Know Who You're Betting Against

LeoFinance
5 days ago
5 Min Read
912 Words

Hey Jesstonk traders

Having a 40-year bull market in equities backed by artificially low-interest rates, and near-infinite money printing and backstopping of the market even for zombified companies has created some really bullish investors.

You've heard the expression "Don't fight the Fed" and clearly, it's a battle many short-sellers and rational investors have been losing against the plunge protection team

If you've only seen returns in the market and never had an extended downturn that wasn't a "buy the dip" opportunity your idea of the market is fundamentally skewed towards the upside.

Not many of us have been around long enough to see a real recession or invest during a full-on correction and without that experience, we're doomed to repeat mistakes of those who we caught by previous real sessions.

We live in a world where people are willing to overpay 1000x the PE Ratio for a stock where dividends don't matter, it's not about the cost to discounted cash flow it's about pumping and dumbing and taking the spread.

The market is officially a gamblers paradise where more retail investors are getting suckered in either through

  • the idea of getting rich quick,
  • the results others have seen,
  • the idea of wealth without work,
  • the idea they've found something other's haven't
  • the idea that what has happened in the past will always continue on into the future
  • the misunderstanding of nominal returns

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The growth of FinTok

I loved this Tweet from Grant Williams, his such a witty fucker, you know the Britts and legit retweets this with "Will".

Yes in 2021, it's not about checking fundamentals, it's looking in hindsight and going hey that went up, last year, should continue this year, buy buy buy!

I have nothing against this girl, she's probably not wrong. I mean I won't say she's wrong or put my money on it. Would I try betting against her and going short Tesla, Blink or Square, hell no.

It's not that she's some genius investor, that is just how the market has performed and the level of confidence people have in stocks always going up.

If you're like some of these young Americans and you're getting $1200, $600 or $2000 to fuck around with, its the house's money, what have you really got to lose? Buy the dip, you genius trader you.

“Will” https://t.co/RaK60RTkCb

— Grant Williams (@ttmygh) January 4, 2021

Pick a stock, it's going up

Stocks are no longer a measurement of the companies performance only a measurement of how much money it can attract from investors via their story.

Are you looking at their balance sheet, total market share, income, dividends, competition and all the other readily available information on public companies and then reviewing historical trend lines?

No, why do that, when you can pick a stock, buy it and number go up!

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This is what you're betting with or against

If you ever wondered who are these nutters buying Hertz when it's bankrupt, pushing Tesla 1000x its PE ratio or bidding up Wirecard after confirmed fraud or buying XRP lol, look no further.

To me, this is evidence that stocks are not where I want to be, sure I could focus on value stocks, get my dividends and pay a slight premium on it in a forthy market, it's not a bad idea.

I have done it in the past, I just feel like the markets got to such a point where this irrational behaviour is only going to end in tears, even for rational investors.

Correction or inflation?

I have no crystal ball, but I do know that something like this is not meant to last and when it's become irrational enough and suckered in as many people as possible, it will have to revert, either through a correction which is often more brutal than any upswings.

As markets correct they tend to overcorrect due to fear and panic and there would really be blood in the streets not only for these retail investors but institutions and pension funds holding these assets.

Alternatively, it continues on this way and what you will have is what we saw in Venezuela and Zimbabwe, stock markets smashing new record highs and then paying you back in a currency that's not worth much.

So either you lose your gains to a correction or through inflation, which one I don't know.

Short the whole thing

This is why I see Bitcoin and precious as my favourite investment, it's a short on all this crap that's going on in markets and can hedge you against both of it.

Sure gold and Bitcoin can crash along with the stock market but I feel they both have a floor that stocks do not have, especially a majority of these companies who are technically insolvent.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

Let's connect

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