The Grinch Who Crashed Wall Street... Santa Selloff

KCalhoun said:
Well worth reading Bloomberg article

https://finance.yahoo.com/news/massive-u-debts-could-trap-150000058.html
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Important to understand though that with interest rates at 0.25% they can go up 2-3% not really kill much of anything besides the psychology of the stock market. And certain parts of the market will excel in this kind of move although with a choppy route. Cdn Banks for example may be killing it in that kind of environment, and when inflation was an issue in the 1970s both Oil and Gold did really well. Chinese and European markets may be cheap. Every situation is different but I suspect the Covid variants will mean US interest rate increases will be later then many believe ( like they were before late 2015 ), which gives plenty of time for corps to rack up more huge earnings before the psychology gets muddied. The timing could change though but I prefer to react to that change then anticipate it.

If we use the Dot Com as an example, SPX is still below similar levels at the top ( roughly 5300 and that's a moving target with rising profits ) and it took a year for the dot com fall out to drop broader markets other then IT. US IT while often overpriced in small cap and mid tier areas now is not really the kind of nose bleed hopeless finances state many of the Dot Coms were at. The world is using IT more these days. So it's a tough call if IT will crater at some point and how.
 
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Another thought on US IT. I am somewhat conflicted because when I recently looked at the financial statements some of the firms seem to have weak fundamentals or are pricing in way too much upside. On the other hand, I have family in the business easily making a ton of money and generating significant real cash flow. And they still like the futures of many of these firms; far more so then I do. So I may be early expecting a correction as I was in 1998 and 1999 when I worked in the last boom myself. It really is a cyclical thing and you ride the wave until it's over.
 
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Right. .... that's why I'm having such a hard time following bullish sentiment..... sky high valuations plus inflation, taxes, pandemic, china, pending rate hikes .... wtf is propping up this market once fed leaves.

I still expect an epic crash. But should've been long TQQQ during rally. Checking 1-month TZA reveals recent weakness in small caps. Mkt reaction Wednesday to Powell may be the tipping point.
 
KCalhoun said:
Right. .... that's why I'm having such a hard time following bullish sentiment..... sky high valuations plus inflation, taxes, pandemic, china, pending rate hikes .... wtf is propping up this market once fed leaves.

I still expect an epic crash. But should've been long TQQQ during rally. Checking 1-month TZA reveals recent weakness in small caps. Mkt reaction Wednesday to Powell may be the tipping point.
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That's the trouble with Fundamentals. They give you a bias that may cause you to ignore what the charts are telling you.

There are time I think less information is better than more.
 
deaddog said:
That's the trouble with Fundamentals. They give you a bias that may cause you to ignore what the charts are telling you.

There are time I think less information is better than more.
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True, price action is all that matters.

But the market feels like the dotcom bubble up here. Or a scene from the Matrix.
 
KCalhoun said:
True, price action is all that matters.

But the market feels like the dotcom bubble up here. Or a scene from the Matrix.
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The thing is when the bubble burst in the tech wreck, in 2008 and in 2020, there was plenty of warning. I know the tech wreck changed me from an investor to a trader. 2008 and 2020 I just sat in cash and watched as the market tanked. Pay attention to what the market tells you, not what you want the market to tell you.
 
KCalhoun said:
True, price action is all that matters.

But the market feels like the dotcom bubble up here. Or a scene from the Matrix.
More...

You're not doing the research so depending on your feelings seems problematic. This site is littered with people ( active and inactive posters ) who felt as you did almost every year since 2009. Even some of the more reasonable bears were hyperboling in 2013 and 2014 like it was all going to collapse. What they missed was rising earnings, strong economic growth, cheap money. You know, the things that are still here with us in 2021.

1998 the Nasdaq was up 39%, then 89% in 1999. Crash didn't occur overnight. Most Dot Coms made no money; GOOG makes wads if money and even gets sued because they make wads of money. AMZN was a bookstore in 1999; now it dominates retail and is a presence in several other areas. AAPL almost went under in 1999 was a $10 stock. The promise of the internet that fueled the Dot Com actually came true, just not in the way many imagined it.
 
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Good points from you both. I wasn't bearish much til recently, eg with the pandemic starting 2 years ago. Now with millions dead worldwide and no end in sight....plus record unemployment, inflation, high taxes, left wing govt.....very hard to understand markets at ath. Unbelievable.

Textbook example of 'cognitive dissonance '.

At least when markets drop,, I know how to trade inverses.

https://finance.yahoo.com/news/rich-dad-poor-dad-author-115446211.html
 
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