Down goes the Dow

I remember coming home from school that afternoon and all "the big kids" in the neighborhood were talking about it. One of them said, "the Big Bopper ain't bopping anymore". Sun's out, temp in 60s, time to hit the trail.

Speaking of trails, I would run the Town Lake back in the day when in Austin, it was cinder. In 1979 ran the Texas Relays Marathon as a flyer, the entire course was on Town Lake.

Big cap tech up, small caps down 100+ bps. Crazeballs.

Seems to me the big issue is market cap weighting.

People are using and abusing the big liquid ETFs, and that is a virtuous cycle, shoveling more and more money into the giants. So the giants go higher, attracting more money to the big ETFs etc, so they go higher, attracting more money etc.

So what's the move? Be contrarian and buy the stuff no one is looking at, like small caps? Or do you just throw up your hands and ride the big cap wave?

I was thinking the same.

One thing that comes to mind is this whole notion of cash on the sidelines. I hate to drag that back up, but if there are such record amounts on the sidelines, the bull run could definitely have legs.

I've been buying tech steadily, even today, fwiw, and adding to positions.

I don't know. Maybe AI will be bigger than Jesus, to coin a phrase.

I would be more wary if it were not for that info about cash on the sidelines.

Goldman Sachs raises price target on Nvidia to $800 from previous PT of $625.

.

reuters.com

Nvidia hits record high as Goldman Sachs boosts PT on AI prospects

Reuters

Nvidia's shares scaled a new peak on Monday after Goldman Sachs raised its price target for the high-flying chipmaker's stock in anticipation of a major boost to its earnings from the artificial intelligence (AI) boom.

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interesting that a major lesson of the last quarter century is to bet on the biggest tech companies.

but it's so hard to do that if you are taught to diversify, to spread your bets, be a little contrarian, when the boat rocks one way go to the other side of the boat...

I can tell you this, besides company retirement account, tech is all I've done since 1995. Then, in post meltdown of 2000, I added a big bet on small caps coming out of the sell-off.

There were various trends within that and I've learned a lot, with no substitute for the learning curve, but it's been interesting.

As portfolio did well, I got more comfortable with not rebalancing and being comfortable with tech bias, though company retirement accts in growth funds was my hedge.

If I were a buy and walk away investor, I would have been more cautious.

But be that as it was, I would like to share a little song I'm listening to, that perhaps is apropos to the current state of affairs.

Game of Trades
@GameofTrades_
·
9h
Money market funds have hit levels NEVER seen since 2007
Assets parked have now hit $6 trillion

I was thinking more about the whole non-diversified discussion.

I once heard an market guru say that retail investors have discreet market advantages, and among those are the ability to move quickly and to move early. Funds are like having to steer a massive ocean liner. If they sell, they can literally impact a market in smaller stocks, But us individual investors can move easily and instantaneously and with little impact. And not to mention free trades and before and after market access, for that matter.

An informed investor like yourself or even myself (to some degree) might be so bold as to assume they are a few steps ahead of the average investor and even large, illiquid funds.

That market guru said the individual investor would be wise to use that to their advantage.

For me, one way I have done that is to skew usual investing truisms, like the 60/40 ratio and the diversify strategy, etc. I did that a little bit at first, but with ongoing success, I did it a lot.

Just something to consider and I thought I would share since we were talking about it.

And like I've said before, building those positions gradually and over time allows a little more comfort with navigating the market swings and not feeling like one has gotten over extended.

Town Lake - my old stomping grounds. Don't miss the bikes.

There were very few bikes back when I was running Town Lake.

A long, long time ago

I can remember how that trade

Used to make them smile

And I knew it was pure chance

That could make those profits dance

And it could only last a short while

But February made them shiver

With each up tick the vix did deliver

Bad news on CNBC

As far as the eye did see

I imagined I could hear their cry

When the vix closed so high

But something touched me deep inside

The day the XIV died

So, come on, XIV be nimble, XIV be quick

XIV crashed out on a candlestick

barchart.com

CBOE Volatility Index Snapshot Chart - Barchart.com

@barchart

Technical stocks chart with latest price quote for CBOE Volatility Index, with technical analysis, latest news, and opinions.

Open link

yeah I'd like to think this...but then you do a lot of work to pick out small caps and cheap stocks and whatnot and you get utterly crushed by everyone just simply buying the SP500 without a second thought.

Being nimble has not been helpful for 15 years or so. The only thing that has been helpful is loading up on big tech.

Yes, I'm frustrated after another nutso day like today with the SP500 down just 36 bps but the equal weighted Sp500 down 86 bps and small caps down 120 bps.

For better or worse the mag 7 is down to what the mag 4 now as apple, tesla and goog are stalled? I suppose that means all the billions of buys will go to just 4 stocks instead of 7 and drive them even higher.

I started out cherry picking the small stocks back in the hay-day of the internet boom. It was part of the learning curve, and it was like you said, a lot of work and timing was everything.

But one bit of advice I latched onto was buy the market leaders. For me, after the 2000 downturn, that simply meant Apple, Google, primarily, and to a lesser extent, Yahoo, Amazon, and a few smaller holding like Marvel Technologies, etc.

But I also got into the ETFs, and as soon as the double leveraged came out, I was heavily on that. UWM was it, I recall, played largely coming out of the 2000 downturn, and as soon as the 3x leveraged came out, I was into TNA and TECL.

So, there wasn't really a need to fuss with smaller companies at all and I would purposely avoid it like the plague becuase I knew that the quality of the info I could get was nowhere like what the insiders got, so I absolutely avoided anything except the largest company stocks and ETFs. Still do.

tl/dr: just use the big companies that are less subject to wild price swings and manipulation, and the ETFs.

The second point I want to make is about the Mag 7.

As for a learning curve, it really seems to me that on any given day, about half of the seven are up and a few are somehow down (on the day). The tendency is to count the down ones out and chase the up stocks. But wait a day and it is reversed. Really, the best thing is to not chase them but buy the one or ones that happen to be down. Amazon was like that for a couple of years, but came roaring back all last year and this year. Apple lead the way for years now but is stalling as of late. I think they each have their hot streaks, but they all advance, just not at the same time. ANd this goes for not only on a day to day basis, but in longer timeframes as well.

RIght now, MSFT and Nvidia are riding the AI wagon. Meta seems to be hot, too. But I bet that just as soon as you count the others out, they will rebound and catch up.

I had an eye exam yesterday, after the wife and I grabbed an early dinner at one of the nicer restaurants in town. At that hour they play oldies for all the gray hairs, this one was playing, and even remembered the artists name. I was in elementary school at the time, so a little foggy.

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