Stock market is a "fully-fledged epic bubble" and will burst
Discussion
rossub said:
I’m afraid I’m never going to be convinced that spending £1k on a phone is worth it when I can buy the 2-3 year old model for 1/4 the price that does everything I need 
In the iPhone world that sounds like you're buying something second hand?In the Android world that may work to a point and of course buy the one that works for you but broadly speaking (and I'm conscious this isn't an Apple v Android thread) cheaper Android phones don't receive updates for very long at all so either you replace the already old phone more often or you stop getting security updates sooner which isn't good either.
The Apple is doomed trope has been around for a remarkably long time. Unlike Kodak they have managed to adapt to new technology and new markets multiple times with obvious success.
The sub-trope, is to question where is the next big thing? This also misses the mark as it is the wrong question. Investors ought to understand that is has always been a business built on user experience of technology. Therefore the question is can Apple continue to gain and keep its user base?
There is some concern in the results here, as it has seen a drop in growth of its services income. However in the context of the economic environment, the performance overall is surprisingly good.
The sub-trope, is to question where is the next big thing? This also misses the mark as it is the wrong question. Investors ought to understand that is has always been a business built on user experience of technology. Therefore the question is can Apple continue to gain and keep its user base?
There is some concern in the results here, as it has seen a drop in growth of its services income. However in the context of the economic environment, the performance overall is surprisingly good.
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hstewie said:
hstewie said: In the iPhone world that sounds like you're buying something second hand?
Ok, 2-3 years old was a stretch. It’s an iPhone 7 purchased in 2020, so 4 year old model. Minimum 3 years use out of it.Anyway, some of you are missing my point. It was the fact that people who can Ill afford it are buying £1k phones and not really appreciating that’s what they’re paying.
I wasn’t suggesting everyone who buys a £1k phone is dim witted.
rossub said:
Ok, 2-3 years old was a stretch. It’s an iPhone 7 purchased in 2020, so 4 year old model. Minimum 3 years use out of it.
Anyway, some of you are missing my point. It was the fact that people who can Ill afford it are buying £1k phones and not really appreciating that’s what they’re paying.
I wasn’t suggesting everyone who buys a £1k phone is dim witted.
It won't run iOS 16 so it's pretty much end of life right now and it won't be getting security updates for iOS 15 very long so you'll either have to replace it or run a phone that doesn't get security fixes which you might be fine with but it isn't a very good idea.Anyway, some of you are missing my point. It was the fact that people who can Ill afford it are buying £1k phones and not really appreciating that’s what they’re paying.
I wasn’t suggesting everyone who buys a £1k phone is dim witted.
I agree entirely about people who sign up for £50-60/month phone deals as I've not seen many where I can make the numbers make sense.
That's probably a whole different thread though
DonkeyApple said:
Yup. I don't like the insane prices for iPhones but each one gets kept until the software updates stops being available. So my children are on secondhand 6's that cost about £100. My wife is on my old 6 plus which I only didn't need as it broke on the way to the airport and I had to make an emergency purchase of an X. I'd switch to a Mac as I cannot stand Microsoft but I'm not going to spend £3k when Microsoft laptops can be had for ten times less.
I use Apple because it's pretty much idiot proof and everyone I know is on Apple so it's easy to get stuff sorted. I tried Android but it was just too 'microsofty' for me, I didn't like it at all.
When it comes to Apple's ancillary products I simply don't see any purpose at all in them. I don't wear a watch, nor need one or desire the hassle of a man bangle that has no essential need. Nor do I need EarPods, I'm sure they're very good but I view headphones as disposable items so just buy cheap.
However, I think we can appreciate that this may not be normal consumer behaviour?. I suspect that the majority of tech users of all brands have been slapping everything in finance and rolling over debt and products while paying huge premiums.
For years people have wondered just how much money someone must have been earning to be driving around in a brand new £100k car, living in a home jammed full of the latest tech from home cinemas, instant hot water taps, battery packs in the hall and going on multiple holidays a year all while always having the latest Apple products. What those people are about to see is the answer to their question, which is that these apex consumers weren't earning any more than them they were just using every penny to rent someone else's lifestyle for a while.
However, we need to note that Apple aren't alone in renting £1k phones. Companies like Samsung are in that space also now and in comparative terms, one might assume that their Western customers are more exposed to the current market?
You have a very similar approach to me, particularly on earphones. A decent phone and iPad are important for me doing business on the move (or for that matter being sat on the sofa with a Negroni).I use Apple because it's pretty much idiot proof and everyone I know is on Apple so it's easy to get stuff sorted. I tried Android but it was just too 'microsofty' for me, I didn't like it at all.
When it comes to Apple's ancillary products I simply don't see any purpose at all in them. I don't wear a watch, nor need one or desire the hassle of a man bangle that has no essential need. Nor do I need EarPods, I'm sure they're very good but I view headphones as disposable items so just buy cheap.
However, I think we can appreciate that this may not be normal consumer behaviour?
. I suspect that the majority of tech users of all brands have been slapping everything in finance and rolling over debt and products while paying huge premiums. For years people have wondered just how much money someone must have been earning to be driving around in a brand new £100k car, living in a home jammed full of the latest tech from home cinemas, instant hot water taps, battery packs in the hall and going on multiple holidays a year all while always having the latest Apple products. What those people are about to see is the answer to their question, which is that these apex consumers weren't earning any more than them they were just using every penny to rent someone else's lifestyle for a while.
However, we need to note that Apple aren't alone in renting £1k phones. Companies like Samsung are in that space also now and in comparative terms, one might assume that their Western customers are more exposed to the current market?
We give our old phones away to friends who lose theirs or who can't afford a new one.
I would recommend using an old iPad as a Bluetooth device in the kitchen - apps controlling the house, software updated automatically, play the radio/Spotify through BT speakers etc.
DonkeyApple said:
The interesting one today was TSLA. The inference being that when it comes to excess consumer spending, the market is clearly split into haves and have nots and supporting the view of a selective recession.
I think Tesla is the only Western EV-only business that hasn’t gone full circle back to near worthless at this point.How they’ll survive in a world where everyone else established and well experienced in the world of cars is now doing EV, is beyond my comprehension.
Reversion to the mean, yay. But it’ll require some action at the other side of the average to get there…
Which does mean this whole world of nonsensical digital value around online profiling/advertising, which at its apex seems to be to sell women skin tight outfits to make the bums look big and hips narrow, or fat lips, or a common one now is fasting for men it seems?!
These businesses are valued at billions $$$
It’s going to be a rough time… but after 20 years there does need to be a forest fire in tech to burn out all the rubbish… and there is A LOT of dead wood imo.
DonkeyApple said:
loafer123 said:
There isn’t generally overleverage in commercial real estate, so not a GFC level event. A lot of private capital deployed through debt funds and CRE PE will be lost, and values may well come down by 20%, driven by higher gilt yields (although those are moderating).
Interestingly, demand is holding up fairly well, even in things that I was bearish on like City offices, so that should help avoid extreme distress.
I suspect City office space is currently under reprieve due to the slump in Sterling. Interestingly, demand is holding up fairly well, even in things that I was bearish on like City offices, so that should help avoid extreme distress.
Funnily enough, I think as I mentioned on this thread, I've actually decided to sell the main house and have been talking quite frequently with my uni peers who are now senior level within the property market and what is being said behind closed doors doesn't align with what is being said in public reports.
https://www.costar.com/article/654177975/values-ne...
And the same issue for all european banks, heavily exposed to CRE lending, and especially in U.K.
https://www.spglobal.com/marketintelligence/en/new...
DonkeyApple said:
Lots of stuff about property.
Some yields are below cost of debt, but with inflation at 10%, and a 20% decline in values likely, that's a 30% fall right there. Given lack of overleverage which caused huge distress in the GFC, we are more likely to see zombification than forced sales.Your point on pension fund property holdings is well made and widely recognised in the industry - I belong to a CEO level industry forum and it has been openly discussed - but there is alot of private capital which continues to seek a home and real assets have their place in that, just not via pension funds. Interestingly, that high level forum discussed value projections with a general consensus around 20% nominal falls. These are incredibly well informed people, including global, rather than UK investors. We shall see if they are right.
Mike Prew (analyst at Jeffries) continues to be bang on on this market, recognising that commercial property is worth the DCF of it's future cashflow and when discount rates go up, values fall until they attract capital. We shall see how far a fall that is, but if interest rates don't peak as high as the market says (and the BoE agrees with that, BTW), then it will be an appropriate repricing rather than a distressed driven rout.
As for resi, s
tty tower blocks with massive service charges continue to be an excellent way of destroying capital of all sorts, whereas decent family housing should be OK, once a couple of years growth is blown off the top of the market.ooid said:
Loafer would have more insight but one important industry report just launched last week, and highlighted some serious valuation warnings for CRE in U.K. (The Bayes mid-year report, 2022)
https://www.costar.com/article/654177975/values-ne...
And the same issue for all european banks, heavily exposed to CRE lending, and especially in U.K.
https://www.spglobal.com/marketintelligence/en/new...
I'd love a bit of distress, given my experience, but we aren't seeing it in an occupational sense, and banks aren't going to liquidate huge chunks of their books just because the ICR/DSCR covenant looks a bit peaky.https://www.costar.com/article/654177975/values-ne...
And the same issue for all european banks, heavily exposed to CRE lending, and especially in U.K.
https://www.spglobal.com/marketintelligence/en/new...
I definitely agree values will fall 20% in nominal terms, which implies 30%+ in real terms*. Will they fall further? Possibly...but, to paraphrase the old saying, if the value of a property falls and no-one sells, did it actually fall?
You have to see occupational and borrower cashflow distress to trigger bigger falls and we aren't seeing that for now.
*It's interesting remembering how inflation changes things...it's been a while since we've had to think about it. I am doing some big stuff in Switzerland, and the contrast between markets is striking.
loafer123 said:
Some yields are below cost of debt, but with inflation at 10%, and a 20% decline in values likely, that's a 30% fall right there. Given lack of overleverage which caused huge distress in the GFC, we are more likely to see zombification than forced sales.
Inflation won’t be at 10% if we see 20% property price declines.Inflation could be negative for a fair chunk of the basket for a period of time.
And as always, depending what you do with your money, the 10% inflation loss may not be realised depending on lots of variables.
Ie, property bought a decade ago and held, may just lose the last 2-3 years of frothy top. Still well up on value for the decade, just with a year or two of higher inflation.
DonkeyApple said:
The interesting one today was TSLA. The inference being that when it comes to excess consumer spending, the market is clearly split into haves and have nots and supporting the view of a selective recession.
Don't look at the price (or movements) of TSLA to reflect anything rational. Mr Whippy said:
Inflation won’t be at 10% if we see 20% property price declines.
Inflation could be negative for a fair chunk of the basket for a period of time.
And as always, depending what you do with your money, the 10% inflation loss may not be realised depending on lots of variables.
Ie, property bought a decade ago and held, may just lose the last 2-3 years of frothy top. Still well up on value for the decade, just with a year or two of higher inflation.
It's an interesting one...if inflation falls hard and goes negative, interest rates will follow (as real rates will be high) and therefore falls in property value won't be as bad.Inflation could be negative for a fair chunk of the basket for a period of time.
And as always, depending what you do with your money, the 10% inflation loss may not be realised depending on lots of variables.
Ie, property bought a decade ago and held, may just lose the last 2-3 years of frothy top. Still well up on value for the decade, just with a year or two of higher inflation.
6 months ago, if you had asked for my forecast on inflation, I would have said, high for 9 months then drops back and may even go deflationary for a while.
Now, as a wage and price spiral looks possible, it could be more unpleasant.
loafer123 said:
I definitely agree values will fall 20% in nominal terms, which implies 30%+ in real terms*. Will they fall further? Possibly...but, to paraphrase the old saying, if the value of a property falls and no-one sells, did it actually fall?
I think, those falls might probably be on seriously old, depreciated office buildings in the city too. I guess highly performing(energy) decent buildings in prime locations would be still attractive. If I remember correctly NEST (pensions) was allocating 70% (Unlisted U.K.) - 30%(Listed Global) format, no idea how how they manage the portfolio but I would assume listed monitored by smart beta, and unlisted portion is managed actively. pquinn said:
DonkeyApple said:
The interesting one today was TSLA. The inference being that when it comes to excess consumer spending, the market is clearly split into haves and have nots and supporting the view of a selective recession.
Don't look at the price (or movements) of TSLA to reflect anything rational. Maybe CEO Xi Jinping has ordered people not to sell stock of they'll be executed?
DonkeyApple said:
pquinn said:
DonkeyApple said:
The interesting one today was TSLA. The inference being that when it comes to excess consumer spending, the market is clearly split into haves and have nots and supporting the view of a selective recession.
Don't look at the price (or movements) of TSLA to reflect anything rational. Maybe CEO Xi Jinping has ordered people not to sell stock of they'll be executed?
Then again there's so much blatant fun & games going on with this one that I wouldn't be surprised to see TSLA go up due some imaginary synergy with Twitter.
pquinn said:
Consider that someone has been (or probably will be) dumping a mountain of stock into the market and what that should do to the price too.
Then again there's so much blatant fun & games going on with this one that I wouldn't be surprised to see TSLA go up due some imaginary synergy with Twitter.
$3k deposit for a self tweeting, autonomous account? Then again there's so much blatant fun & games going on with this one that I wouldn't be surprised to see TSLA go up due some imaginary synergy with Twitter.
Mentions of Kodak earlier during the Apple chat, makes me think that businesses like Meta and Twitter are the potential 'Kodak's' or 'Blackberry'?
To me Twitter is just a thing used by dysfunctional, old people in order to bark at the moon? It had its day in the Sun many years ago and the price tag based on a very historic valuation just seems an insane way to try and save face?
An important question to be asking, in some ways, is how has the US lost so much ground to China over the last decade when it comes to social media and it's evolution towards lifestyle apps?
Imho Twitter and FB are basically going to have to battle it out for the next few years.
One will win. It’d not likely we will see both emerge with a large market share.
I also think which ever one wins will need some new ideas and have to change a lot.
Musk is obviously a forward thinker, starlink is going to play a part in this, I have no doubt.
Fb have been caught napping. They had a great idea and flogged that idea well. But the metaverse is dead in the water imho. They need something new and they need to come up with it in the next couple of years. Musk is already way ahead he is in FTTP land while fb is still using dial up,
Can musk do something cool with Twitter, maybe. Ego will probably play a bigger role than anything else.
One will win. It’d not likely we will see both emerge with a large market share.
I also think which ever one wins will need some new ideas and have to change a lot.
Musk is obviously a forward thinker, starlink is going to play a part in this, I have no doubt.
Fb have been caught napping. They had a great idea and flogged that idea well. But the metaverse is dead in the water imho. They need something new and they need to come up with it in the next couple of years. Musk is already way ahead he is in FTTP land while fb is still using dial up,
Can musk do something cool with Twitter, maybe. Ego will probably play a bigger role than anything else.
Not sure there is a lot of scope for innovation - everything is still the same variations of messaging, public posting with image attachments, conversation threads and short form videos that has been around for years. Platforms come and go with fashion (and funding) but the basics are the same and usually the more basic the more successful.
People tack other 'portal' stuff on (news and whatever) but being a universal platform is expensive and people just don't want it enough.
And advertising is still a finite pool that shifts to where the return is, so scope for endless growth doesn't really exist.
Meta in particular cocked up because the 'new' idea is an old idea that requires a load of cost & hassle to use and isn't social media in a form people want. For gaming maybe but not for social.
People tack other 'portal' stuff on (news and whatever) but being a universal platform is expensive and people just don't want it enough.
And advertising is still a finite pool that shifts to where the return is, so scope for endless growth doesn't really exist.
Meta in particular cocked up because the 'new' idea is an old idea that requires a load of cost & hassle to use and isn't social media in a form people want. For gaming maybe but not for social.
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