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Something Seems a Bit Fishy...
We have all been feeling the market volatility of late and it seems that the market is bouncing from one extreme to the other. I know my portfolio has, I have been experiencing +/- 3% moves almost daily. My portfolio is public so check out my positions as my plan is to hold my equities for a long period of time. Despite this plan, I do want to call out a few concerns I have in the current market and welcome feedback in the comments! I am looking to you CS community to help me make sense of these things and hope that my experiences in turn help you all learn and grow as investors.

So, lets lay them out..

  • Inflation: "duh" everyone is talking about it and with this mornings latest reading of 6.8% prices are rising and rising significantly. We also have learned in the past week that "Transitory" has died.. R.I.P. Transitory, you were a bastion of hope for many. Now that the term is dead, what is next? "Pervasive?", "Persistent?", "ENDEMIC??" well the market makers are going to have to chose their words wisely but odds are it isn't getting better anytime soon. The FED meets again next week and has already introduced tapering but the word on the street is that they will have to accelerate the schedule and possibly move up the rate hike schedule. The adage goes, "don't fight the FED" but in my opinion the FED might be about to pick a fight with the bulls (myself included).

  • Indexes: or more accurately, the overreliance on them as a true gauge of market health. Have you felt that the indexes have been lying to you lately? When I say this, I obviously do not mean literally lol but what I do mean is, at least personally speaking, the indexes seem to be less and less indicative of how MY PORTFOLIO is performing. I have a hypothesis on why this is the case and it has to do with how they are calculated. Take a look at the breakdown of the S&P by weight.

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So, a handful of companies make up a little over 25% of the entire index. This my friends is what they call an "Asymmetric Relationship". Or said another way.. the tail is wagging the dog here. I believe the issue lies in the common belief that "the indexes are at all time highs, we must be doing alright". I think that may have more to do with the T.I.N.A. trade than anything else (There Is No Alternative) meaning where else are you going to put all this cash that we just printed? Bonds? Cash? (in an inflationary environment mind you) stocks still seem to be the best return on invested capital, so, that is where it has been going.

  • Employment Numbers: Many have been cheering the jobless claims numbers lately as a big win.. but that is only half of the picture and in my opinion not the half we need to be caring about. The other side is JOB OPENINGS and those are at historic highs. To break this down further what it is implying is despite rising wages (inflationary again..) better benefits offerings, flexible work schedules and the ability to work remotely we still cannot find enough people to work. So where did they go?? That I have no clue on but what I can say is they seem to not be looking anymore as they are not filing for unemployment. This plays critically into the Supply Chain Crisis we are experiencing. It doesn't take a rocket scientist to understand that if you want to fix that issue you are going to need people to do it.

  • COVID: I am honestly cringing just typing the word over two years into this.. but it is still here and as long as we have public health officials pulling the fire alarm on us it will continue to cause volatility. At this point, I believe the cure is worse than the disease.. I am fully vaccinated but like many.. we are about to not be as they are going to change the definition to three shots vs. two. At this point just tell me if its 5 shots, I will take them just to move on, hell I will even mix and match if that is what it takes.

  • BUBLES: This one might cause a stir but I am becoming more and more convinced that there is a bubble in three specific areas. Crypto, Metaverse, and EV investments. Funny enough, from my personal experience these investors are comprised of the same people. While I do think all of them individually have there merits and are cool technologies I am concerned they are over their skis a bit.

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Quick rundown of each:

Crypto - I am pretty sure that $BTC.X is still king of Crypto and that Satoshi is probably a dude named Craig while the debate rages on. I don't see why or how this guy could get through a lawsuit and win if he did not actually have the keys to the $50B crypto stash.. otherwise the argument would be easy, no I am not Satoshi do not sue me as I can't pay you what you want. The reason this is relevant is I just want to circle back to this concept.. we have put an awful lot of faith in a coin created by a mystery man. This coin is worth ~$50K despite its recent sell offs. This $50K coin still cannot be used to buy things or transact in an easy fashion which is kind of the second elephant in the room behind the fact it was created by a ghost. Not to mention $DOGE.X was started as a joke and has a larger market cap than most of the S&P 500.

Metaverse: I would consider myself very tech savvy, I have played with some sick $NVDA GPU's, rocked a number of VR headsets, been in a virtual house, raced real people around the world in a full VR car on a simulator. So, I have seen how sweet it is first hand.. that said.. the truth is I am pretty much the only person I know who has actually done this before. I am 31 and only a two of my heavy gamer friends have these setups and only one has what I would consider the "real deal" setup as in the VR headset hanging from the ceiling, a virtual walk-around space for gaming, and a bunch of GPU's to run it... anyone see the problem? If I am self proclaimed "on the cutting edge of this" yet only have one friend who has both the means and desire to buy all the necessary equipment to utilize this tech that is not a huge TAM. People forget a setup like this costs probably somewhere in the neighborhood of $10K that is a bit more than your average Xbox. I know you can get the cheaper setups but lets be real.. my buddy is going to demolish you in any game you come up against him in simply because of his hardware. We haven't even gotten to the wild speculation on things like digital assets like "real estate" in the metaverse.

EV's: Ok.. just gonna set this picture right here before I dive in..

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The company that has made less than 60 cars is worth more than $GM and $F?!? What?? Then there is $TSLA which is an epic company with an awesome leader but that graph is a bit scary from a valuation standpoint. I mean, no matter how you slice it, it is hard to justify.

So now what? Why the hell are you telling me all of this? Are you gonna bail on the market? Sell everything for bullets and gold?

Probably not. I intend to stay the course but I will be keeping an eye on these. I have also cut out all of my options trading for the moment until I can see some progress made on my concern list above. As always, please feel free to poke holes and provide feedback on my thoughts! There is always more to learn!
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