10% for no reason.
So, just use your money to buy shares of a stock that's doing good and that faces no problem... but that's impacted by bad news related to other stocks.
It's much better to invest in turbulent times like these than in times where every stock seems to be rationnaly valued.
Wow. What a bad day. I can't add any exclamation mark. Because I'm not happy. I prefer to remain as stoic as possible.
Paypal is down 25% today.
Facebook is down 23% in after hours.
Both represented about 15% of my total portfolio at the beginning of the week. So, these two stocks have a negative 4% impact on my portfolio.
That's a lesson for people praising and applying concentration. That's a lesson for me.
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Now, a little comment: I agree with the Paypal drop today. Because Paypal was expensive and priced for a high growth. It looks like there won't be that much growth this year. Maybe no growth at all. Who wants to pay 40 times earnings for a stock that doesn't grow?
On the other hand, I don't understand why Facebook is punished that much. If the drop still is 20-25% tomorrow, Faebook will be priced like Kellogg's (PE: 16-17), a company that grows about 3% a year with margins much lower.
