This is a really good post. I've been a indexer since 2013 but with the wild increases in tech I decided to purchase some individual stock as 2% of my net worth and I didn't think about the fact earnings could be great but if the PE is 32 eventually the stock price will stall out and wait until the PE goes back down.Yes.I have learned a lot here on this board. The other day talking investing with a friend he texted me his holdings and I had some thoughts on it.. Wondering what others think and if I correct in my assessment. as well.
In short, of his overall investment amount he is:
23% in crypto
63% in individual stocks: AAPL, AMZN, COST, NVDA, and UTHR
16% in ETF between QQQ and VUG
He mentioned VUG "Is good because is contains 50% tech".
Did some quick math and calculated and overall weighting of 75% investment in the technology sector.
I am thinking:
-Not diversified
-Too heavy on Tech
-A ton of overlap between the stocks and ETF's
-He may be a bit misguided and chasing performance by thinking tech will always win.
-He is thinking a "growth" means his investment will always grow
Does this sound about right?
And ripe for the smash. As and when it comes.
It's not that Apple, Amazon, Costco, Nvidia are not great companies. They are. But they are also the largest market cap companies in the world. And generally valued at huge multiples of current earnings. They cannot keep earnings growing at rates which will support those valuations.
So eventually the PEs will fall. If we look at something like Microsoft, its share price took something like 12 years to recover from the 2000-03 period bottom. In that time, it grew its Earnings Per Share very substantially. But the value the market put on that, the Price per Share/ Earnings Per Share, fell. So the stock did badly.
C*o we cannot discuss here. But it will be highly correlated with speculative buying of tech shares.
He's going to lose a lot of money at some point. He's basically gotten lucky, and will get unlucky at some point.
We've been through these cycles before. In the late 70s/ early 80s it was mining and oil & gas stocks. Plus oilfield services.
There was a time in the 1990s when pharma was all the rage. Then we had the dot com era -- and Tech-Media-Telecoms, some very reputable companies like HP & IBM - just imploded as stocks.
Banking & mortgage companies had their time in the sun. Countrwide grew to something like the ?largest? mortgage lender in America. Then basically collapsed.
It's not that the Magnificent 7 internet companies are not great companies, it's just that they can't outperform the pack for forever.
Statistics: Posted by Nadchat5 — Thu Sep 04, 2025 10:37 am — Replies 117 — Views 26463