This is the top of a dead cat bounce…
Anyone who actually thinks the market deserves to be where it is fundamentally, Is either mentally retarted like myself or has invested in small cap American Equities for the past year.
What has happened at the top of every single bubble since the history of the stock market? Volitility, plain and simple it spikes to infinity. You can no longer reliably buy puts on things you know are going lower $AMC, RIVN etc… Because IV is too high and the options chain is skewed against you to the downside. $FB just broke a record for largest intra day loss of capital in the history of the stock market. Large caps start trading like Penny stocks and have massive double digit moves in both directions. People forget they are owning parts of actual companies in the real world and instead treat the market like a large Casino. The number one DD for large bubbles is “look at how well the stock has performed in the past”. Ask these people about simple valuation metrics and they stare at you with 3 heads and say “well maybe for a car company but this is a tech company”. Most large cap companies are still trading at very high multiples. Not just the growth stocks everything. The only discount available is in Small caps and some microcaps. Small caps have an average forward PE of just 13.5 currently. Crashes don’t happen in a straight line and a waterfall downwards. They have large rips higher meet resistance and sell off. Given that Amazon’s earnings were actually unimpressive and guidance was bad it’s going to bring the whole market lower.
-Volitility with large overnight and intraday moves in markets becoming a regular occurrence. -Small caps are a leading indicator for markets historically -Earnings are stagnating -Energy prices are high -Money velocity is in the toilet -Supply chain problems are persistent -China is in recession -There is no option to lower rates to help bring stability back to markets -Selling from company insiders highest since .com bubble -Manic euphoria in markets can be tracked by the number of active participants in WSB. 800 percent growth in 2 years is not normal. -Large amounts of dumb money has inflowed into the market in the past two years. -The Fed is no longer able to support markets significantly.
TLDR – large caps go down -Overseas markets and small caps (also go down just not as severe) Option 1.Sell everything and move your money into cheaper markets (Japan, Brazil etc…) Option 2. Gamble all your money into Puts on large cap tech. Amazon specifically is likely to lose all its gains tomorrow and close they day red. Algo’s and boomers have pushed it higher AH, tomorrow they will find out Amazon’s EPS best was due to Rivian and that guidance is lackluster. Option 3. Be a “long term investor” and learn that the companies you bought. Were never deserving off 100X sales multiples and historically high PE multiples.
Submitted February 04, 2022 at 02:06AM by rightlywrongfull
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