Next 10x Stock Winner


#2439

How does rate hike impact any of them?


#2440

Rate hike is across the economy,affects all of them. Most of the customers/US companies are running on credit, when short term rates are affected, borrowing becomes expensive, credit customers (Individuals or companies) try to reduce borrowing, order less…etc.

That is why, when market dips, every stock dips including cash rich FB as it is expected that FB’s consumers reduce borrowing.

If you see FB and SHOP, both are Cash Rich companies and when their customers reduce orders, FB still make profit (reduced profit) while SHOP will make further loss.

Effect of analyzing the rate hike with individual company is tough for us, but may be possible with big funds/institutions. They get rid of such companies on rotation.

If this is not happening, FED won’t be able to control the economy with rate hikes. This is like just applying break on economic motion, they press the pedal slowly every quarter after quarter.

We are seeing the phenomena now in real estate, it is sagging last 8 months as the mortgage rates (related to MBS & 10 year T) are increasing.

If you need more information google “Taylor Rule or Effect of rate hike on US economy” with SSRN. There are plenty of researched papers available.


#2441

Effect on RE is more direct and visible. Effect on businesses is more complicated, cash rich companies like Apple has huge cash hoard would benefit from rate hikes: earned interest and cash is king (increased bargaining power).


#2442

There are two parts

  1. Rate hike effect directly on company

  2. Rate hike effect indirectly through company’s customers

AAPL, FB…etc will escape from first as they are cash rich, but they also get affected when their customers reduce orders as borrowing becomes expensive.


#2443

Different customer profile.
Consumers can afford $1000+ iPhone :joy: as evidenced by the long queue today.
Businesses on credit would reduce orders as pointed out by you.

So FB would be more affected by rate hikes than AAPL.


#2444

In simple term/explanation:

If no tenants are there for your rental home, you will still hold your rental home, without tenant, for even 1 year. The impact is your income stream is stopped.

If it happens to me, my cash reserve is drained in addition to income stream stop.

The risk is more for me than you ! Happy !! :rofl:


#2445

Is why tenant profile is important. Buy rentals in area where the tenant profile is outstanding :slight_smile:


#2446

My portfolio got whacked today for no apparent reason. :cry:


#2447

Slaughtering starts around 2:00 pm EST.
10x lost more than 3% of yesterday’s close.


#2448

Is it the shitty Trump again? :rage:


#2449

?


#2450

Perfect leak to steer spotlight away from the rapist judge. If Trump fired Rosenstein we will have black Monday. :scream:


#2451

i don’t know if this is the kind of spotlight that works? I mean. itwas on the judge, now trump?


#2452

Ntnx is bombed. I bought more. Hope it isnt an example case for sunk cost fallacy… Or is it?


#2453

Manch once said sunk cost is relevant, the theory is wrong. So you are doing correctly :crazy_face:


#2454

Did I say that?


#2455

it’s not a theory, it’s a fallacy. different!


#2456

You did but I may have misquoted you and quoted you out of context :smiling_imp:


#2457

English lesson? I always think sunk cost is mostly irrelevant but hard to resist not considering sunk cost


#2458

NTNX is really stress testing me.