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Discussion Starter #1
I think the Federal Reserve's massive money printing has sparked a mania in asset prices, and the bubbles are popping up everywhere.

We've got first time retail investors aggressively buying QQQ and TQQQ.

We've got first time retail investors going crazy about TSLA.

Now apparently they are going crazy about silver, and the price is skyrocketing. I was on the phone with a broker and he told me that a woman called him earlier, told him to use all the margin she had available to open a massive silver position. He said it was a lot like the behaviour from callers during the marijuana mania. In fact if you need to phone the brokerages you might want to get your calls done now, because they will probably become unreachable if the TQQQ / TSLA / silver mania escalates.
 

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Corporate insiders who nailed the market bottom in March are now starting to sell stocks
Executives in charge of the companies benefiting from the rally are showing signs of anxiety
Now, fewer than 200 corporate insiders have bought shares in July, compared with a full-month average of 1,160 during the first half of this year, Washington Service data show.
In terms of total value, insiders sold US$52.6 million of shares last week while their purchases reached US$3.4 million, according to data compiled by Bloomberg.
By Lu Wang
July 22, 2020
 

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It definitely seems to be divorced from any kind of economic fundamentals, but some say the rules have changed... it's QE Infinity. Kick the can down the road, then kick it some more.

I've been hearing similar arguments about Canadian real estate. It's become too big to fail. We will never see a meaningful correction in home prices because the powers that be (BOC, CMHC, Feds) will swoop in with whatever policies are necessary to set a floor under market. Let's just call them the "Housing Plunge Protection Team"... lol.

I'm still in the camp that believes there can't be unlimited support for asset values. I also think it's hard to know when we've gone "too far" with these policies. Asset values will have to stand on their own two feet at some point. Will the economy be there to support them? How much of the economy is even "real"... when these supports are pulled back, how much of the structure remains standing? Let's not forget economic growth was almost nil BEFORE the pandemic...
 

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This article could be right out of any other bubble. People borrowing tens of thousands of dollars to buy Tesla. Many of them are still holding the shares and the debt.


Tesla out with earnings which beat expectations. The stock is blowing past record highs after hours. Tesla has 4 quarters of positive GAAP earnings. It now has an annual trailing P/E of 862.
 

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Discussion Starter #5
IMO, this is why indexing is such a good idea.

Instead of getting wrapped up in specific fads (TSLA, silver, pot) you stick to broad indexes. In addition to that, instead of wondering if QE or money printing can change everything (do fundamentals still apply? or is this a new paradigm?) you just stick to your existing plan.

I think a big reason that couch potato / asset allocation is a good idea is that it simplifies what we have to do as investors. Crazy things come and go, and we're just along for the ride.

Though, I must acknowledge that the money printing has helped my portfolio. My permanent portfolio type of asset allocation is now showing a whopping 8.1% CAGR over the last 4 and a half years. This is unusually high for this conservative portfolio.
 

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Rent money for the landlord going to stock ????
How about the Zillionaires using bailout money buying another vacation home?
 

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Look at THRM. It is up close to 1500% just in the last few weeks. Why? Because they are partnering on a COVID-19 test. Do they have sales? Profits? FDA approval? Testing? Even a product? The answer to all of those questions is no! They have nothing but a plan and are just starting to develop a product.

These COVID-19 testing companies are going to end in tears for a lot of investors. Some are worth close to $1B with practically zero tangible assets. There are hundreds of similar companies with similar products. Some may be successful, but almost certainly the vast majority will not, and there is no guarantee anyone will actually make a profit even if they make sales.
 

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Have you seen SONA also? Almost a billion-dollar company at the moment. YTD +10948%, that's more than x100. Anyone who was holding 10k$ of this at the beginning of the year is now millionaire.

And some companies totally unrelated to COVID just say they are doing something for COVID and then skyrockets. Look at FaceDrive. They are now a billion-dollar company. People who bought on July 10th are certainly still crying at the moment.

Description
Facedrive Inc. operates as a ride-sharing company in Canada. It offers Facedrive, a ridesharing platform; TraceSCAN, a COVID-19 contact tracing app.
 

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We all know you can't time the market. However, is this the new reality for the future? Will it all come crashing down? Is it smart to put lots of money into the market now? Would you have to be a fool to put money in the market? Who the hell knows anymore?
 

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Discussion Starter #12
We all know you can't time the market. However, is this the new reality for the future? Will it all come crashing down? Is it smart to put lots of money into the market now? Would you have to be a fool to put money in the market? Who the hell knows anymore?
To be fair though, this is always the problem. There is always the possibility that everything will come crashing down tomorrow, COVID or not.

I think a well diversified asset allocation plan is best. And I mean "plan" as in, a clear strategy of what you will do. I wouldn't want to just go buy some hot asset in vogue today, and then not have a clue what to do later.

I had some spare cash and added to my investments this week. Maybe it was horrible timing; I have no idea. Where to invest it?? This is where the asset allocation plan helps you out. It tells you exactly what you need to do.

In my case, I was underweight in stocks, and bought more Canada & US. It doesn't feel like a great idea, but the fact those segments were below target weights showed that they have in fact been the underperformers compared to my other holdings.

Might I have bought these right at the top? Will everything crash soon? Sure, it's possible... makes no difference to the plan.
 

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I'm thinking of shorting Tesla and TQQQ or buying puts. We will see how they open on Monday. If Friday is any indication the party may be over.
 
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