Japanese traders were borrowing against the Yen at near zero interest rates and using those funds to buy US stocks and to an extent crypto. Japanese central banks are raising rates causing that borrowing to now cost more; those traders are unwinding their trades now. Having a serious impact on US markets but nothing fundamentally wrong with the actual companies. Add the uncertainty around Iran ramping up even more and it’s a recipe for a 10% pullback. Huge buying opportunity for the near 6 trillion in cash on the sidelines.
NVIDIA is really tempting and I completely missed the original train. I need to read some research reports on it, but know that Microsoft, Google and Facebook spent ungodly amounts on AI last quarter. That trend isn’t reversing soon and NVIDIA should continue to be the biggest benefactor.
I didn’t say crash, I said housing should also correct. And while I agree that they rarely correct, it’s because they rarely need to correct. We are in a huge housing bubble, with abnormal almost vertical appreciation in home prices since 2024. This would be an appropriate time for a correction. Real estate is not special. It is susceptible to correction, just like any other market.
I didn’t say that it would be slight. Not sure where you got that from. We are in a stock market bubble and it makes sense to be corrected.
This is a huge buying opportunity. I’m buying more big tech later today. Days like this normally don’t reverse so waiting until the afternoon could present an even better entry point on some of these stocks. People will panic, it’s human nature. Decisions based on panic or emotion in the market are no bueno.
I've been waiting for this to happen for 2 years. Anyone with a decent IQ knows the markets have been bloated since Obama with all of the quantitative easing that took place. When the average price-to-earnings is more than 30:1, you usually run away. The ratio now in the overall market is the highest it's ever been and that spells really, really bad news. I wouldn't be surprised if the DOW dropped to 30,000 by the time the dust settles.
The AI thing is gonna be interesting for now as they've basically had zero revenue return on the development and spent gobs of money as you stated. So their financials for the next few quarters aren't going to be pretty and they're gonna have to try and explain that to investors.
Yeah, I always have a decent amount of cash on hand for market swings. Not really timing the market because I'm not naive enough to think I can pull that off consistently. That being said, since I retired I don't keep as much cash (money market) laying around. I can but some in this swing, but not like I used to when I was young and crazy.
I agree, the only AI I pay for is $20 a month for ChatGPT 4.0. It gives you all the AI you need and more. Big tech isn’t seeing any ROI currently. Microsoft does get 75% of OpenAI’s (parent co of ChatGPT) profit until they get their $10bn investment back, but that means by definition they are in the red still. I think NVIDIA, data centers and utilities will continue to get the AI dollars for at least 1 to 2 years as big tech explains away the losses to investors. And my thesis, that I feel pretty good about, is that big tech will find any and every way to justify outsized spending on AI for fear of missing out if they don’t. It’s like the market for touchscreen phones in 2008 when an iPhone was $100-$200, there will be a huge winner in the existing tech stocks that are spending all the money on AI. I’d rather bet on the stocks that get those dollars in the arms race for the meantime. Will be interesting…
