The NASDAQ 100 is down 32% Year to date.
Inflation is slightly above 8%.
Imagine working through all those decades and then losing 40% of your net worth in a single year.
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Anyway the NASDAQ 100 lost ONLY 32%
Several once “hot stocks” have now lost 50%of their value Amazon
All-time high: $186 (15 months ago in July)
Current price $ 95.72
Same as: Mar 2020 (Joe Biden facing Bernie Sanders in primary)
Meta (aka Facebook)
All-time high: $378.69 (a year ago in Sept)
Current price $ 97.38
Same as: 7 years ago Jan 2016 (Barack Obama was president)
Netflix
All-time high: $690 (1 year ago, almost exactly 365 days)
Current price $296
Same as: Dec 2019 (George Floyd still alive, COVID shutdowns have not begun, Anthony Fauci still unheard-of)
Nice going, Biden! Why didn’t you do anything to tame investors’ irrational exuberance that drove up Amazon’s stock in 2020 when everybody was ordering everything online?
It’s all relative.If you bought Amazon 5 years ago you would still have an annualized 15% return, which is better than the S&P500’s 10% annualized return rate over the last 5 years. If you bought AMZN 10 years ago you’d still have an annualized 25% return. If you are buying stocks short term, especially tech stocks, then you should know those stocks are highly volatile and accept the risk.
In some ways the current market resembles the dot.com crash.
1.) The Fed is culpable. (Drunk on Keynesian economics)
-and-
2.) Investors are just-now learning that a company whose revenues comes from ads, (twitter, facebook, google), is a media/advertising company no matter how much people pretend it is a “tech stock”
If Dominos has a super high-tech multi-million dollar pizza oven it is still a pizza company.
If a cab company lets riders use an app it is still a cab company.
A ditch digger paid via ZELLE is still a ditch digger
Etc…
The biggest losers at the moment seem to be the so-called tech companies whose income derives almost exclusively from advertising . . . which is exactly what happened in the dot.com crash.
I just find the market fascinating because depending on how you invest the stock market can either be considered zero sum, or “organic growth”? If that makes sense.
By that I mean some ways of trading, if you make money it means someone else lost money…. Other ways you can consider it buying and the company gained value and then was sold. Dunno I just think it’s interesting.
Stock market price level is a result of two things
Corporate earnings (for which the economy and President are answerable)
Price-to-earnings ratio which has to do with the Fed and investor confidence.
It would be wrong to pretend the economy (buck stops here, the whitehouse) does not matter.
It would be wrong to pretend Presidential policy, (including but not limited to an open and obvious hostility toward corporations) does not matter.
I have a friend of mine who has quite a bit of Facebook shares. I said to him, if I told you a year ago you could buy Facebook for under $100 buck’s a share eventually what would you have told me?
This is why people need to be working with financial advisors. The stock market goes up and down - it’s volatile. It’s the nature of the stock market. If you’re in your 20’s or 30’s and can afford to wait it out until the stock market starts rising again, then you can afford a little more risk. If you’re near retirement, you need to be in safer investments. A financial advisor (preferably fee - based) can help you re-balance your assets based on the risk that is most comfortable for you at different points in life.
Oh, and if you have a financial advisor that isn’t diversifying, RUN!!
Oil companies or oil the commodity?
You said “stocks” so . . . companies it is.
Oil in general are just now beginning to recover to their pre-COVID levels of 3 years ago. the S&P Oil Index etf trades at $276. (See chart below) Nobody drove during the pandemic shut down and oil companies pretty much all ran at a loss. They provided us with oil not just oil at cost, but BELOW COST. (Mighty nice of them huh? Maybe we should say “thank you.”)
But even that is a very very bearish level.
Oil stocks trade at a P/E (ttm) of just 4.9. You can buy a share of oil stock for just 4.9 times last years’ earning-per share.
As I said that is very very bearish. Investors apparently believe oil companies are either
A.) Not going to exist 20-30 years from now, or
B.) Will not be able to sustain their current profits much longer.
The market has more faith in
the broader market (S&P 500) (20x earnings)
tobacco companies (15x earnings)
cannabis (still no earnings at all, either nobody buys cannabis, or the company execs smoked away all the profit)
That said, individual oil companies trade at levels all over the map.
Retail investors such as myself have become a big presence in the oil-stock market.
People spend a lot of money buying stock in oil companies IF the company has name recognition.
