Quote:
Originally Posted by threezero
But I digress, I haven't done any fundamental analysis on the stuff I've invested in lately. The market clearly doesn't care about this. This is a market where the greatest investor of all times is underperforming barstool and robinhooders.
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Thanks for taking the time for the writeup.
I'd chime in the part on fundamentals and how I see it.
As a person who graduated with a degree in Economics, too often, I try to analyze everything with fundamental economic theories. This goes back when I just graduated in 2006 where I thought the Vancouver housing market didn't make any fundamental sense, conventionally speaking, and hence I didn't get into the market that grew all the way until the later part of 2016.
Looking back retrospectively, I think there was no flaw in my analysis based on what I learned and all the laws and concepts in economics that I learned still held. There was one single problem... more precisely, a variable that I did not take into account as it wasn't the historical market behavior that I learned: the Fed (and all the central banks really).
At the time, with the 2008 financial meltdown, the US took the approach of protecting the part that was absolutely essential to prevent a systematic meltdown, and in doing so, it pumped billions of dollars in the market.
Don't get me wrong, US Feds took the rightful approach. They allowed the bubble to deflate as soon as possible, however, to prop up the market, they continued the same practice long after the correction took place and the market had absorbed the impact.
This created a huge inflow of liquidity into the market. US went mostly into the stock market, while Canada, because RE accounts for such a massive portion of our economy, our gov't and BoC kept the bubble going.
Which led us to today. The Fed, prior to the Covid19 meltdown eased quite a bit of its pumping practice as the economy was reaching to a healthy state (relatively speaking). With the Covid19, and being an election year, they had no choice but to return to the old practice of injecting huge liquidity into the market. All that money has to go somewhere. And it continued to pump into stock market as RE is no longer perceived as a safe investment that can offer great returns.
In short, I agree with what you said... there are a lot of speculation, FOMO or whatever going on in the stock market, but I also believe that as far as asset goes, the increase won't stop until the Fed starts easing on the practice. So, I'm just going to ride the wave and continue to hold. I suspect that Tesla will easily reach $2000 a share and more if Fed continues its practice plus SP500 inclusion as there isn't a fundamental problem with Tesla, the only thing is that there are a lot of speculation in its SP that goes beyond fundamentals.
One can go as far as swapping Tesla from that last sentence with any company that has no fundamental problems. Their SP would ride to ATH after ATHs. This would only begin to scale back once the Fed stops its practice. Because fundamentals can't compete with the pocket of Fed.