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Is The Market About To Crash?
Four warning signs things are too good.
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Quote
"Don't try to buy at the bottom and sell at the top. It can't be done except by liars." - Bernard Baruch
Is The Market About To Crash?
This post almost didn’t get sent.
Being bearish and spreading fear is not something I like to do. You get enough of that from the mainstream media calling for WWIII every other week.
Secondly, most of those who cry wolf end up being wrong as over the long term the market is quite resilient and continues marching higher.
With that said, this post is simply a summary of recent observations which have made me ask “are things too good right now.”
You might think these are pointless, or you might agree. That’s up to you to decide.
Greed Is High
The fear and greed index looks at a number of factors including market momentum, average put/call ratio, and overall volatility.
The indicator below is very shifty, but overall it seems that most folks would agree that this indicator has been on the right side quite a lot as of late.
Valuations Creeping Higher
It’s no secret that valuations are high right now. One example that caught my eye is Palantir stock that is currently trading at a PE ratio of 321.
The S&P 500’s P/E ratio is also creeping higher. While we aren’t at the levels seen in 2020 (that was another wild time) we are above the average over the last decade.
Investors “Can’t Miss”
This one is broad, but right now is one of those times where everyone is looking like a genius.
What does this mean?
Co-workers flexing about how they flipped a stock for hundreds of percent, Twitter guys bragging about their “great pick”, your uncle saying he just bought Nvidia after reading Rich Dad Poor Dad, etc, etc, etc.
When people start convincing themselves they are better than Warren Buffett, while Buffett is holding $325 billion in cash, I start getting nervous.
Meme Coins
This one is directly related to what we saw in 2021 and 2022 when random coins were flying and JPGs of rocks were selling for millions of dollars.
While NFTs still haven’t made a complete comeback, seeing a 14 years old make $30K on a meme coin this week called “Just a Chill Guy” gave me bad sense of Deja vu.
Kid makes a coin then dumps on people for $30k while live-streaming 😭
— TTI (@TikTokInvestors)
4:25 AM • Nov 20, 2024
Conclusion
I haven’t been investing for the longest, but over the last 8 or so years I’ve seen a couple swings from extreme greed, to extreme fear. For the reasons listed above, it seems we are leaning pretty heavy on the greed side.
My investing strategy is not changing, but I am keeping a closer eye on what is happening in the market.
Hopefully we can write this post off as bogus in another year.
Worst case, we get a discounted market. ~ Cade
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Chump Change Picks
The 3 Step Plan To Figure Out What You Want To Do In Life - Part 2 of a blog post by Shaan Puri on how he lived “strategically broke” to help him find what he wanted to do in life. Creative post, and a cool story.
Three Quality Stocks To Buy Now - YouTube video by Joseph Carlos giving his bull case for three undervalued stocks. Unlike a lot of Youtubers, I enjoy Joseph’s almost boring video style as he doesn’t try to hype up picks, but instead gives you his bland thesis.
Lock in a 6.9% Yield - Public’s Bond account is the first of its kind as it allows investors like you and me to easily invest in corporate bonds. Worth checking out if you are looking for a place to store some cash.
Best Memes
The only thing more funny than meme coins. Memes about meme coins.
We all need to take notes from this kid.
type of vibe i’m on
— N (@dearvotion)
12:41 AM • Nov 19, 2024
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Nothing in this email is intended to serve as financial advice. Do your own research. Thanks for reading, if you have any questions, comments, suggestions, etc. about the email don’t hesitate to send me a reply.