I bleed maroon said:

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AggieT said:

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So that a stock going from $10 to $20 (100%) looks different that a stock that goes from $100 to $110 (10%)

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I think my eyesight is good enough to tell the difference between those two using a linear scale chart. Again, how is it more "correct"?

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Because a $10 move is not the same when the stock is $10 vs when its $100. Log scale shows those moves as what they are, a 100% gain vs a 10% gain.

That said, go look at 2008, 2020, and 2022. What might be a minor looking correction in log scale could actually be the stock losing 60-80% of its value, and linear scale shows it for what it is.

If the S&P dropped to 3500 from here, it would look like a standard correction in log scale. In linear, it would look like a bloodbath.

Last bear market bottomed at 3500 and change in October 2022. Average bull market return is around 250% depending on the source. We had a strong correction in April. S&P is in the high 6s as we speak. Per the numbers, the bull market has room to run. Of course, we could start a selloff tomorrow. Nobody knows. That's why investing is fun. Dan Niles noted yesterday that rate cuts are looming and a new Fed chair will be in place next Spring. Fed will start easing in December. He thinks a 25-50 percent run up is coming. Sharp fall afterwards. Who knows???

Just read an article w Bill Gate's saying the same. After his trckfkry of COVID I've got to think a popped bubble works to his advantage. Meaning he's trying to talk people into freaking out, which suggests the data isn't there it substantiate it.

Heineken-Ashi said:

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I bleed maroon said:

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AggieT said:

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So that a stock going from $10 to $20 (100%) looks different that a stock that goes from $100 to $110 (10%)

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I think my eyesight is good enough to tell the difference between those two using a linear scale chart. Again, how is it more "correct"?

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Because a $10 move is not the same when the stock is $10 vs when its $100. Log scale shows those moves as what they are, a 100% gain vs a 10% gain.

That said, go look at 2008, 2020, and 2022. What might be a minor looking correction in log scale could actually be the stock losing 60-80% of its value, and linear scale shows it for what it is.

If the S&P dropped to 3500 from here, it would look like a standard correction in log scale. In linear, it would look like a bloodbath.

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Sorry, my friend - I missed your response. So it sounds like you and I are in agreement. It's just another way to look at the data to ease understanding. Sometimes it's misleading, and sometimes helpful. I don't find it useful, as in your first example, I can tell the difference between a 100% and a 10% gain on a chart. I guess if people adjust the scale (i.e. a y-axis of 90-120 for the $100 stock), the significance can get lost, which is why I prefer starting the axis at zero. My bottom line is that I disagree with the other poster who said logarithmic scales are "correct". Thanks for your insight.

And, I think I have formed my opinion on "the bubble":

I don't think we have an equity "bubble", where unfounded optimism causes a denial of actual value. There is too much real revenue and earning capacity inherent in the high-flyer class - NVDA, PLTR, etc.). I think we're inflated relating to historical valuation norms, but a mere correction can bring it more in line with reality. Instead, I rank these asset classes as much more likely to be in bubble territory than broad-market equities (roughly in order):

- Crypto "currency" (a classic 1600's tulip bubble, until proven otherwise)
- Quantum computing (still too early to demand current valuations)
- AI pure plays (Not MSFT, ORCL, etc.)
- Small-cap non-revenue nuclear companies
- Small-cap minerals

That said, I hold speculative investments in each of these categories, as I suspect that (similar to the dot.com bubble) for each Netscape, AOL, and MySpace that blows up spectacularly, a Google or META will emerge as a best-of-class winner.

I bleed maroon said:

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And, I think I have formed my opinion on "the bubble":

I don't think we have an equity "bubble", where unfounded optimism causes a denial of actual value. There is too much real revenue and earning capacity inherent in the high-flyer class - NVDA, PLTR, etc.). I think we're inflated relating to historical valuation norms, but a mere correction can bring it more in line with reality. Instead, I rank these asset classes as much more likely to be in bubble territory than broad-market equities (roughly in order):

- Crypto "currency" (a classic 1600's tulip bubble, until proven otherwise)
- Quantum computing (still too early to demand current valuations)
- AI pure plays (Not MSFT, ORCL, etc.)
- Small-cap non-revenue nuclear companies
- Small-cap minerals

That said, I hold speculative investments in each of these categories, as I suspect that (similar to the dot.com bubble) for each Netscape, AOL, and MySpace that blows up spectacularly, a Google or META will emerge as a best-of-class winner.

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This seems about right to me. Crypto is absolutely a bubble (and a scam depending on which one you are talking about) that really only has 1-5 players worth looking at. I own the king in that space (BTC) and a little bit of Cardano (ADA) as my flyer.

I have some speculative in small-cap minerals but no outright individual holdings in nuclear and quantum.

I cashed out bigly in the first green wave a couple of years ago (hydrogen). I do not expect to hit like that again but it would be fun to do so.

I bleed maroon said:

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And, I think I have formed my opinion on "the bubble":

I don't think we have an equity "bubble", where unfounded optimism causes a denial of actual value. There is too much real revenue and earning capacity inherent in the high-flyer class - NVDA, PLTR, etc.). I think we're inflated relating to historical valuation norms, but a mere correction can bring it more in line with reality. Instead, I rank these asset classes as much more likely to be in bubble territory than broad-market equities (roughly in order):

- Crypto "currency" (a classic 1600's tulip bubble, until proven otherwise)
- Quantum computing (still too early to demand current valuations)
- AI pure plays (Not MSFT, ORCL, etc.)
- Small-cap non-revenue nuclear companies
- Small-cap minerals

That said, I hold speculative investments in each of these categories, as I suspect that (similar to the dot.com bubble) for each Netscape, AOL, and MySpace that blows up spectacularly, a Google or META will emerge as a best-of-class winner.

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When you take your speculative positions, what's your exit strategy? A % over time? Let it ride with stepping stop losses?

rononeill said:

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I bleed maroon said:

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And, I think I have formed my opinion on "the bubble":

I don't think we have an equity "bubble", where unfounded optimism causes a denial of actual value. There is too much real revenue and earning capacity inherent in the high-flyer class - NVDA, PLTR, etc.). I think we're inflated relating to historical valuation norms, but a mere correction can bring it more in line with reality. Instead, I rank these asset classes as much more likely to be in bubble territory than broad-market equities (roughly in order):

- Crypto "currency" (a classic 1600's tulip bubble, until proven otherwise)
- Quantum computing (still too early to demand current valuations)
- AI pure plays (Not MSFT, ORCL, etc.)
- Small-cap non-revenue nuclear companies
- Small-cap minerals

That said, I hold speculative investments in each of these categories, as I suspect that (similar to the dot.com bubble) for each Netscape, AOL, and MySpace that blows up spectacularly, a Google or META will emerge as a best-of-class winner.

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When you take your speculative positions, what's your exit strategy? A % over time? Let it ride with stepping stop losses?

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I am not recommending my strategy (I'd actually listen to H-A more closely on stops and limits - he's a better "trader" than me). BUT, here is my general approach:

- I mainly handle speculative risk with position sizing. I basically invest only an amount I can afford (or frankly expect) to lose. None of these is ever over 1% of my portfolio - generally far less than that.

- As opposed to having a prudent exit strategy up front, if the opportunity exists, I'll buy far-out-of-the-money puts, or write out-of-the-money covered calls as soon as decent upward movement occurs. I then assess their future, competitive position, market segment, etc. to see if I want to continue holding it. If so, I'll rollout the covered calls to higher strikes, until I feel it's run far enough. Hopefully, I have written calls on only a portion of the position, and I let those get called away, ideally with enough to cover the initial investment. I then hold the "house money" shares, maybe repeating the covered call strategy (or buying puts to protect the gain), or deciding to exit when prudent.

It's not rocket science, but it works for me (especially with something like PLTR, which I bought at $9.50/share a few years back).

Sounds complicated. I buy positions of speculative stocks like you, but then just let it ride with no puts or calls.

At some point, I either randomly decide to sell it to make some profit, or it just goes into the gutter forever.

Follow me for more stock tips.

YouBet said:

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Sounds complicated. I buy positions of speculative stocks like you, but then just let it ride with no puts or calls.

At some point, I either randomly decide to sell it to make some profit, or it just goes into the gutter forever.

Follow me for more stock tips.

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I do the same with truly speculative microcaps. It's just a step above putting it on a single number in roulette, and I treat them as such, unless they surprise me and become real. PLUG and AMNF started out this way, for my real world examples.

YouBet said:

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Sounds complicated. I buy positions of speculative stocks like you, but then just let it ride with no puts or calls.

At some point, I either randomly decide to sell it to make some profit, or it just goes into the gutter forever.

Follow me for more stock tips.

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That's often how I describe my business - I put 200% of what I can handle on my plate and do it at 70% competency and it works out.

I bleed maroon said:

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YouBet said:

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Sounds complicated. I buy positions of speculative stocks like you, but then just let it ride with no puts or calls.

At some point, I either randomly decide to sell it to make some profit, or it just goes into the gutter forever.

Follow me for more stock tips.

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I do the same with truly speculative microcaps. It's just a step above putting it on a single number in roulette, and I treat them as such, unless they surprise me and become real. PLUG and AMNF started out this way, for my real world examples.

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By the way, my latest longshot bet in this vein was ENIC a couple days ago. I simply bought May exp. $5 calls. Check it out - has actual earnings, favorable segment (energy transmission), low P/E (10x), high 5%+ dividend (rare, may not last?), fairly stable country (Chile). Speculate at your own risk!

I bleed maroon said:

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YouBet said:

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Sounds complicated. I buy positions of speculative stocks like you, but then just let it ride with no puts or calls.

At some point, I either randomly decide to sell it to make some profit, or it just goes into the gutter forever.

Follow me for more stock tips.

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I do the same with truly speculative microcaps. It's just a step above putting it on a single number in roulette, and I treat them as such, unless they surprise me and become real. PLUG and AMNF started out this way, for my real world examples.

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Yes, PLUG is basically my biggest hit on absolute, total speculation that I first purchased 20+ years ago. (I originally purchased some other pink sheets company that PLUG later purchased).

Guess I would count BTC as well. So far. Although I'm not necessarily looking to make USD on that. Different strategy with that.

I just want to reiterate that the bubble isn't inherent in traditional stock measurements. It's a sovereign debt bubble. And it's global. And it's existing alongside a credit bubble. When that kind of bubble pops, it brings everything down. Fundamentals become meaningless, as those fundamentals exist within a regime of easy, liquid global money supply that would be wiped out.

Heineken-Ashi said:

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I just want to reiterate that the bubble isn't inherent in traditional stock measurements. It's a sovereign debt bubble. And it's global. And it's existing alongside a credit bubble. When that kind of bubble pops, it brings everything down. Fundamentals become meaningless, as those fundamentals exist within a regime of easy, liquid global money supply that would be wiped out.

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^
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Opinion, stated as fact. But, there are some good points in there, if you ignore the absolutism and hyperbole.

Bubbles indicate that people are speculating in the absence of any grounded reasoning for their investments. There ARE plenty of companies where fundamentals do and will matter, regardless of macro-meltdowns in markets. Temporary price declines in high-quality companies will build back up to a formerly steady-state level in most cases. McDonalds, Walmart, Caterpillar, and Exxon won't stay down for long. Because, even in an easy-money or credit crunch environment, they have tangible flows that will ensure their survival (and thrival)?

That said, sovereign debt is a problem, worldwide. But for the US, even though our last 4 presidents couldn't economically even manage a checkbook, our "full faith and credit" is unsurpassed in world history. It would take more than a global upheaval to disrupt our relative competitive advantage. When one company, NVDA, is worth more than Canada and Mexico combined (look it up), it tells you just how well-positioned we are. Despite those 4 elected leaders doing everything they could to ruin our economy, the republic prevails. Still - fix the debt. On this we're all agreed.

Fix the debt for sure. Some assets are in a bubble and some aren't. Growing earnings in what may be a slowly growing economy doesn't seem to me to be all that bad a place to be to me. Investing in companies that have never had earnings … not for me but I admit the chances for home runs are there but maybe at a .100 batting average.

One company valued more than multiple major economies doesn't scream advantage to me; it screams bubble

We've seen that before many times throughout history.

Met with our FA yesterday. About 30-45 days ago suggested profit taking etc bc over valuations, pending correction, lack of support. New tune yesterday. Per Raymond James guidance, still room to run on account of everyone smoking earnings.

rononeill said:

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Met with our FA yesterday. About 30-45 days ago suggested profit taking etc bc over valuations, pending correction, lack of support. New tune yesterday. Per Raymond James guidance, still room to run on account of everyone smoking earnings.

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Everyone getting laid off is certainly helping profitability.

Have we really seen concrete evidence that this year's layoffs are worse than most years? Seriously asking.

And I mean without the government layoffs included

Chatgpt says it has been worse for retail but not across all sectors like a 2008 style downturn.

One thing to look at in addition to layoffs is corporate bankruptcies. They're at their highest level since 2010. On a macro level, if you can get through a lot of those bankruptcies and NOT have huge cracks in the system it's an indicator of health in the system rather than the opposite.

In essence, you are trimming out the least profitable companies. I'm sure a lot of the bankruptcies have to do with refinancing of corporate debt. Many of those companies loaded up on 3% - 5% interest debt following Covid and now they are looking at 8% rates on operating/equipment/capex lines.

flashplayer said:

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Have we really seen concrete evidence that this year's layoffs are worse than most years? Seriously asking.

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Not sure. My comment was a bit one note. I think you have to look at it more macro than that. All of the layoffs are contributing to a job market that is terrible. We've had a steady stream of layoffs for 3-4 years now so it's not just this year. Big Tech has shed thousands of jobs every year since around 2021ish. And it's not just them...retail, logistics, others.

Anecdotally, we've never personally known this many people to get laid off and be unemployed in my working lifetime. It's wild how many people we know who have been laid off.

All of these layoffs are putting experienced people in the same job market as college grads who are struggling mightily to find jobs because of the competition. Their unemployment rate is pushing 10% based on WSJ article I read yesterday which is highest it's been in decades. Big Corp is proudly telling the market that they are not going to hire nearly as many entry level people because they feel they don't have to due to AI. My small startup that I just retired from is not hiring entry level positions because we were going to use AI instead.

Then you have the H1B scam in IT which needs to be destroyed, entirely.

All that to say...it feels larger than normal because of all of these other factors at play along with it. It's a bad time to get laid off.

Similar theme from Merrill Lynch.

We're due for a stiff correction. S&P 500 at 6,800. Back in March of this year, talking heads were saying 6,800 by year end and we begin to see a lot of sell off...back to 5,200 support. That's not a bubble popping. It's just a correction. It will look bad in the moments it is happening, but it will be healthy and expected by those following the markets. Naturally, the media will feed the news cycle with gloom and doom.

TTUArmy said:

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Naturally, the media will feed the news cycle with gloom and doom.

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As will half of this Board

Mr.Milkshake said:

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TTUArmy said:

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We're due for a stiff correction. S&P 500 at 6,800. Back in March of this year, talking heads were saying 6,800 by year end and we begin to see a lot of sell off...back to 5,200 support. That's not a bubble popping. It's just a correction. It will look bad in the moments it is happening, but it will be healthy and expected by those following the markets. Naturally, the media will feed the news cycle with gloom and doom.

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We are not due for a correction. Just had one 6 months ago

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It certainly could keep moving up. However, it looks like we're at the top of the channel; if not a slight wick above. I'm fairly confident the air up here is going to get pretty thin at this level. If we do begin to see a significant correction, I expect Trump will soften up the tariff talk pretty quick.

TTUArmy said:

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Mr.Milkshake said:

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TTUArmy said:

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We're due for a stiff correction. S&P 500 at 6,800. Back in March of this year, talking heads were saying 6,800 by year end and we begin to see a lot of sell off...back to 5,200 support. That's not a bubble popping. It's just a correction. It will look bad in the moments it is happening, but it will be healthy and expected by those following the markets. Naturally, the media will feed the news cycle with gloom and doom.

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We are not due for a correction. Just had one 6 months ago

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It certainly could keep moving up. However, it looks like we're at the top of the channel; if not a slight wick above. I'm fairly confident the air up here is going to get pretty thin at this level. If we do begin to see a significant correction, I expect Trump will soften up the tariff talk pretty quick.

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He's already pulled back on China as of yesterday which was really the crux of all of this. WSJ article today discussing that Trump admin has given up on trying to change China because you can't so now we are back to de-escalation.

My opinion: Strategy will be resume normal trade relations with them but then keep them out of the western hemisphere so they don't get even more ingrained in word supply chain.

Edit: that's not really an opinion. That's what they are doing.

TxAG#2011 said:

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We are not in a bubble. I get the feeling some of the olds don't fully comprehend what AI is doing.

We are two feet off the start line. Trying to apply technical analysis to a civilization changing technology is not wise.

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If you're on the bleeding edge of adoption you can see what's coming. Ppl have skills unlock that would take a decade of learning to be proficient with, and are 10x'd on those they already have

TxAG#2011 said:

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We are not in a bubble. I get the feeling some of the olds don't fully comprehend what AI is doing.

We are two feet off the start line. Trying to apply technical analysis to a civilization changing technology is not wise.

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I keep reminding myself that….

"What if this really IS everything it's cracked up to be?"

You definitely want to be tied to the ownership side of the freight train that's going to run over a whole lot of the economy,

I also wonder about differences from this "bubble" and the dotcom one.
A lot of the dotcom trash companies were public. Now I think a lot of the trash AI investments are staying in the private markets.

I also feel like a lot of the pump and dump scammers and charlatans that were around for dotcom are happily ensconced in the crypto world, so they aren't fanning the flames of the AI bubble they way they were back in 2000.

I know that doesn't mean this isn't a bubble, but for what similarities might exist between this market and the dotcom, to me it feels like there are still some meaningful differences.