Have We Hit The Top?

[Simba]

Some of these growth companies have been completely decimated. 

Names like $PTON come to mind. 

[Gregmal]

Yea....Im becoming very convinced this is happening soon. The average or worse tech stuff is straight up withering. I still fear letting go of my MSFT and GOOG but anything below that type of quality seems downright dangerous right now. 

[formthirteen]

55 minutes ago, Gregmal said:

Yea....Im becoming very convinced this is happening soon. The average or worse tech stuff is straight up withering. I still fear letting go of my MSFT and GOOG but anything below that type of quality seems downright dangerous right now. 

 

For some reason I didn't fear letting go of MSFT at $27. Maybe now is the time?

[muscleman]

59 minutes ago, Gregmal said:

Yea....Im becoming very convinced this is happening soon. The average or worse tech stuff is straight up withering. I still fear letting go of my MSFT and GOOG but anything below that type of quality seems downright dangerous right now. 

 

Don't forget what happened to Cisco in 2000. Even MCD and Disney had dramatic 70% drops when the nifty-fifty theme ended. They are quality stocks for sure. That doesn't mean they are immune.

 

Everyday, the evidence is piling up. We just had over 400 Nasdaq stocks making new 52 week lows last Friday, and that was more than March 2020 during covid crash. Liquidity is drying up too.

[muscleman]

3 minutes ago, formthirteen said:

 

For some reason I didn't fear letting go of MSFT at $27. Maybe now is the time?

I don't think MSFT is going to 27. But if it goes from 290 to 100, is your gut strong enough to hold it through? You sure you won't puke it all out? If you are such a super long term holder, then it is time to start practicing mental exercises now, and see if you are really willing to hold it through. If yes then hold. If not, well you know what to do.

[Spekulatius]

On 11/19/2021 at 9:13 PM, Simba said:

Some of these growth companies have been completely decimated. 

Names like $PTON come to mind. 

More interesting may be to buy something like PYPL ~40% down. I would be more interested if it goes to 150 personally (6x revenue which is where it was trading for pre-COVID-19)  Fintech has gotten hammered hard lately.

[Gregmal]

Yea it’s all quite strange and a huge and ongoing exercise in mental flexibility. It’s one thing when I buy stuff with the PYPL example(or Z) where it’s like “ok I’m ready for it to go down” but with stuff like GOOG or MSFT or BRK for instance you expect stability. It really feels like I am in the Matrix and Morpheus is offering me the red or blue pill and I’m trying to take 3/8 of the red pill along with 5/8 of the blue but still torn and uncertain but apprehensive LOL. I do think this time is “somewhat different” so relying on historical evidence is dangerous, but there is also just a common sense element here as well indicating it’s not “ALL” sustainable. 

[KCLarkin]

9 minutes ago, Spekulatius said:

More interesting may be to buy something like PYPL ~40% down. I would be more interested if it goes to 150 personally (6x revenue which is where it was trading for pre-COVID-19)  Fintech has gotten hammered hard lately.

I looked through a bunch of growth trash names. Nothing looks really interesting yet. Scary that things can be down 70% and still be unappealing.

 

The forces hitting the payments players are different than growth trash. And they are starting to look interesting.

 

[Spekulatius]

20 minutes ago, KCLarkin said:

I looked through a bunch of growth trash names. Nothing looks really interesting yet. Scary that things can be down 70% and still be unappealing.

 

The forces hitting the payments players are different than growth trash. And they are starting to look interesting.

 

Yes, there is a ton of growth names that are down 50-70% and they don't look remotely like a bargain to me. no valuation floor whatsoever.

 

On another note but somewhat related, I had a talk with my brother yesterday (he lives in Germany) and he told me straight up, he only buys stocks "with a story". He is not interested in a stock based on valuation alone whatsoever. this is interesting because I don't think he is even a reckless investor (or speculator).

He is now interested in hydrogen tech (which I told him  is likely dead on arrival since batteries are better) and would never buy anything that has to do with hydrocarbons whatsoever.

 

He did buy some nicotine/cig stocks after I recommended them to him to his credit. I also pitched SWMAY since it does have a story.

 

I guess it is about:

 

Edited November 22, 2021 by Spekulatius

[formthirteen]

59 minutes ago, muscleman said:

I don't think MSFT is going to 27. But if it goes from 290 to 100, is your gut strong enough to hold it through? You sure you won't puke it all out? If you are such a super long term holder, then it is time to start practicing mental exercises now, and see if you are really willing to hold it through. If yes then hold. If not, well you know what to do.

 

I've been going through my portfolio a couple of times, trying to imagine each stock being down 50% or more, and have found nothing to sell. I'm sure I will feel differently once a stock is down 50% for real.

 

I sold MSFT at $27. It felt good. I don't remember if the stock was up 50% or 100%, but I remember the price. There was probably no FOMO, only bad products and leadership.

 

Another mental exercise I try to remember to do once in a while is to try to think about if I'm holding a stock because of wishful thinking. Are there any other exercises people here do?

 

Principles made me sell half of BABA. I should have sold more.

 

Recognizing it was all wishful thinking made me sell WISH.

Edited November 22, 2021 by formthirteen

[Gregmal]

Then again a proliferation of ads like the one featuring this piker everywhere.....

 

https://investingoutlook.co/wall-street-legend-strange-day-coming/?cid=MKT579436&eid=MKT582603

[Gregmal]

ZM another predictable one goes down. And yes, there were people buying these last year because they were going to change the world. 

[muscleman]

11 hours ago, formthirteen said:

 

I've been going through my portfolio a couple of times, trying to imagine each stock being down 50% or more, and have found nothing to sell. I'm sure I will feel differently once a stock is down 50% for real.

 

I sold MSFT at $27. It felt good. I don't remember if the stock was up 50% or 100%, but I remember the price. There was probably no FOMO, only bad products and leadership.

 

Another mental exercise I try to remember to do once in a while is to try to think about if I'm holding a stock because of wishful thinking. Are there any other exercises people here do?

 

Principles made me sell half of BABA. I should have sold more.

 

Recognizing it was all wishful thinking made me sell WISH.

 

I wound encourage you to do the mental exercise to not only see the prices down 50% but also when you open WSJ, you see the media bombarding you for the end of the world coming.

John Templeton said the time to sell is before the crash, not after the crash because price is already down.

 

The data set is getting more bearish each day, but I still do not see all stars aligning yet, so I do not have a compelling case at the moment. I am holding all cash at the moment instead of opening short positions.

 

Attached is an interesting comparison with 2007. I am not saying that this time it will follow just like that.

 

[Simba]

On 11/22/2021 at 1:29 PM, Spekulatius said:

More interesting may be to buy something like PYPL ~40% down. I would be more interested if it goes to 150 personally (6x revenue which is where it was trading for pre-COVID-19)  Fintech has gotten hammered hard lately.

 

Of the bunch, PYPL is certainly on that list of interest, especially relative to good quality tech companies producing cash flow.

 

I do think that move to 300 was a bit frothy for my liking. 

 

 

Edited November 23, 2021 by Simba

[Simba]

On 11/22/2021 at 1:42 PM, KCLarkin said:

I looked through a bunch of growth trash names. Nothing looks really interesting yet. Scary that things can be down 70% and still be unappealing.

 

The forces hitting the payments players are different than growth trash. And they are starting to look interesting.

 

Rarely do stocks get 2008 levels cheap though.... A lot of these names went up on pure froth however (pure multiple expansion). I do expect a huge bounce at some point, it's hard to say where the multiple steadies out in the end. 

 

SaaS is not cheap enough, but with rates at 1-2%, a bottom can very likely happen with these stocks trading at low yields relative to treasuries.

 

Personally surprised by the pace of these movements... brutal 

Edited November 23, 2021 by Simba

[Gregmal]

China/Didi delisting rumors, China RE, next round of Covid variant hysteria, and earnings void + blackout periods…. Got VIX? 
 

Will be an interesting December 

[Mephistopheles]

@Gregmal what is the best way you recommend hedging? Buy the VIX? Buy S&P puts? I'm thinking instead of selling and going to cash (and paying taxes), it's better to buy puts and then write off the losses. I have never hedged, let alone shorted or bought puts ever so I am a newbie with this stuff.

[boilermaker75]

32 minutes ago, Gregmal said:

China/Didi delisting rumors, China RE, next round of Covid variant hysteria, and earnings void + blackout periods…. Got VIX? 
 

Will be an interesting December 

 

It'll be an interesting Black Friday, which is usually a very subdued trading day.

[Gregmal]

Hedging is so complex and not really one size fits all so it’s quite hard to really give a good answer. 
 

generally though I like 20-30% OTM VIX calls with 4-6 weeks of time in front of them. If I’m feeling extra bearish I’ll also add 40-50 strikes which are often had for next to nil. 
 

On top of that you can pick your spots with longer dated puts. Then layer accordingly. PLTR for instance I have $25 puts. AAL $25 and $10 strike. SPCE $10. It’s late and I don’t have time to get into the logic behind all but as you can see some you just want to mimic an outright short while other instances you are playing for a complete blowup. 
 

Happy and Healthy Black Friday to all! 

 

 

[Gregmal]

And definitely agree on tax considerations. I know I’ve talked with a bunch of folks here about this recently, but if you have a lot of capital gains this year….I’ll just speak for myself actually…I’d rather have some big short bets on into end of year and pay less taxes than just do nothing or sell and generate more tax liabilities. 

[maplevalue]

I would say I am fairly skeptical of us being close to a top given how cheap stocks remain to bonds.

 

With that said today's selloff reiterates to me the potential for a 'doomsday scenario' where we get:

 

more COVID lockdowns -> more fiscal stimulus from governments -> stimulus exacerbates the high inflation we already have -> monetary policy having to tighten in a low growth environment. Not good for asset prices!

[Dave86ch]

It looks like a checkmate situation.

[IceCreamMan]

On 11/26/2021 at 11:53 AM, maplevalue said:

I would say I am fairly skeptical of us being close to a top given how cheap stocks remain to bonds.

 

With that said today's selloff reiterates to me the potential for a 'doomsday scenario' where we get:

 

more COVID lockdowns -> more fiscal stimulus from governments -> stimulus exacerbates the high inflation we already have -> monetary policy having to tighten in a low growth environment. Not good for asset prices!

 

Makes sense, however, what would we have predicted in January 2020 would happen to asset prices had we known about the upcoming lockdowns, etc?

[changegonnacome]

Crazy thing is new variant = renewed uncertainty = renewed uncertainty = more accommodative FED/ECB......omicron might extend the levitation of the indexes for a little while longer (than otherwise might have happened) if your a believer in TINA & liquidity being a key driver........however increasing signficantly the risk of CB's having to slam on the breaks later in 2022 with some non-forecasted interest rate rises to stem runaway inflation.

 

Lets see what the data says on Omicron - but if its more transmissible than Delta (seems more likely by the day), the big question is does it escape immunity more so than delta & once infected is it more virulent such that people end up in the ER in greater numbers. Any of the last two and the FED's plan to double the pace of tapering in January will be out the window IMO.

 

I think we've all seen strange things occurring in the broader market in recent times.....I remember one jobs report which was poor but where the indexes rallied in response knowing it would likely lead to lower for longer rates/more stimulus. Indexes have become somewhat unmoored from the real underlying economy for a while now and seem to be driven by liquidity & expectations of accommodation/fed put. It will be fascinating to watch over the coming weeks.

[scorpioncapital]

the top of what is coming? inflation is a disaster like deflation but it works differently. Inflation is like 2 horses. prices go up, stocks go up, there is no 'top', but the expense side of your life grows faster than your net worth/income. As a result you actually have personal deflation, camouflaged as inflation and infinite growth of assets, but just not enough.

Edited November 28, 2021 by scorpioncapital