I keep hearing about froth in the market. Is there froth? Yes, but it’s mostly in certain growth stocks that are non-profitable and trading on potential (such as nuclear and quantum computing). A few comments:
1) The market corrects this froth on its own. Many of these stocks are 10-50% off their highs but the market has barely corrected due to sector rotation.
2) Not everyone is in these stocks. Yes, people are watching them, tweeting about them, trading them (long and short), but stop thinking this is the ENTIRE market. Very few market participants are in these names. They are mostly just talking about them.
3) I don’t consider something like
$NVDA froth because it just broke out of a one-year consolidation in July (in other words, it has not gone up EVERY DAY for the past two years like some people think it has). Also, they have insane revenue growth (considering their size) and real profits (unlike many of the stocks in the late 90s).
4) If you feel the indexes are frothy because YOU want them to correct: A) We just had a 20% correction earlier this year. Sorry if this doesn’t fit your stupid, miserable narrative that we need a 2–3-year, -50% bear market. Be careful what you wish for because that would mean there’s a bigger problem in the world. B) Don’t focus on what you THINK the market should be doing, focus on what it is ACTUALLY doing. C) The market is barely correcting because earnings are growing, the Fed is cutting rates (Don’t fight the Fed), and the seasonality is strong.
5) Like Paul Tudor Jones said, you “adapt, evolve, compete, or die.” The key word is ADAPT. You have to adapt to the market environment. I’m not a blind bull. In a bear market, I will be in cash hiding under my bed. For now, I’m going to continue to take advantage of an equity friendly environment and not fight it.
6) If you want to argue these points, I don't care. I'm not here to argue with people all day. I'm not preaching, I'm simply expressing my views. Do what works for you. As long as you're improving and making progress, that's all that matters. Good luck! 🙏