YTD thoughts: first half of 2022
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This is the worst stock market I experienced for last few years. As shown below.
I am not disheartened though. Because I think long term is always good to get rid of the extreme speculations, just like the subprime mortgage last time around (2007 to 2009), this time it seems the speculation in cryptos is equivalent, if not more. China, on the other hand, they successfully cracked down the cryptos (Bitcoin ₿ etc). But China’s economy was very much dependent on the real estate industry in last few decade. In other words, there were lots of speculation and bubbles there. So there is some reckoning of that due to the recent zero covid / shutdown policy: or put it another way, it’s the the straw that broke the camel’s back （压死骆驼的最后一根草）。
Back to last 6 months, the bottom started to fall out during Jay Powell congress hearing (I think it was this one, or this one. I felt the google video search functionality can use some improvements). I recall the market reaction when he said that.
There is an old saying in the wall street: don’t fight the fed. In similar tone, I think we don’t want to fight the market either.
Cyclical stocks and econ cycles
We all know the real estate and commodities (oil, gas, metal, etc) tend to be cyclical: boom bust and so on. To some extent, the internet and software stocks too. If one bought the $AMZN or $MSFT at the high in year 2000, it would take many years (maybe 15) to get back even. For $CSCO (Cisco), it never reached its high (about $77 on March 31, 2000), more than 22 years later. This is due to the “irrational exuberance” as Allen Greenspan said. And comparing that to $AAPL (Apple). Is Apple at the Cisco moment in March 2000 now? I recall I got my 1st job in March 18, 2000 and Nasdaq hit its dot com high on March 20, 2000 (over 5,000). I don’t know. We don’t know. We only know after 22 years 🙂
Btw, I listen to this amazing background music (FLYING OVER JAPAN (4K UHD) Amazing Beautiful Nature Scenery with Relaxing Music | 4K VIDEO ULTRA HD) on Youtube when write this.
Last but not least, listen to this word from the Oracle of Omaha.
Last but not least, the YTD performance of S&P 500 individual companies stocks. Interestingly I have the best performer of last year $DVN #Devon Energy and this year $OXY #Occidental Petroleum. Guess who is the worst performer in S&P YTD? Hint: it’s a familiar name and a former high flyer.