This is an interesting debate subject. Is the recent rout in high growth “momo” stocks cause for alarm? On one hand, these stocks have all gone up a great deal and are simply “coming down to reality”, as some might say. Then you have the fact that most stocks are doing just fine, as the tech bubble deflates. But I am looking at this deflation with a much more careful eye.
These aren’t just “momo” stocks getting taken to the woodshed. These are the fastest, brightest, most promising companies in the country. Ask anyone woking at a consulting firm about WDAY and they will tell you a story about a great company. The life is being sucked out of the market and just because your boring dividend stocks are insulated from this debacle, that doesn’t mean the market is a healthy place to be right now.
Please don’t point to the fact that XYZ is up 100% over the past year either. Wall Street only cares about the last trade. The fact of the matter is these stocks are now diseased and the money being lost in these stocks is astronomical.
About 600 companies are off more than 15% from their 52 week highs, with market caps above $1 billion. That doesn’t sound like a bull market to me. We can’t continue to bleed out these tech stocks, 5-10% per day, and expect the rest of the market to ignore this forever.
Eventually, if these stocks don’t stabilize, it will affect everything.
So, yes, be worried and tread carefully.
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Nice work Fly
“tread lightly” perhaps Walter White’s face would send the message better on the front page?:
http://i1.ytimg.com/vi/10czUKzpbgg/maxresdefault.jpg
You come at the king you best not miss.
Very true.
Should have just kept $BWLD.
I’ve hit that sweet spot where my stocks are down and my spy puts are being crushed. lol
agreud .. more trouble ahead
Mr Fly, this is just a simple case of the old men teaching the young whipper snappers a valuable lesson in valuations. Old man divy stocks are working because they always work.
Only one problem. They don’t always work. Look at some 20 year charts of Dividend stocks. Sheez.
You must not be looking at the right charts. Sheez!
… This just in, old man divvy stock T crushes GOGO showing strength, vigor and innovation. Back to you Bill …
Even great companies shouldn’t trade at 40x revenue
New tech may be ruined for good, but I assure you, they won’t let the rest of the market crumble. We are on the cusp of yet another run in the indices.
Happens the same time and under the same fanfare year after year? FED will be extra watchful going into mid-term and continue into next general? That is what makes phantom growth projections reality election spend!
Only day traders and options freaks need to be careful. The rest of us are doing quite alright and so is the market, Momo names loosing ground here is healthy.
Agreed, sir. Can’t continue and be healthy for the major indices. Buyers have to come back in soon. These stocks have been reset to fall 2013 without bad earnings, rate hikes, etc. Hopefully (very hopefully), Einhorn and his pack have done us a favor in giving great re-entry points
only 10 comments in 80 minutes!?
the internets much preferred when senor T was losing money hand over fist
Right on the money, Toucan.
i’m worried if Omar comin
” Old man divy stocks are working because they always work.”
Never fails. I hear something more naiive every day.
Take a gander at the valuations of said dividend stocks.
Never fails, I meet stranger people everyday on the internet… a man named Jennifer. That’s just weird!
This volatility marks an interim bottom that should hold for 2-3 months. Techs are a buy – right here. right now.
http://www.businessinsider.com/the-fly-out-2014-4
WE ARE IN A BOTTOMING FORMATION – BUY
Talk is after May 1st holiday, China Govt will be coming out with more reforms to limit the ability of obtaining loans using commodities. Liquidity is the only focus markets should have. QE is tapering, China Shadow banks are now a risk because of the bond default. Old Man Stocks would work if we had a True Growing Economy, But we don’t.
We don’t have a growing economy (the kind we used to have post recession) but we have low interest rates (cheap borrowing) and a cash cache (tricky) on the balance sheets on many old man stocks.
But Trader, What happens if China can’t borrow anymore? One heck of Bubble over there, I have been watching it form. If old man stocks have production in China, that Cash IMHO will go bye bye fast if the USD/CNY continues to move up like it has been. Miners will be killed, Auto Makers, Luxury, etc…low interest rates have a tipping point if the globe goes into deflation.
I have got to say the FEYE 45 calls for May 9th expiration look real cheap. Ultimate BETA especially with earnings coming.
Fly buys: FEYE SPLK WDAY YELP LNKD
Thank God It’s Tuesday. TGIT (copyright 2014)
Ditto (copyright 2014).
Nice quiet day. 🙂
Not over yet, Most important hour of trading coming.
Feels over though. But of course you are right.
We go up into the close. +150 on the DOW easy.
Well what happened to +200? Where did those 50 pts go?
I predicted we would go up all day, which we have. The specific amount was just gravy. It could go up 175 for all I know. I do figure the melt up will intensify as the close approaches though
And excuse the sarcasm. Listening to Rage Against the Machine, which always gives me a personality disorder.
http://www.youtube.com/watch?v=1JSBhI_0at0
Man. Good day but
Senor Fly any take on the regional banks trading down. Something to do with BAC?
Love the $CFR
If I want to buy index fund over time, which do you recommend ? Thanks.
If you are talking mutual funds and a very very long dollar cost averaging the answer would be a Vanguard index fund due to it’s low expense ratio.
+1
https://investor.vanguard.com/mutual-funds/all-vanguard-funds
Thanks. Do you have any other fund for long term investment ? I’m a small investor trying to build up asset.
If you put your money at Vanguard there are no transaction costs to buy and sell the index or mutual funds. FWIW. Over the years I have noticed that the US President’s financial adviser is usually using Vanguard.
Maybe value. Value beats the market over time.
https://personal.vanguard.com/us/funds/snapshot?FundId=0623&FundIntExt=INT
TraderCaddy–what RYDEX funds do you daytrade?