Hi Everyone! It has been a while since I have posted! I have been sitting in the side lines and watching how things were playing out. The call for sitting on the side lines, was due to deciding that the uncertainty caused by the corona virus weighed more than the Fed printing machine in my head. Yet still to this day I stand with my decision, and seeing, Warren Buffet, sitting in the side lines with $138 billion cash and equivalent on hand makes my decision more justifiable. Yet I see a lot of people who believe we are back on track, since the markets are all most back at all time highs. And I do hope that I have made the wrong decision that I have made the wrong decision. However, I do not believe we have bottomed and done with this crisis. I do not want to state the obvious and go into arguments between Fed actions and unemployment rate and so on. Yet I want to focus on what are companies doing.
The other day Wells Fargo decided to stop accepting loan applications from independent car dealers. This basically indicates that they believe that these loans will most likely default and they don't want any exposure to it. Another news is credit card companies are lowering card limits. This is another indication that companies believing that people wont be able to pay money they have borrowed, and do not forget these are the people who they have approved, the limits they had. Even though there are plenty news like these, the one that catches the eye is regards new stock issuance. In April U.S. companies sold around $20 billion. These number has spiked to $60 billion in May. They are taking advantage of the rebound and unloading their shares to retail investors who believe the worst is behind.
Lets come to the headline. Before stating anything just want to say that if I would have to I identify as anything, I see my self as Darwinist. Let natural selection do its job and do not intervene. That being said if regulators intervene when price drops more than 7% and puts in circuit breakers in place, to protect investors from panic selling; they should also put in circuit breakers when a stock increase more than 7% a day to prevent panic buying, A.K.A FOMO. You do not need to dive in to ZMs 10K and do a deep dive to understand something is off. Just look at its PE. Its PE ratio is 1300!!! It means that if you buy it today and it keeps making the same amount of money for ever. You will have to wait 1300 years for it to make that money. If it multiples its earning by 10, that still gives you 130 years. Yet I see people posting "BUY THE DEEP" after todays loss. The hype might continue, however it will be a hard thing to watch when it falls.
The only thing that I could say to you guys is...
As always this is not an financial advice , this is just a thought!
Stay safe,
The other day Wells Fargo decided to stop accepting loan applications from independent car dealers. This basically indicates that they believe that these loans will most likely default and they don't want any exposure to it. Another news is credit card companies are lowering card limits. This is another indication that companies believing that people wont be able to pay money they have borrowed, and do not forget these are the people who they have approved, the limits they had. Even though there are plenty news like these, the one that catches the eye is regards new stock issuance. In April U.S. companies sold around $20 billion. These number has spiked to $60 billion in May. They are taking advantage of the rebound and unloading their shares to retail investors who believe the worst is behind.
Lets come to the headline. Before stating anything just want to say that if I would have to I identify as anything, I see my self as Darwinist. Let natural selection do its job and do not intervene. That being said if regulators intervene when price drops more than 7% and puts in circuit breakers in place, to protect investors from panic selling; they should also put in circuit breakers when a stock increase more than 7% a day to prevent panic buying, A.K.A FOMO. You do not need to dive in to ZMs 10K and do a deep dive to understand something is off. Just look at its PE. Its PE ratio is 1300!!! It means that if you buy it today and it keeps making the same amount of money for ever. You will have to wait 1300 years for it to make that money. If it multiples its earning by 10, that still gives you 130 years. Yet I see people posting "BUY THE DEEP" after todays loss. The hype might continue, however it will be a hard thing to watch when it falls.
The only thing that I could say to you guys is...
As always this is not an financial advice , this is just a thought!
Stay safe,