Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 1
Rather uncertain outlook for this one so I'm taking a conservative view and only 5 years vs 10.
$10 eps as a ball park average x 5 years growth @12%pa = 17.62 x terminal valuation of 20PE = $352 by 2027.
10% return sought equates to an intrinsic value of $218 today.
Thoughts?
No. of Recommendations: 3
I wouldn't buy Meta at any price, because I don't like the management, I don't like how they make money (to me, it often feels like they are damaging democracies and promoting narcissistic behaviour patterns for profit) and I don't like the stock voting/ownership structure (13% owned by Zuck but 57% voting control; you are not an owner so much as 'along for the ride').
I have my doubts about whether they can maintain their share of advertising spends, never mind grow them.
I think it is very difficult to make estimates of future earnings because I remember when e.g. Altavista, MySpace, Yahoo, Hi5, etc. were leaders, and then suddenly, they just weren't. People don't advertise on abandoned sites. That's a risk. It's like banks when confidence is lost, there's a reflexive setup whereby if people think no one else goes there now, they don't go themselves. Network effects work both ways. I have always been gobsmacked by how fast banks fell from 'hundreds of years of stability' to 'wouldn't trust them with a penny!' in 2008. Literally weeks.
I think this is the same kind of situation potentially if you are looking 5 or 10 years out, price estimates have to include some calculation of "% chance it all turns to poo suddenly".
I don't know a single person who enjoys using Facebook or trusts them, regardless of age. I know a lot of people who would cheerfully use any alternative that gains momentum.
In terms of VR, super duper tech, but profitability is less clear and when Apple VR shows up... who will be using facebook VR? VR is a huge roll of the dice for profits. Could be a big win or a big zero. They are showing extreme competence on the hardware side and extreme incompetence on the software/experience side. The problem is that if any company comes along with either a) equally good hardware/price, plus better software or b) better hardware, they will eat Meta's share of VR very rapidly.
They have some really excellent AI researchers. I'm less sure on how they are monetizing it. There is a lot of 'price is free' competition in AI currently.
Next year's earnings are currently estimated at $8 (source: Finviz). People were selling this stock at $90/share just 3-4 months ago. They were selling it for 20% less just days ago. Feels like a poor time to buy.
I don't think earnings/growth/PER as a way of predicting future price is going to be a good guide to the future on a stock so prone to emotional trading, risk of accelerating negative network effects, and with such dominant majority shareholder/CEO control.
A) I question also the PER assigned to the earnings in your post. If FB becomes established as ex-growth - for any reason - the PER ought to be around 10-12x not 20x, in a bear market/recession.
B) Where are 5 years of 12% growth coming from? Facebook are 'huge', like Google they already represent more than a quarter of all ad spending in the world. The number can't go over 100%, and Google have another quarter too. Is spending on total global advertising going to skyrocket during a recession? Can Meta offer adequate return on advertising spends? What will make someone change to Meta who is not using it now?
I think the stock is stinky and risky, I think the numbers for growth/PER are questionable, and I think the error bars around earnings/growth/PER are huge.
No. of Recommendations: 2
I already own it.
I'm considering whether to hold or exit after the big run up. I'm about break even. To give you context.
It's on the superinvestor top 6 monthly buy list still and was previously. It's a cash generating machine.
The past is the past. I'm interested in the future and trying to make sense of normalised earnings and potential growth over the next 5 years to asses run rate and valuation.
No. of Recommendations: 5
Started a new position recently in the 148 range. If indeed they are damaging democracies, then said democracies should look in the mirror at their own educational system, lack of critical thinking skills, and socioeconomic conditions that renders so many to retreat to their own echo chamber, and believe in whatever some flashy computer screen tells them.
I'm in Apple - and I dont like slave labor.
Ditto Nike.
I'm into General Dynamics and Raytheon despite my not being a fan of blowing people away that many times I never met or never did anything to me.
To each his own.
I invest in legal instruments that I feel will preserve and hopefully increase purchase power. If I want to change or help the world, well by golly anyone from Meals-on-Wheels to volunteer tutoring is out there not too far from home.
I own Meta even though I do *zero* social media sites. I'm the guy who only watches DVDs and still goes to movie theaters and wants the whole texting-liking-tweeting-smartphone world to get off my lawn :)
The recent financial announcements are encouraging, though I want to see follow thru and won't add until I'm convinced of such. In the end - I feel the human race is owned, yes owned by tech and social media. They can't go without it, they preen for it, they use it to shape anything from what they eat, what they drive, how they talk, vote, have sex or live life. And that - continues to attract commerce.
So, um, yeah, if an entity has a hand in owning the human race - I'm fine investing in it. I didn't create this lifestyle, but I'm fine making a few bucks off it.
No. of Recommendations: 2
I would propose that a man who owns 1% in each of 100 slave plantations is no different to a man who owns 100% of a single slave plantation.
I would propose that if owning a slave plantation in the 18th century would have been a morally objectionable way to build capital, then things are not really any different today when engaged in business investments.
If you build income doing things that are harmful to the world, then you are morally responsible for that harm. I have the impression from your post that you don't consider yourself morally responsible, but wishing something so, does not always make it so.
I would propose that those who cheerfully and knowingly draw income from damaging their own society, are not patriotic.
I would propose that "If indeed they are damaging democracies, then said democracies should look in the mirror" sounds rather like 'victim blaming' and 'false equivalency' and 'whataboutism'.
To each his own, as you say.
No. of Recommendations: 1
Patriotism is the last refuge of the scoundrel they say.
Morally responsible? Absolutely. But not vane enough to think that my selling $30k of Facebook stock is going to help a thing.
That is for those who adorn their Facebook with messages of rainbows and tolerance - yet love their exclusive enclaves and exclusionary high debt causing campuses. Those who love touting tolerance and openness - yet seek to limit high skilled immigration.
Me owning a few shares of META? Won't make a difference if I sell.
I'm not a girl at a slumber party who doesn't like the other girl and will therefore harbor it....
The day someone credibly proposes totally getting rid of social media? And the movement has legs? I'll sell, and contribute the money to that cause.
Until then - I hope the people keep using Meta, and the ad dollars roll in.
No victim blaming - just using specifics - not platitudes. The world isn't the. campus. The campus which incidentally preaches tolerance and openness and fairness, yet takes price in rejecting boatloads of people, and leaving others awash in debt so generous open minded tolerant faculties can live well.
Let's go after that greed for starters. Cities with rent control - can have faculty pay control.
And credit card companies - can use the same debt collecting rules as the IRS does.
Fairness.
No. of Recommendations: 1
I've made my mind up. Sold a little bit of Meta yesterday in a taxable account to keep me within tax free limits changing this April.
The rest I've thought about and consider it a hold but will not add at these prices. My position is big enough at c7%
This conclusion reached by weighing up alternatives, current valuation and possible growth potential. One to let run for 5 years and review IMO.
No. of Recommendations: 1
Forgot to add. Same applies to Alibaba.
