Last Stand.
About a month ago, I started dedicating more of my daily bandwidth than I would have otherwise liked to documenting what was pretty clearly an unsustainable rally in tech shares.
For me, it's never a matter of decrying the supposed "injustice" of liquidity-driven markets, or momentum-based rallies or lamenting the death of price discovery (which went to meet its maker years ago). Rather, it's merely an exercise is pointing out things that are glaringly obvious, and tech was glaringly overbought
Well…that was depressing. Today I was imagining how Thomas Nast would have portrayed modern society. We have no well-respected political cartoonists anyone, just meme-ographers whose memes only serve to reinforce our own small worldviews filtered through Facebook algorithms. Other than avoiding social media narcissism, how do you tune out the noise, Heisenberg?
I enjoy my surroundings. https://twitter.com/heisenbergrpt/status/1223018673012604928
That’s nice. Do you get a lot of mosquitoes in the summer?
maybe if everyone on a social media platform owned an equal piece of it could be the next obvious evolution.
Markets are manic depressives with most being followers (FOMO, TINA, et al). Independent thinkers/thinking can be career ending. So most go along with the “talking points”.
Individual investors have an amazing advantage. Call it “Time Arbitrage”, not having to swing at every pitch, sticking to beliefs, etc. But few are aware or disciplined enough. But focusing on that advantage could lead to significant outperformance.
Good things tend to happen to true value or “cheap” to intrinsic while bad things tend to happen to overpriced or “rich” stocks. Know what you own and own what you know. Think competitive advantages, moats but also value.
Will great companies at good to great prices with good bal sheets weather this? Probably. Will expensive me too garbage “stories”? Maybe but I am not that brave.
This selling seems a bit as egregious as the recent buying BUT that doesn’t mean it is a good time. Time horizons matter, so does the valuation, the margin of safety.
Do your homework, be smart, look at the value, look at the bal sheet (staying power), completion, barriers to entry, etc. Keep some fire power, hedge wisely if you are capable (hedging can be options or via the above).
And don’t listen to the talking heads on TV etc. utilize the good info (like Heisenberg), process it, and come to your conclusion. If you can’t or don’t feel comfortable be humble and try to find a good investment professional (hard but hopefully possible).
It is a journey not a destination. Enjoy it and realize that you have an advantage many pros do not. Utilize it and you could very well outperform (and have fun doing it).
Good luck and invest/trade well. Be smart.
Do you worry about rising sea levels?
I don’t see what a rate cut will accomplish here. It’s not like 50 bp lower borrowing cost will slow the virus’ spread or make governments cancel quarantines.
The Fed has three .50 caliber bullets left. How about not shooting one into the air?