They'll be anti data centers until they are no longer the opposition party. Then suddenly both Republicans and Democrats will change while MAGA/America First and woke 2.0/socialists sides won't have changed at all.
Isn't the political party system great!
Deliberately pay capital gains tax now on the off-chance taxes go up next year? You do you my friend.
Anthropic and OpenAI will disintegrate and vanish in the mist.
That's all folks!!!
But, it also means I can probably reinvest in some of those stocks now that a correction is in progress. There are some excellent tech companies with strong leadership and strong growth (e.g. ARM) that have been too expensive for a long time; still too expensive, but getting closer to reasonable.
Most of my holdings with AI exposure were and are well-run businesses; they were when I bought them, when I sold them, and throughout the AI-inspired rise. The problem was I didn't believe there was sufficient market opportunity to justify the stratospheric rise, and I think the market has now begun to catch up to that thinking. The market has begun to agree with the premise I based my decision to sell on.
I suspect the decline will continue and I will be able to buy back into at least some of the stocks I sold at a price better than what I sold them for.
So, yes, my post was to say I am frequently wrong on timing, even if the premise I based a decision on turns out to be true. I don't understand people, but I understand tech.
And conventionally, we use the marginal buyer's bid as the measuring stick for public companies. e.g. the share price
Of course, the intrinsic value based on currently known data/fundamentals is unchanged.
But many market valuations are disconnected from that to begin with. Loans, options, warrants, many things are tied to the market cap/share price of a company. E.g. what is the LTV ratio when lending? What are my RSUs worth?
This is completely and definitionally true in the context of trading, but keep this definition on a leash because if you apply it outside a purely financial context it tends to smuggle wealth-weighted objectives into your thinking, and regardless of whether or not you think that's moral you probably want to be aware of it. Example: feeding orphans is zero "value" because they can't pay you but merging the banks into a mega-bank to raise fees and collect bailouts has extreme "value" because it can make a bunch of obscenely rich shareholders even more obscenely rich.
Due to this mismatch I keep both definitions in my pocket: Wealth Weighted Value for finance, People Weighted Value for more colloquial settings or moral analysis.
The S&P500 is still up ~7% YTD, and 5y CAGR of 9.4% before dividends, in line with historical norms.
This is primarily a decline in tech: week over week, the S&P is -4.5% (SPX), but the S&P excluding tech is +0.1% (SPXT).
Right now, this looks like speculation that tech will reduce capex after Q4 earnings (Nvidia, Micron, Sandisk, AMD all down >2x vs the S&P). But it'll take time to tell; most just announced Q3 a week ago.
All this to say: expect volatility, but no need to panic.*
*(Unless you're in TQQQ. Then panic.)
TQQQ is the only ETF (Exchange-traded Fund) that targets 3x the daily returns of the Nasdaq-100 Index.
Ouch!
1. Market price changes are changes from what was expected before compared to what is expected now. And not even only in regards to the asset itself, but with respect to comparative change in other assets as well. 2. conventional wisdom when the branches of government are divided, less change comes from the government, so you can expect that your expectations for the future will remain stable, and that confidence reduces risk aversion, resulting in higher pricing.
Therefore, the market going down cannot be attributed purely to a question of who is in charge, because the democrats can't pass anything unless they get a nice number of Republicans on their (possible I suppose, but I don't think anyone is expecting that right now). But it could be attributed to expectations of what Republicans would do vs now that they can't.
Besides, it's basically impossible (or at least for layman, who knows if you're a market maker?) to accurately attribute a day's market behavior to any event, with a compelling causal explanation (sometimes your attribution could also be explained to have the opposite effect than the one you're trying to explain) and not ignoring alternate possible explanations.
It's kinda annoying when even otherwise serious people invoke the market movement of a day as an meaningful event that can be explained (notwithstanding that by tomorrow the effect might have reversed). But unfortunately business news like CNBC promotes that kind of thinking.
It will be a long time required here, investigating all corruption that has been happening.
Inflation increase should be viewed as a mafia in charge of a country.
It's interesting reading the panic then in the comments, and yet now the nasdaq is up 65% from those lows, even with today's drop.
The question one should ask is how far down does it go and if history is any indicator it's not gonna be up from here before the new year (and likely down a bunch more). There is a LOT of over valued stocks still to be cleared out - I suspect the cut is gonna be a lot deeper. The history on this is 2018 for Trumps last midterm and a pending rate hike. Sticky oil prices are gonna drive inflation and the fed raise's the market suffers.
Nasdaq plummets 4% into correction territory
American zillennials are going to burn down the American financial system. J.D. Vance and Mamdani are to the left of Danish SocDems on key economic and trade issues.
European pension funds and sovereign wealth funds should pull out of the US immediately.
Is this just the start of the fall that many people have been predicting for months? Did something materially change in the Democrats' stances or policies since yesterday? Or is something else unwinding entirely?
I would put this as part of the larger crunch in the AI trade that started just before earnings season as people digest what margin compression in traditional revenues for the big tech companies means going forward. Just with bigger swings because of the election.
That is something different: liquidation value. Market cap tells you the sum total of the numbers next to this ticker symbol in everyone's brokerage account. It tells you the collective expectations about future returns and also the wealth effect that people feel based on their ability to individually obtain cash for shares.
It is true that neither of those things is liquidation value, but also liquidation value is neither of those things. If you expect a liquidation scenario, sure, use liquidation value. If you don't expect a liquidation scenario but want to measure collective expectations of and confidence in a stock, use market cap.
Everything is valued in prevailing conditions. Conditions change, and value changes.
The peer-comments about the market cap being representative of the expected value, or present-value of cash-flows with some discount / risk adjustment are on point. (which implies that the change in market cap might be a change in cash-flows, change in discount (typically FedRate) or risk)
Nvidia can be down to 3-3.5T market cap from 5-5.7T heights
bell-cot•1h ago