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Simon Property Group Inc. Message Board

  • thrasherterry thrasherterry Sep 13, 2010 12:18 PM Flag

    Continuing thoughts on the Bull Market

    I hate to put the final nail in the Bears but facts are facts. Fundamental valuation of stocks is one of the most essential factor influencing
    investment decisions as to suitability, timing, and amount of funds to commit
    to such an investment at any particular time.

    For this purpose, the general stock
    market or sectors thereof, are usually analyzed in terms of a variety of parameters
    among which earnings, book values, cash flows etc are most usually employed.

    Regardless of the choice of parameters, the main goal is to arrive at a
    well-informed judgement as to whether stocks are fairly, under, or over-valued. I point this out in lieu of the fact that SPG in general followings the Dow.

    This judgement will affect importantly the expected long-term investment returns
    that can reasonably be expected from any investment.

    Here I like to point out where the DJIA index stand when evaluated against one of
    the most fundamental but least used parameter available: the Gross Domestic
    Product or GDP. The reason for me choosing the GDP is that corporate profits
    and earnings, the "mother milk" of stocks, ultimately depend on, and are
    generated by, the general level of economic activity, of which the GDP is the broadest and BEST measure.

    Looking at the numbers, (sorry, i don't know how to produce the actual chart on this board)-- the overall behavior of the ratio appears
    similar to that of the DJIA/GDP except that the historical top of the ratio was
    higher, 50% versus 25% above GDP.

    At the recent March bottom, the ratio
    declined to a level last seen at the bottom of 1987 "October market massacre"
    and at the end of the recession and bear market of 1990.

    The DJIA/GDP ratios demonstrate that, contrary to a widespread notion derived
    from looking at PE ratios, the exuberant market valuations prevalent at the end
    of the 1990s and in 2000 actually did not exceed the historical peak reached in
    the 1960s. Nor did the DJIA break down below the lower boundaries of DJIA/GDP
    ratio in the recent severe market decline associated with the sub-prime financial

    At the bottom of this decline, the DJIA/GDP ratio fell to the same level as
    that of the 1973-74 bear market.

    This coincidence is all the more remarkable when one considers the diametrically
    opposite economic conditions in which these market declines occurred: inflationary
    with record high interest rates and high taxes in 1973-74, deflationary with record
    low interest rates and taxes in 2008-09.

    These observations lead to another overall conclusion:--- at end of the day,
    the processes at work in extraordinary inflationary or deflationary conditions,
    have equally pernicious results for the economy and the stock market, and hence
    for investors.

    Finally, looking to the future, shouldn’t we take heart from the low stock market valuation
    we have today?
    Thrash Man

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    • "all you need to know about the stock is the final price when you sell it. what part of that is so hard to understand"

      impossible to understand... jk. my goal isn't to understand how spg got to 95 as much as it is to understand what comes next. excuse me if i don't believe that the same catalyst driving cat is the same one driving spg. frankly, i understand that the two stocks are different and that spg is more exposed to the underbelly of the ralley that has driven gold and the likes of cat...

      inflation will not be a friend to retail stocks. beyond toying with the oct 100 puts, i am waiting to make my bets. best to wait on the bulls to take a breather.

    • better not sleep with SPG without lots protection.

    • bg
      this is what you need to know. while i currently don't own one share of spg( unfortunately) the bulls on the stock are not married to it. its like we're sleeping with it short term.
      now to say some on here have held it forever and they are buy and hold boys/girls

      all you need to know about the stock is the final price when you sell it. what part of that is so hard to understand.

    • Thanks WS -

      GOOD for you!!!

      I love to see Entrepreneurs be successful.......


    • Most people in the domaining industry are flippers. They find domains owned by less sophisticated, techy, individuals who are willing to sell, and then find larger corporations to sell them to. For the example, black & decker or some other manufacturer might be interested.

      I'm a long term domain investor, not a flipper. I have sold some domains because the price was too good to pass up, but I don't buy to flip.

      I collected my first genre of domains and built a business around it and sold for 7 figures in 2006. Now I'm building up a different genre.

      This is not a new industry, been around for 15 years. It's just new to traditional investors who don't yet see the massive transformation from brick and mortar to e-commerce.

      I have built my inventory up substantially over the past 2 years. Really, ever since the market irrationally rocketed above S&P 900 last year. I am pouring more and more dollars into new inventory every week. The higher the stock market goes, the greater pace I put more dollars into domain names. You can still buy unregistered domains that are 3-5 words long that get a little search and type in traffic for $8, but the renewal feeds get you. Right now I am concentrating more on premium domains in the $2000-$20000 range. I have my eye on a couple of category killers that I might be willing to go $75K.

      My current inventory is around 3000 domains, so my recurring cost is around $25K a year. Kind of high considering I don't spend any of my time developing or monetizing them to cover the costs. When I feel that I have sufficiently bought up enough inventory in this genre I will launch a business around it. I am close, but not there yet.

      If SPG was smart, they would have been spending tens if not hundreds of millions buying up these domains/internet real estate over the last 10 years, because they have no ecommerce presence and will get crushed in the next 5-10 years, and maybe sooner.

    • Hey WS -

      Very interesting Business Model. Perhaps you can write up a case study of your Business Model and sell it to Harvard??

      But then again.. some of those savvy Harvard MBA's might become your competition..... scratch that thought. (Perhaps after you sell your business??)

      What type of "inventory" do you usually maintain???
      A range would be a good enough answer... like 10,000 - 25,000 domain names, for example.



    • Not sites, actual domain names.

      For instance, in finance terms:

      Or geographically:

      I don't own any of the above, I stick to one genre and try to dominate it. High query refers to these search terms get typed in search engines a lot. Search engine algorithms favor the "exact match" of that search. So if you own the domain, and someone types into google or yahoo "los angeles" you have a huge advantage as far as coming up in the top listings if you develop the domain into a website.

      Additionally, these types of domains get a lot of free "direct navigation" traffic from people simply typing in the .com version thinking that the site will give them what they want without doing a search.

      If you believe in inflation, than there is no better investment out there than these types of domain names.

      They don't trade in a market sense, every domain is unique. So the market cannot be manipulated. You have savvy people that registered a lot of these domains in the 1990's (myself included) for $70. Now registrations are only $8, and same as renewals (you renew once a year). You don't have to pay any real estate taxes like commercial does.

      There are so many great .com domain names out there owned by ordinary people that will sell because they are looking to cash out.

      Using the Google Keyword tool, you can enter in a search phrase and see how many people for search terms like "stock quotes" globally and locally per month. The more exact match search terms, usually the higher the domain will cost.

      Personally, I stick to product related domains that people go to buy online. An example would be I don't own it, just looked in my office and saw it, but that is a great domain name that will undoubtedly appreciate in value whether developed or undeveloped.

      The key is, this market cannot be manipulated or controlled, ever. It is as free of a market that exists in the world. You also have to believe that the .com extension will remain king, which I do believe.

      Like I have been saying for a while on this board, commercial real estate is a poor investment compared to Internet real estate ie premium .com domain names.

    • charlatin
      so " high query exact match .com domain names"
      this is all new to me. do they trade prices like stocks.? I mean is it like a bidding .

      for example , give us a name of a popular site and what it goes for.

    • Why a rich girlfriend? Young girlfriend makes a lot more sense.

      I don't buy equities, as I've pointed out previously, I buy high query exact match .com domain names. No asset in modern history has appreciated at a greater rate than .com domain names.

      Unfortunately for many, they still don't seem to understand that Internet commercial real estate (ie prime .com domain names) is where the future is at, not brick and mortar.

      You are living in the past, but best of luck to you.

    • charlatin
      i don't buy in every day. i'm getting my own hedge fund ( the Wellington ) started. so i'm for the most part meeting with investors. sailing. getting ready to turn 50.
      trying to locate a rich girl friend. etc
      in my personal acct. i'm just sitting on some bonds. and waiting.
      Love the long term market outlook but one doesn't have to buy in every day.
      so what are you buying ?

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