Know Who You're Betting Against

in LeoFinance11 days ago

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.

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."

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I'm banking on fascist hive token to moon

LOL I think Elon will get there before HIVE does

Always the rational one King of Jessicans. I think I'm going to commit myself to composing my Skramist manifesto during this lock down and hive will be my brainstorming drafting outlet.

I think I've coined the ideology of Accelerationist rationalism as Skramism and I'm working on chapter one. Mutual Fade

LOL I look forward to reading your manifesto, we debate so much about ideologies like socialism and capitalism, why not add some nuance, since we all play in that gray area, i'd love some Skramism

Scratch that participating here bit. Too many fascists

Lol while your stays are brief they are always memorable

Appreciate it, best wishes to you man. Check NYT best seller list 2022 for Skramism

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.

Can't end in other way, in a context of hyperinflation like this with a pandemic and inverstors going like mad for empty brands, no way that Tesla is bigger than the sum of BMW, Mercedes, Ford lol. It's ridiculous, the day the market gets a correction many people will cry.

Bitcoin isn't raising from nowhere, this precise context of market bubble its increasing the trust on it.

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If the correction does come, wow its going to wipe out so many people in ways that aren't even imaginable, people who never had to work will need to go back to work, people who thought they were wealthy will be in for a reality check

I feel the same way as these valuations continue to move into higher nose bleed levels that cannot be justified people have to look at alternative investments, there's real estate but that's a pain, there are bonds I guess, but Bitcoin is the easiest to get into at any price, you got 100 bucks you can bag you some BTC, it's just the simplest way to get in with whatever value you want to invest

r bidding up Wirecard after confirmed fraud

damn there are still that kind of people? Why am i surprised though :P

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LOL its a casino in the stock market at the moment, if you can buy something to resell it to someone else who cares what the company is actually doing. It's the same with venture funds and spacs too

Everything is held up by smoke, mirrors, scotch tape, krazy glue, and fake news,
This year I will be allowed to take control of one of my Retirement Funds and I hope I can get out of doge when that eligibility option date comes.
My home has been Tax assessed at over $1 million CDN again, when based on fundamentals it should be plunging due to the Covid lock downs.
The Banks and Realtors don't want to see falling prices so I think they are faking the figures.

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Lol, that's crazy, maths has so far left the station and we're all about large numbers as long as the number goes up that's all that matters. If this is really where we are I would love to know what is the percentage of fake, financial engineering to each number, like by how much are we over-inflating everything and what would be close to the real price of something.

I can't even think of a measuring stick, I guess gold would be the closest thing we have right now but even it's numbers are wonky so where do we begin to find our equilibrium, I feel like we've been knocked so far off our axis that we've established this new equilibrium and no ones questioning it a damn