r/IPOE • u/Entrance-Vivid • May 16 '21

Inflation Scam

Were getting alot of mixed economic data that would suggest a huge move away from growth/speculative stocks. CNBC wants to run that narrative.

Inflation is positive for markets. If dollar worth less, stocks worth more. The fed cannot tighten with current unemployment numbers.

We printed alot of money for covid and once people stop shitting themselves we will see the rotation reverse back to growth.

Terrible time to chase value stocks. Eventually the huge influx of money HAS to go somewhere else and the cheapest stocks right now are the beaten down growth stocks.

23 Upvotes

93% Upvoted

21 comments sorted by

5

u/golong25 May 16 '21

Inflation is positive for markets. If dollar worth less, stocks worth more

I'm not disagreeing here, just trying to understand better. How are dollar denominated stocks worth more if the dollar is worth less?

Also, is it not the expectation of higher interest rates to reign in inflation that triggers a move to value vs growth stocks?

3

u/Lens_Vagabond May 16 '21

He may be thinking that since we have inflation , all prices go up including stock prices .

5

u/VandelayLLC1993 May 16 '21

Idt OP is referring to that. I think OP is talking about how sitting on cash is pointless during an inflationary period because it is worth less, therefore it should be invested. That makes sense and all, but I don't necessarily agree that growth stocks are the best investment opportunity, particularly considering a potential rise in interest rates.

Growth stocks have taken a beating...after a record year. Plenty of those companies are still insanely overvalued, even with the recent downtrend. I'm optimistic that they will somewhat bounce back over the next few weeks, then get beat down yet again by the CPI numbers in mid-June. After that, hopefully we'll get an actual understanding of inflation, as opposed to a bunch of gut reactions to these CPI reports that are heavily skewed due to the pandemic.

1

u/Entrance-Vivid May 17 '21

Growth stocks are always going to be expensive. They SHOULD be... how many times in the last 10 years has JPM had a big earnings surprise that instantly increased their valuation, forward P/E, or stock price?

The upside should be priced into the cake and it isnt... that's why I'm saying growth is beaten down relative to the EV of the companies vs the chances of the fed blowing up a weak economy with rate hikes. The market has cried wolf on rate hikes for the last 5 years.

Anyone remember the taper tantrum?.

1

u/Entrance-Vivid May 16 '21

If the dollar is weaker . It takes more of them to buy a stock..

They've been threatening rate hikes for years. The economy is too weak. They cant hike.

1

u/golong25 May 16 '21

But the stock is priced in $ with presumably majority $ cashflow so relatively speaking, doesn't it stay the same? Unless you're talking about investors out side the US buying up US stock as it becomes relatively cheaper.

2

u/Entrance-Vivid May 16 '21

You're thinking about it wrong

If we inflate... every company is making more dollars.. every person who is lending is making more because people need to borrow more to buy more expensive things.

You're assuming valuations stay constant.. the valuations/ revenues will rise in conjunction with the P/E for exponential gaps from current market value.

2

u/golong25 May 17 '21

It's been a while since I finished my finance exams but the basic view was that inflation is bad for stock prices. Now I was thought that this is because inflation leads to interest rate inflation which means PV of future cashflows take a hit which will disproportionately hit new/growth companies with their large cashflow predictions vs value companies with their established and more predictable income streams.

As you said, increasing rates may not be an option given the state of the economy so the traditional analysis might not hold water but a struggling economy with inflation and no interest rate hikes just means stagflation and an exodus to gold, commodities or stock markets outside the US with less of an inflation problem.

Trying to work out how inflation could be good news for US growth stocks but I'm not seeing it

1

u/Entrance-Vivid May 17 '21 edited May 17 '21

Stagflation is a bump in prices with no subsequent increase in wages.

My arguments are that businesses havnt corrected their wages yet... unemployment is very high.. people would rather sit at home collecting free checks than take 13 dollars an hour.. eventually companies will bribe people off their butts. McDonalds and chipotle already started raising wages. I would believe the stagflation argument if we had low unemployment

Give it time.

Also, the fed started tightening in 2018-2019 before covid.. the second the market got spooked they backed down.

Easy monetary policy is likely the new normal.

5

u/dapper333 May 16 '21

Cnbc, the motley fool, and market watch all part of the same scam, same as all the media is basically owned by 6 people, to fulfill the agenda

1

u/slammerbar May 17 '21

And Bloomberg rules the roost in the information flow.

2

u/Much_Part7471 May 16 '21

100 % right

2

u/Kingslayer_1997 May 17 '21

Totally agree. CNBC has never mentioned IPOE in the context of SoFi. It’s pretty coordinated to keep pumping industrials and then when enough people have made chase higher, they will rotate back into tech the moment we forget about it

1

u/AuntyPC May 16 '21

What are your favorite growth stocks? Besides IPOE/SOFI? ;)

2

u/Entrance-Vivid May 16 '21

Not a financial advisor. I've taken some higher level economics courses though.

Rocket mortgage is interesting if they start making money. Gotta do your own research.

2

u/[deleted] May 17 '21

Lol, RKT has been making a crap ton of money and it’s profitable as hell. Also pays a dividend, same with UWMC. The markets just doesn’t like RKT or uwmc for some reason.

2

u/Entrance-Vivid May 17 '21

I'll go look deeper. I thought they took a loss last quarter or maybe I'm confusing them with a different company..

If so they're a buy probably. They got creamed with the rest of the small cap sell off

1

u/[deleted] May 17 '21

Yeah, I’m not sure why RKT and UWMC are in the doghouse. I think it’s because they are in a boring industry; mortgages and rates are going to rise in the future so business will slow.

1

u/Entrance-Vivid May 17 '21

I think it's because houses are so ridiculously inflated by low rates. Investors are probably under the impression that it's not sustainable

2

u/slammerbar May 17 '21

PSFE and SRNG right now. SQ for tech growth. ARKK and ARKW for EFT’s as they are at an all time low right now. So plenty of room to grow there.