저자: Stockology Insider · 외국인
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Jim Kramer is pedalling his tired gardening metaphor to convince you that getting wrecked in tech is actually healthy rain. You should celebrate. This is peak Wall Street gaslighting, telling bag holders to thank the market for flushing their portfolios while he spins the latest AI sell-off as a gift.
Accept it. Coveted. I bring this up because Rain is to guard the sell-offs are to the stock market. You should expect them, maybe even hope for them. We just don't realize it at the time. Like today, Dow dipped 26 points. SB lost .049%. NASDAQ shed.90% was uglier at one point. Pretty ugly. So tonight, I want to sing the praises of rainy day selloffs like this one and explain how to use them and why you should like them.
First, let's look at what happens when you don't get enough rain. That is the story of the great runup at the end of the dotcom bubble from 1999 through the first quarter of 2000 that people always referring to, but they didn't live through it like I did. If you weren't around back then, you might not know that there was almost no rain in that market, just scorching sunshine.
Day after day, we had stocks of worthless companies going up and up and up, nurtured by the sun, of reckless buying by both individuals, new to the market, and growth craving mutual funds who just were the scourge of the market. These buyers never took a break. If you got a sell off, it was only for just a couple of hours, not days as buyers could not resist throwing money at anything that looked like an internet company or one that helped them.
It was a market full of what we call parabolic moves. That's where stocks go straight up and never even go stair step. This is a pattern, by the way. I don't mind at all. What only happened in this Mojave Desert style of bull market? Pretty simple. We went up so much that we were delused with two things.
Secondary offerings from companies, that's right, raising new money and massive insider selling. Now these bogus stocks moved up on very little buying. So when they were finally inundated with insider and corporate selling, the stocks just wilted. [screaming] More than 300 of these newly minted companies in the 1999 to 2000 period embarked on these wild and crazy trajectories where after gigantic moves a torrent of selling hit the market
and they crushed the individuals and the mutual funds that invested in this dross. People lost hundreds of billions of dollars and many never came back. Now, I have spent the last 25 years trying to prevent people from sticking their necks out too far in these kinds of fly by night markets, and I will shout from the rooftops when I see one.
When I saw a similar move in the chimera stocks last year, I labeled it the year of magical investing to make to spoof it, make people aware that the whole shebang was living on borrowed time. Sure enough, the entire group collapsed in the fourth quarter. Many people again got hammered, but fortunately nowhere near the destruction of year 2000.
Many of you are still with us. Despite what you may hear right now about the data center and the overextended nature of a handful of stocks, this period is nothing like that one. Sure, we got too many parabolic moves, but unlike the dot era, the year of magical investing, the companies that are moving up strongly are real, meaning they have sales and earnings and their prospects are extraordinary.
Many have great boundaries, especially if they're in memory or storage or processing of data. The bad news though is the if in that sentence. Today the Wall Street Journal ran a story that basically said one of the chief pillars of the artificial intelligence rally, open AI may not be doing as well as you and I thought.
It may not have hit key benchmarks as you and I thought. It may have overordered as you and I thought. And to read between the lines, it may bring the entire edifice down when the company, well, let's just say tells us the truth. How about that? When I read the piece, I was reminded of all the amazing hatchet jobs that I was forced to write in my multitude of journalist haunts when I was younger.
They ended up coming easy for me. You know why? Cuz you just have to pose enough truthful questions that the sum total is a death sentence for whoever you're writing about. After just a few months, you know what? I gave up fighting to be constructive and just decided if my editors wanted a hatchet job, I would give them a hatchet job.
This journal piece is right my wheelhouse from the old days. Put the fear of God in people. And you know what? I loved the article. Loved it. Why? Because it gave us the rain I was looking for. We needed some rain to shake out the summer soldiers and the Sunshine Patriots. Thank you, Thomas Payne. This article was filled with such a hailtorm of fright that it finally caused an AI related sell-off that this market needed so badly.
Thank you, Journal. It was like rain. But you know what? It also reminded me of Tatifa fertilizer, the natural kind. I found it hard to believe that things were as laughable and pathetic at OpenAI, the artificial intelligence kingpin, as the article made it sound like. What a laughing stock. Hey, maybe that's because you know what I was thinking, why do I like it's cuz I trust the CFO of Open AI, Sarah Frier, whom I've known for ages and has never bagged me.
Now, it's entirely possible that she woke up this morning and she said, "Today is the day I'll make a national fool out of JIM KRAMER BY TELLING HIM THINGS ARE GREAT WHEN THEY'RE REALLY AWFUL. But one, I don't think I'm that much of a priority. And two, she's too honest for her own good." Sure, Open AI has issues.
Oh, yeah. But it has not paid to bet against it so far in practice or in theory. Still, if I thought that OpenAI were Lucent or Nortell or Global Crossing, this the real let's just say the worst of the worst of that period. If I thought that you were going to lose money because of this, do you think I wouldn't shout it from the rooftops?
I don't play for dinner. Let's go back to the rain metaphor for a moment, though. We're on the cusp of the big four tech earnings. Amazon, Alphabet, Meta, and Microsoft. And that could all disappoint if this article is substance. Honestly, that's exactly what this market may need, though. We need a shake out of the fair weather soldiers and the fairweather shareholders.
And and we actually need to have some shorts built in. That's what rain does. That's how a market can continue. Otherwise, it will go bubbleicious. We're also seeing a host of other stocks that have gone parabolic. ARM Holdings, which I we own for the trust. Dell AMD, which I wish we own for the trust, and Corning, which reported this very morning.
These stocks had threatened to touch the sun. Corning flew too close and had its icorous moment today, tumbling nearly 9%. I told members of the investing club that it didn't really matter what Corny said because it stock had gone parabolic running so much that disappointment was indeed inevitable. Sell, sell, sell.
It didn't matter if the company announced two huge clients, something that would have normally sent the stock barreling into the sun. Instead, it reacted to the rain and got clubbed. I say good coin needed that too. Even though my trust owned it owns it, it's what we needed to see. Now, do all these par parabas mean that the entire move is kaput?
No, not at all. What you can you what can you do to protect yourself from them? Here's an idea. The pros do what we call schnitling. Taking a little bit out of the stock on each day of the parabolic move. You have 200 shares, you sell 50, and then you wait a little bit, then you sell another 50. If it keeps going higher, don't sell it all, but make sure that you've sold down some.
Then, if the stock drops 5 to 7% from where you first sold, then you can begin to buy it back slowly but surely, 25 shares at a time. The goal is to be able to take advantage of the rain and do some planting further down. Otherwise, these cells feel like a seal clubbing expedition where you are the seal.
I don't want that. What makes me so certain things are okay? The fourth industrial revolution. That's what do I know if Open AI is going to be the best investment ever? You know what? Frankly, I don't care. What I care about is owning the stocks that are best prepared to benefit from the need to have compute, storage, and power.
the three shortages that are driving the moves like the one in Seagate this very evening. A memory disc drive which just reported after the closes up a hundred points. Of course, I keep the chapel trust diversified. We own a lot of companies for the trust that are not in the more or less malign data center space.
We handled the nasty downdraft of tech innuendo when Nvidia was 40 or 50 points lower than it is now. We'll handle that, too. Here's the bottom. I'm not worried about the rain. My bottom line says newspapers, hedge funds, managers, panelists, commentators, you name it, bring it on. Especially the gas bags who can drum up a storm if they have to.
Instead, I worry about a lack of rain that will cause this market to self- emilate. Fortunately, today we got a nice shower of selling. Don't worry, more showers ahead. Can't handle it. Buy an umbrella. Brian in North Carolina. Brian.
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