All things STOCKS

[05_never_again]

To your points:

1. What? I feel like the opposite is true from say, 20 years ago. The tech/creature comforts aside, newer cars feel more cheaply made than older ones. I would kill to have a brand new version of my first truck rather than buying that same 2026 model, regardless of price. We're encouraged as consumers to get the newest models of things as soon as they're out. That's all gut intuition so if you have data to support it, I'd love to read it.

2. It used to be that the freaking milkman could afford to be a homeowner. As someone in their 30's, most people I know have roommates, but also have degrees, good jobs, and 401ks. Yet they can't stand the thought of paying 400k+ for a damn cottage with a cheap face-lift, regardless of acquiring equity, they'd rather just rent.

Part (thought certainly not all) of that problem is consumer expectations. 20 and 30-something ideas of a "starter home" are much different than what a starter home was considered to be 40-50 years ago. The size of the average house has exploded since 1970 while the average household size has declined.

Having said that, they are overall less affordable than they were even in the early 80s. The average house price + mortgage interest relative to average income, even with 15-20% interest rates in 1980, are smaller than they are today.

 

[Vol423]

There is a lot of confusion of inflation with "things are more expensive than they used to be." I don't know how many times I've heard people say things like "I don't know why they say inflation has come down. Everything is still really expensive." The unfortunate reality is that it is going to take multiple years of wage growth outpacing inflation for people to feel like things aren't expensive. Inflation was 7% in 2021 and 6.5% in 2022, or almost 15% compounded over 2 years. Wage growth was nowhere near remotely close to that.

The job market is very strange. Hiring is very slow. Despite headlines about job cuts that occur every year at large companies that get people's attention, people aren't getting laid off either. There is still a COVID overhang where companies are working off the post pandemic over-hiring that they did. Those 35k AMZN layoffs got a lot of attention. What people seem to have forgotten is that those layoffs represented 2% of their workforce (it's like a 100-employee company letting go of 2 people) and that their workforce size has tripled since 2017.

60% of the population has no clue what inflation is. They think if inflation decreases, then prices went down. They also don't grasp the fact that economy-wide deflation would be catastrophic.

 

[05_never_again]

60% of the population has no clue what inflation is. They think if inflation decreases, then prices went down. They also don't grasp the fact that economy-wide deflation would be catastrophic.

I know. I was saying that is unfortunate because I think that's got a considerable amount to do with why consumer sentiment is in the tank.

The average consumer thinks they're being lied to when they're told that inflation has come down because they don't understand exactly what that means.

 

[Jax_Vol]

Just looking through some Schwab research, it’s priced for perfection. 200x p/e with a forward estimate of 40x. But at least they are profitable. Zero debt mitigates a lot of potential risk. 80% plus institutional ownership. But also below many of the S&P performance comparisons. Been public for 10 years. Stock isn’t too far below the highs. $25B market cap is tiny relative to the trillion dollar big tech players.

I can’t comment much on the technical aspect of how they fit into the cloud / AI / data center universe, but the demand for storage wouldn’t seem to be going away anytime soon. Especially if China isn’t allowed to dump government subsidized products into the market. I don’t even know if they sell to the infrastructure builders or the device manufacturers.

I don’t know who they’re competing with. Their SEC filings would have that disclosure. Also, who are their biggest customers and at what percent of revenue?

Thanks Thunder!

I'm gonna try them for a little. More on gut.

I also need a technical whiz to explain their "moat" if they have one. They store data, but obviously that seems like a cut-throat business. Especially if Asia is allowed to play in US market.

 

[Vol423]

I know. I was saying that is unfortunate because I think that's got a considerable amount to do with why consumer sentiment is in the tank.

The average consumer thinks they're being lied to when they're told that inflation has come down because they don't understand exactly what that means.

I agree. They'rereaching their breaking point if dealing with Bidenflation. As you said, the only solution is decreasing inflation (which is happening) and increasing earnings over a number of years.

 

[Vol423]

Thanks Thunder!

I'm gonna try them for a little. More on gut.

I also need a technical whiz to explain their "moat" if they have one. They store data, but obviously that seems like a cut-throat business. Especially if Asia is allowed to play in US market.

Do what you want, but I'd suggest you should learn more about the company before investing in a stock that is described as priced for perfection.

 

[Thunder Good-Oil]

New cars can last 30 or 40 years? Who is your source for that?

People are conditioned to believe that they have to have the newest cars and trucks. They don’t drive them until the wheels fall off anymore because they’re status symbols. Most 1995 cars and trucks can run just fine. Depreciation is marketing by the manufacturers.

Uber and Lyft are good alternatives as well for a lot of people.

We’re spoiled.

 

[Thunder Good-Oil]

Do what you want, but I'd suggest you should learn more about the company before investing in a stock that is described as priced for perfection.

I think that the bigger takeaways are who are the customers and competitors. The P/E ratios can flex wildly until there’s steady, substantial revenue and a history of well managed cost containment. $0.40 EPS with a below $100 stock (200x) can get to a reasonable multiple quickly. Analysts are looking for about $2/eps.

 

[Thunder Good-Oil]

Pure Storage, Inc. - Financial Information - SEC Filings

investor.purestorage.com

https://d18rn0p25nwr6d.cloudfront.net/CIK-0001474432/8c023447-ebc8-42c3-86e5-21558f3d7224.pdf

 

[Vol423]

People are conditioned to believe that they have to have the newest cars and trucks. They don’t drive them until the wheels fall off anymore because they’re status symbols. Most 1995 cars and trucks can run just fine. Depreciation is marketing by the manufacturers.

Uber and Lyft are good alternatives as well for a lot of people.

We’re spoiled.

I agree with those comments, but I also think today's cars are cheap pieces of crap. They're also loaded down with computer chips that will be obsolete and likely rendered inoperable by future software updates or lack of replacement parts.

 

[Thunder Good-Oil]

I agree with those comments, but I also think today's cars are cheap pieces of crap. They're also loaded down with computer chips that will be obsolete and likely rendered inoperable by future software updates or lack of replacement parts.

O'Reilly, Advance, NAPA, and AutoZone sell stuff that keeps them rolling. The longer new pickup trucks sell new for north of $50k, the more incentive there is to keep old cars going. It’s vanity, not reliability that send cars to the crusher. For meeting basic transportation, they’re fine. It just hurts to put $500 2 or 3 times a year into an ugly POS vehicle. But you can also forgo the collision insurance and interest expense.

It used to be rare for cars to reach 100,000 miles. Now it isn’t uncommon that they’ll functionally last 2 or 3 times that.

 

[Vol423]

O'Reilly, Advance, NAPA, and AutoZone sell stuff that keeps them rolling. The longer new pickup trucks sell new for north of $50k, the more incentive there is to keep old cars going. It’s vanity, not reliability that send cars to the crusher. For meeting basic transportation, they’re fine. It just hurts to put $500 2 or 3 times a year into an ugly POS vehicle. But you can also forgo the collision insurance and interest expense.

It used to be rare for cars to reach 100,000 miles. Now it isn’t uncommon that they’ll functionally last 2 or 3 times that.

You have no idea how long cars being sold today are going to last. You're projecting based on cars from decades ago. Today's cars bare little resemblance to the older cars that could last for hundreds of thousands of miles. A major part of that is that the inclusion of so many computer chips sets them up for planned obsolescence.

 

[Thunder Good-Oil]

A lot of inflation is by choice. $5-$10 gets you a coffee at StarBucks. But $0.80 will get you a frozen burrito from Food City. A 10 pound bag of taters only costs a couple of dollars.

Live Nation screws young adults with $100 cheap seats at concerts. Market Square was having free concerts not long ago - I don’t know if they still do that or not.

UT Football tickets used to be about $10. Danny’s convinced a lot of sheep to pony up thousands every year.

 

[Thunder Good-Oil]

You have no idea how long cars being sold today are going to last. You're projecting based on cars from decades ago. Today's cars bare little resemblance to the older cars that could last for hundreds of thousands of miles. A major part of that is thst the inclusion of so many computer chips sets them up for planned obsolescence.

Computer chips used to costs hundreds or thousands of dollars. They’ve fallen to hear nothing.

Planned obsolescence is what the manufacturers do with their marketing campaigns.

Just buy a solid Toyota. They’ll last several 100k if not abused.

 

[05_never_again]

People are conditioned to believe that they have to have the newest cars and trucks. They don’t drive them until the wheels fall off anymore because they’re status symbols. Most 1995 cars and trucks can run just fine. Depreciation is marketing by the manufacturers.

Uber and Lyft are good alternatives as well for a lot of people.

We’re spoiled.

I drive a 2008 Toyota Tacoma. Due to living very close to my office and using my wife's car for any kind of family trip (short or long), it only has 127k miles on it.

People ask me all the time "when are you going to get rid of that truck," even when I tell them there aren't many miles on it.

 

[YankeeVol]

Computer chips used to costs hundreds or thousands of dollars. They’ve fallen to hear nothing.

Planned obsolescence is what the manufacturers do with their marketing campaigns.

Just buy a solid Toyota. They’ll last several 100k if not abused.

I wouldn't touch a new Toyota right now

 

[Vol423]

Computer chips used to costs hundreds or thousands of dollars. They’ve fallen to hear nothing.

Planned obsolescence is what the manufacturers do with their marketing campaigns.

Just buy a solid Toyota. They’ll last several 100k if not abused.

I'm done with this conversation. You have talking points based on historical products with very little in common with today's cars.

 

[Thunder Good-Oil]

I'm done with this conversation. You have talking points based on historical products with very little in common with today's cars.

The point is, inflation today isn’t at all similar. People don’t need new loaded pickup trucks for nearly $100k. A used Nissan Altima gets their butts where they need to be and don’t cost much at all.

 

[Thunder Good-Oil]

Conspicuous consumption - Wikipedia

en.wikipedia.org

 

[DinkinFlicka]

People are conditioned to believe that they have to have the newest cars and trucks. They don’t drive them until the wheels fall off anymore because they’re status symbols. Most 1995 cars and trucks can run just fine. Depreciation is marketing by the manufacturers.

Uber and Lyft are good alternatives as well for a lot of people.

We’re spoiled.

Thing is, the wheels seem to fall off sooner.

CVT is a huge contributor to that.

Speaking of Uber/Lyfts, anytime I'm in one and the 2020+ vehicle has six digit mileage, the car almost always feels/sounds like crap.

Seemed like 150k is just getting started in a lot of late 90's/early 00's cars, but that's just my observation.

 

[Vol423]

The point is, inflation today isn’t at all similar. People don’t need new loaded pickup trucks for nearly $100k. A used Nissan Altima gets their butts where they need to be and don’t cost much at all.

You're attempting to completely morph this discussion. Your original statement was that today's new cars will last for 30-40 years.

 

[DinkinFlicka]

I wouldn't touch a new Toyota right now

My example from earlier:

I would take a 2002 Tacoma with 200k miles on it rather than a 2026 Tacoma fresh off the assembly line.

 

[DinkinFlicka]

Maybe back on topic since this is deviating.

I think tomorrow's earnings can make or break the next month for the tech sector. Highly unlikely NVDA misses but as we've seen, they can beat and give good guidance but the stock still bleeds. However, with as much intense scrutiny and waning confidence in the AI short term, I think a Jensen homerun could stop the fall and spark a huge rally we typically see in Nov/Dec.

 

[Vol423]

Maybe back on topic since this is deviating.

I think tomorrow's earnings can make or break the next month for the tech sector. Highly unlikely NVDA misses but as we've seen, they can beat and give good guidance but the stock still bleeds. However, with as much intense scrutiny and waning confidence in the AI short term, I think a Jensen homerun could stop the fall and spark a huge rally we typically see in Nov/Dec.

I hope so. I have no doubt they'll park their earnings and projections in the cheap seats. The question is whether or not the market bounces off of it or continues this slide.

 

[Thunder Good-Oil]

You're attempting to completely morph this discussion. Your original statement was that today's new cars will last for 30-40 years.

My original statement was about inflation. You’re arguing whether or not a new car can last 30 or 40 years as I said. It seems like the inflation discussion has been morphed.