Facebook Stock Should Decline At Least $24 Per Share By 2022

The most optimistic 2022 earnings per share expectation for Facebook is $4.50. If the stock trades at 20x earnings, the per share value of the social media giant would be $90. If it trades at 25x earnings, the valuation would be $112.50. With the price of Facebook stock now sitting at $114 per share, the business performance of Facebook the company will have to exceed the expectations of the most optimistic Wall Street analyst or the long-term valuation of Facebook stock will have to be north of 25x earnings–one of those must come true for you to earn a positive return on Facebook stock over the next eight years.

I do not share that optimistic view of Facebook’s future earnings growth because the optimistic projections act as if United States will never enter a recession any time in the next few years which is important because advertisement rates are highly … Read the rest of this article!

Tesla’s Stock Price Will Doom Investors Buying Now

Every now and then, you might encounter something in the stock market that makes you wonder: Am I crazy, or is everyone crazy? With what is going on at Tesla right now, I want to offer you the reassurance that it is the Tesla shareholder base that is completing disregarding the long-term intrinsic value of the corporation as the price of the stock has climbed from $35 last year to $585 now for a valuation of $555 billion.

The stock, which is set to be added to the S&P 500 in the coming days, is offering us a real-time lesson on why Jeremy Siegel’s papers concluded that investors would be better off owning the original S&P 500 without any of the additions that occur over time (the reasoning being that booted stocks usually are trading at too low of a price while the newly added stocks are getting there in … Read the rest of this article!

Warren Buffett Buys 10% Of Wells Fargo

You know what I would like to read? A biography of the successful life decisions made by biographers using the knowledge acquired while covering the strategies of other successful people. I have this in mind anytime I read an interview with Alice Schroeder in which she discusses how her intense study of Warren Buffett’s tactics and philosophy have made her a better investor.

Specifically, she has mentioned that early in her career, she would often put up a mental block against purchasing companies that are trading at a higher price than existed when she first studied the stock or first purchased shares. It’s a very human form of mental anchoring. Joseph Steinberg, the founder of Leucadia National, has written that it’s difficult for him to buy a $10 hamburger because he remembers being a kid when it cost $0.10.

There are two logical ways to work … Read the rest of this article!

VWEHX: Vanguard High-Yield Bond Fund

VWEHX, the Vanguard High-Yield Corporate Fund, has been a great to investors since its inception in December 1978. VWEHX has generated 8.41% annual returns durings its thirty-two years in existence, which would turn a $10,000 investment into $146,000 over that time frame. Better yet, VWEHX has been the near perfect bond fund to own if you are after high current over the long run, as $108,000 of those gains would have come from income generated from the bond holdings that would be passed on to you.

The terms of a VWEHX would have been this: For every dollar you put into the investment, you got to collect $10.80 in total over the span of regular monthly payments that occurred over the following 30+ years. VWEHX has been the best way to enter the junk bond market, as the strategy involves buying over four hundred companies with low credit quality and … Read the rest of this article!

The Difficulty Of Valuing Gilead Sciences

Gilead Sciences caught my attention in February when the price of the stock fell to $82 from its 2015 high of $125 per share. I wrote it about it then, likening the anxiety that was dragging down the price of pharmaceuticals to the anxiety that dragged down the price of weapons manufacturers Lockheed Martin and Boeing during the political talks of sequester.

Gilead, whose signature drug is Sovaldi, has come under scrutiny for pricing its Hepatitis C drug at $1,000 a pill or $84,000 for a three-month regimen. France, Spain, and India have threatened to invalidate Gilead’s patents for Hepatitis C, and the Veterans Administration in the United States has sought to add political pressure to Gilead’s American operations by using media pressure and the threat of congressional regulation to get Gilead to voluntarily the price of Sovaldi.

Unlike Sovaldi, that proposition may prove a tough pill to swallow because … Read the rest of this article!