Random Thoughts In A Dangerous Market
Sometimes you just need to do a brain dump.
This selling has been very orderly - and that’s the worst type of selling.
Vicious market drops in response to news or events hurt, but they’re fast and resolve quickly, akin to ripping off a bandaid.
The selling we’ve seen of late is slow, methodical, and relentless, all hallmarks of deleveraging, unwinding, derisking, or whatever euphemism you choose.
This isn’t your brother-in-law’s selling, it’s the big dogs dumping, and it can go on for a long time.
Speaking of the big dogs, with all the selling we’ve seen over the past few months you’d think we would have heard about a few funds blowing up, yet we haven’t.
Hell, even Cathie Wood seems to be doing fine.
Before this market bottoms, we’ll need to see some carnage on the institutional side first.
Bill Gurly knows the score.
So does Brian.
You don’t have to make your money back the same way you lost it.
I hear it all the time, “My [insert beaten-down growth stock] shares are already down [Choose one: A. 60% B. 70% or C. 80%] so how much lower can it go?”
Zero. That’s the answer. The answer is zero.
Yet, despite being the correct answer, it’s not the worst answer.
Zero is painful, but it’s definitive and provides some closure.
The truth is, many of these former high-flying growth stocks aren’t going away, they’re just going nowhere for a long time.
That’s a lot of lost opportunity costs.
You don’t have to make your money back the same way you lost it.
Speaking of zero, that’s where most of crypto is going to end up.
When it does, it will happen at light speed, and in retrospect, seem so obvious.
Quick, violent moves break retail traders, and sometimes, products.
Extended macro moves break models.
I guarantee you, there are plenty of models on the institutional side right now that were created based on the thesis that oil/bonds/rates/the dollar/munis - and so on - will never make the types of extended macro moves we’re currently seeing.
When those models break assets need to be sold. Lots of assets.
And that’s when markets break.
Social media companies have spent billions of dollars trying to figure out ways to suck you in, keep your attention, and lure you back when you try to break away.
The stock market is OG social media, only it has trillions of dollars working for your attention.
Covid is over. (Don’t @ me, it just is.)
It’s spring, the world outside is beautiful, and the market doesn’t exist once you turn your screens off.
Also, books don’t have pop-ups or notifications.
Get away from the market for a while. It’s not a good place to be right now. Let your 401k, IRA, and dollar-cost averaging do the work.
I’ll give you a heads up if anything changes before St. Leger’s Day.