Story Stocks For Fools Will Wither Worse Than Market

Damn you, Mr. Market!

This post is just a 2-minute comment on the minuscule stock market correction experienced the last few trading days. It’s hardly visible on a 15 year chart, but nevertheless… people are talking about it.

Here I had a nice new post on story stocks lined up, that I had hoped writing and publishing before the market turned down. All short ideas of course.

But now I guess I’ll just have to idly sit by and see all the “10 times Sales or more” and “no profits, please, we are American” stocks predictably crash to the ground during the coming 24 months.

You know which stocks I’m talking about: Tesla, Twitter, Amazon etc.

And then there is Apple (currently 107 USD/share). It’s not actually expensive, not obviously at any rate. Even I got the “right” price to 107 USD in the fall of 2014 (see post here), but I think it will hit a 50 handle before this is over anyway. Today’s dip into the low 90’s was not a one-off, but a signal about underlying weakness and times to come.

 

The peak is behind us

Yes, I think we have seen the peak of the general market for this time. The risk spirit is gone, the irrational exuberance and the unwavering belief in central bank omnipotence have vanished like so much #¤%&¤ from the “news” anchors at CNBC.

Sure, we might see an intensive bounce and a marginal new high at some point (though I seriously doubt it). There probably is a bit juice left in the narrowest of narrow slices of the market, meaning a select few stocks will continue to show new highs for a while. That could fool some people, for some time, into believing it’s still a bull market. It’s not.

Usually there are dozens of 10-20% bounces at the index level during the 60% ride down (that I think is in the cards). I expect this time to be just as lively. So strap in tightly and try to avoid buying too much too early.

 

Lots of fun ahead of us

In any case it will be a fun ride, with plenty of historical stupidities said and done by the usual culprits: The Federal Reserve, CNBC, Krugman etc. And then, when it’s all over, the interviews and compilations with Peter Schiff, Jim Chanos, Raoul Pal, Marc Faber… will be nothing short of epic.

 

Strap in, start researching

So, what should you do?

Start researching your favorite stocks and industries right away to be ready.

Look for sustainable models, sticky products and services, strong balance sheets, good cash flows etc. and decide at what prices they definitely will be good investments.

Then get ready to carefully accumulate shares in those stocks, when they dip below your wish list price (probably 12-24 months from now). Buy slowly on dips during a year or two while ‘your’ stocks bottom out, and then buy some more when they start rising in earnest.

Oh, and then it’s almost 2020 and we can look forward to a fantastic decade of productivity, robotics, genetics, journeys to Mars, and the first general Artificial Intelligence that at all resembles a human mind (very late in the 2020’s).

Please note, that I’m not recommending anything here, nothing at all connected to the real stock market. This is all a fairy tale. See Disclaimer page here.

 

And, yes, I bought some Brent today. Slowly accumulating. I know you’d ask anyway.

admin

3 Comments

  1. Not worried that Brent will get killed with equities (and deflation in general), like in 2008 (admittedly from a very different price level)? Also, the curve is still pretty steep (>15% 1y), creating a rather tough headwind for a longer-term trade, don’t you think? Obviously, backwardation may very well return with rising prices (that would be nice), even though Brent has mostly been in contango since 08. I’m warming up to the trade but can’t really decide on the trigger (was hoping for the curve to give me a sign, but nothing so far). But perhaps you have your own tanker, paid and ready, alleviating the need for rolling futures;-)

    • Short answer, yes I’m aware of that probability and mechanics of it.

      But, I’m not going all in now. I never do that. I start buying percentage by percentage of what I’m ultimately aiming for. If the oil price trough is more than 24 months away, then I’ll start getting a little worried though.

Leave a Reply

Your email address will not be published.