Down goes the Dow

agip wrote:

fisky wrote:

The current chatter about bonds, diversification, and growth reminds me of a debate going on in my own head.

Some people see the current stock market as a bubble that will be followed by an inevitable correction. I think the current overvaluation in the market is not a bubble but a new phenomenon that I call the "picnic ant market." (Others have probably already thought of this and written about it in other terminology.)

Today's millennial and GenX investors are like picnic ants. When an ant finds a tasty morsel, it sends out a viral tweet or post and other ants swarm to the stock, driving the price up. Eventually, interest wanes. Some ants stay with that morsel, but others are drawn to the next potential stock. Unlike previous market bubbles, the picnic ants have an insatiable appetite. Instead of investing their retirement funds, these new investors are investing an almost unlimited supply of discretionary income... money that they previously would have spent partying, driving a new car, etc.

Instead of leaving when the market declines, more picnic ants will be drawn in by the allure of catching the next ten-bagger. In previous corrections, most stocks turned down. I wonder if that will happen on the same scale in the future since the picnic ants can just move from one stalled sector to another sector with more promise.

Regardless, I've abandoned the balanced approach and I've decided to move with the ants until such time that the ants start leaving the picnic in mass. With over 600,000 new Robinhood downloads so far this year, I think the picnic ant movement has a long way to go before the mass exodus from the picnic begins.

Thoughts? ...other than trailing stop loss is your friend? :)

I've started moving money into a momentum fund, VFMO, so I generally agree with you.

Using a moving average as a trailing stop could be helpful...in theory.

I would be cautious to take a small corner of the stock market and extend its importance too much. 99% of the market is not affected by the picnic ant situation. They are just voyaging on. THey don't make news, of course. The stocks that make news and therefore make people thikn they are the whole stock market...are the GME, TSLA, meme stocks, doge coin etc.

I think we can make money off the meme stocks, but only as a moonlighting gig. The big show is just buying and holding.

agip wrote:

fisky wrote:

The current chatter about bonds, diversification, and growth reminds me of a debate going on in my own head.

Some people see the current stock market as a bubble that will be followed by an inevitable correction. I think the current overvaluation in the market is not a bubble but a new phenomenon that I call the "picnic ant market." (Others have probably already thought of this and written about it in other terminology.)

Today's millennial and GenX investors are like picnic ants. When an ant finds a tasty morsel, it sends out a viral tweet or post and other ants swarm to the stock, driving the price up. Eventually, interest wanes. Some ants stay with that morsel, but others are drawn to the next potential stock. Unlike previous market bubbles, the picnic ants have an insatiable appetite. Instead of investing their retirement funds, these new investors are investing an almost unlimited supply of discretionary income... money that they previously would have spent partying, driving a new car, etc.

Instead of leaving when the market declines, more picnic ants will be drawn in by the allure of catching the next ten-bagger. In previous corrections, most stocks turned down. I wonder if that will happen on the same scale in the future since the picnic ants can just move from one stalled sector to another sector with more promise.

Regardless, I've abandoned the balanced approach and I've decided to move with the ants until such time that the ants start leaving the picnic in mass. With over 600,000 new Robinhood downloads so far this year, I think the picnic ant movement has a long way to go before the mass exodus from the picnic begins.

Thoughts? ...other than trailing stop loss is your friend? :)

+1

I've started moving money into a momentum fund, VFMO, so I generally agree with you.

Using a moving average as a trailing stop could be helpful...in theory.

I would be cautious to take a small corner of the stock market and extend its importance too much. 99% of the market is not affected by the picnic ant situation. They are just voyaging on. THey don't make news, of course. The stocks that make news and therefore make people thikn they are the whole stock market...are the GME, TSLA, meme stocks, doge coin etc.

I think we can make money off the meme stocks, but only as a moonlighting gig. The big show is just buying and holding.

fisky wrote:

The current chatter about bonds, diversification, and growth reminds me of a debate going on in my own head.

Some people see the current stock market as a bubble that will be followed by an inevitable correction. I think the current overvaluation in the market is not a bubble but a new phenomenon that I call the "picnic ant market." (Others have probably already thought of this and written about it in other terminology.)

Today's millennial and GenX investors are like picnic ants. When an ant finds a tasty morsel, it sends out a viral tweet or post and other ants swarm to the stock, driving the price up. Eventually, interest wanes. Some ants stay with that morsel, but others are drawn to the next potential stock. Unlike previous market bubbles, the picnic ants have an insatiable appetite. Instead of investing their retirement funds, these new investors are investing an almost unlimited supply of discretionary income... money that they previously would have spent partying, driving a new car, etc.

Instead of leaving when the market declines, more picnic ants will be drawn in by the allure of catching the next ten-bagger. In previous corrections, most stocks turned down. I wonder if that will happen on the same scale in the future since the picnic ants can just move from one stalled sector to another sector with more promise.

Regardless, I've abandoned the balanced approach and I've decided to move with the ants until such time that the ants start leaving the picnic in mass. With over 600,000 new Robinhood downloads so far this year, I think the picnic ant movement has a long way to go before the mass exodus from the picnic begins.

Thoughts? ...other than trailing stop loss is your friend? :)