Tech Stocks Keep Tanking?
- Thread starter RedSun
- Start date
With central banks now reversing money printing, and yields rising, there's been a big move out of US stocks (especially growth stocks) into international value stocks.
With inflation at a 40 year high in the US, and interest rates at an all time low, interest rates must rise further in the US. This will weigh on the valuations of US stocks, which happen to be particularly expensive (PE = 36 for growth stocks).
In other words, this move into value stocks in international markets will continue for some time.
This is a major reversal from the last 10 years we have known, characterised by falling inflation.
With inflation at a 40 year high in the US, and interest rates at an all time low, interest rates must rise further in the US. This will weigh on the valuations of US stocks, which happen to be particularly expensive (PE = 36 for growth stocks).
In other words, this move into value stocks in international markets will continue for some time.
This is a major reversal from the last 10 years we have known, characterised by falling inflation.
If I recall...the less known, more speculative stocks dumped early and quickly but the market indexes stayed up because of these listed above. But once more and more people became interested in shorting as a strategic trading plan, those rich valuations of the top tickers were just too much of a temptation. And once a few heavy traders began to short, the crowd piled into the short and they came tumbling down. Valuations were just too high to resist such profitable shorting. Today, shorting is done much more widely and the top tickers AMZN, TSLA, AAPL, GOOG, MSFT are way more over-valued. But in 2000, the top tickers didn't crash, they slowly bled over the course of many months. They all started acting the way Tesla is acting at the $1200 level.
Interest rates and stimulus were not high, so after two short years Greenspan was able to drop interest rates to zero and pump other stimulus measures. Housing and housing related stocks were able to re-gain most all lost index levels pretty quickly and correct the dot com crash damage. Today interest rates are zero and stimulus measures are on full and housing is already in a bubble....So, I don't really know how it quite ends this time.
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I honestly don't think housing is in a bubble. Maybe a select few markets, but as a whole, I don't see prices coming down anytime soon. Demand is too strong and supply is too constrained. Add to that the cost of new construction, between labor, materials, everything, and the price of the average starter home is out of reach of a large percentage of that historical demographic. The same metric applies at the top end too. Folks that have historically moved up are now finding they can no longer afford something better so what happens is the existing supply in a given market keeps gradually increasing in price. Even if we go into a recession, I don't see prices dropping this time around. I wrote about this here a few years back before this current explosion in the cost of materials. It was easy to see coming that's why I recommended multi-family residential Reits at the time.
Oct 2017:
Hey that Mid America Apartments (MAA) is up 20% since last Nov.
Not exactly a fang stock...but with a 3.25% divy to boot... I could have made a worse call.
Ahhh... 20% in a year is boring I know.
Today:
Every day I peek at stocks like HOOD with glee to see how much lower they have fallen.
It's like a kind of payback to every millennial who was frothing out their mouths at me and telling me how I was some stupid 'boomer' for not buying it at the IPO prices and how I would be sorry when they all would be millionaires in a year or two.
Well, at least we have a few million bag-holders now, in less than a year anyway.
Good job guys! Keep holding that sac-of-shit. How's TikTok working out for ya?
It's like a kind of payback to every millennial who was frothing out their mouths at me and telling me how I was some stupid 'boomer' for not buying it at the IPO prices and how I would be sorry when they all would be millionaires in a year or two.
Well, at least we have a few million bag-holders now, in less than a year anyway.
Good job guys! Keep holding that sac-of-shit. How's TikTok working out for ya?
So then why didn't you short them at the time? Profits can be made going down as well ya know.Every day I peek at stocks like HOOD with glee to see how much lower they have fallen.
It's like a kind of payback to every millennial who was frothing out their mouths at me and telling me how I was some stupid 'boomer' for not buying it at the IPO prices and how I would be sorry when they all would be millionaires in a year or two.
Well, at least we have a few million bag-holders now, in less than a year anyway.
Good job guys! Keep holding that sac-of-shit. How's TikTok working out for ya?
Almost here.. Question is do we still want to get in. Yikes.. I think there should be a bounce at 420 though.
Careful, I remember Mark Longo telling me once that Netflix was known as a Widow maker to floor-traders.
Then again, that was quite some while back.
Then again, that was quite some while back.