3 upvotes, 1 direct replies (showing 1)
View submission: Don't invest recklessly
The average PE ratio on the S&P 500 is in the mid 20's somewhere, which is higher than the historical norms, but not crazy like some of these tech stocks like the ones you've mentioned. Overall the US stock market is a bit "expensive" right now but not multiple times more than it should be to be considered normal.
But yeah buying stocks with really high PE ratios makes a ton of assumptions that things will go well for the companies. The term "priced to perfection" comes to mind.
Comment by BitGoyim at 30/11/2017 at 23:36 UTC*
7 upvotes, 3 direct replies
Amazon is trading at somewhere around 300 times current earnings. Shareholders must have a lot of faith in them to justify that premium. In my opinion the proliferation of alt-coins, forks, and ICOs as get rich quick schemes has inflated the BTC bubble as the reserve currency of crypto. The question is how will it pop. The volatility over the past few days indicates a market that is struggling to agree on a price. In healthy markets prices derive from something real or fundamental that is relatively independent of the price of the good itself. Numerous commentators have said that Bitcoin is going parabolic. That means its price growth is powering its own price growth. Essentially the price growth of Bitcoin is generating free money for hodlers from new dollars pouring in. Kind of like a Ponzi scheme. This can go on until Bitcoin eats the financial world, displacing traditional currencies, or until there is a very nasty correction triggered by any moderate sell of. I think that it is more likely that bitcoin will suffer a correction rather than that it eats the whole global economy at an exponential rate over the next few years. There are too many vested interests in the current system. Maybe a state actor such as the NSA could create malware directed at bitcoin nodes, for example, etc, exchanges can be outlawed. Possession or trading criminalized. I don't support any of this but these are actions the existing system could take to protect itself from a rising Bitcoin. On the other hand maybe it is the Trump of Currencies and everyone will dismiss it but it will keep rising any way. The lack of maturity of many in the "community" disturbs me. They talk online like a bunch of teenagers. But on the other hand most detractors of bitcoin have not bothered to research it either. They routinely cast their judgements based on misconceptions of how bitcoin works or strawmen. An example of a strawman is "gold has real world uses." True but real world uses are dwarfed in importance in comparison to supply and speculative demand when it comes determining market price of gold.