The Official Stock Market Thread

[GeechQuest]

Originally Posted by pcptrade

Sometimes stocks drops to near book value during panic selling which could be due to hedge funds going belly up, margin calls etc. We have seen that before and I would not be surprised if we see that again in some stocks, which is already happening right now. I see that as a rare buying opportunity. I bought GOOGL at $1100 during March 2020 and I bought more yesterday. I will buy more if it drops to 1800-2000. Even though stock buybacks are bullish, I would not pay too much attention to it. I have seen many companies go bankrupt despite stock buybacks and insider buying in the past. I am not saying AAPL and GOOGL fall into that category because I bought both of them in my brokerage account yesterday. I went to 100% cash in my 401k in early Jan and reentered in targeted index funds the past two weeks. I am currently long 70% in my 401K between SP 3900-4100 level and 50% long individual stocks in my brokerage account that I added over the past one week. I still have 30% cash in 401K and 50% cash in my brokerage account just in case if we drop to 3500/3200 levels. I am fine if the market does not drop further because I am still net long from current price levels. However, I think we have more downside left just looking at the charts of Indices and BTC/ETH.

I understand all that, I just think people selling the indexes are ridiculous personally. I get why some over leveraged folks are having their hand forced though.

The top holdings in the S&P are weighted heavier, handing out record cash to shareholders, and producing greater returns by an order of magnitude than they were pre pandemic.

The S&P prior to the Covid boom had a market capitalization of $27T. I’m March of 2022 it was at roughly $43T (obviously a little less now but I don’t want to math). Basically we lose the market caps of the Top-10 holdings and are STILL roughly $10T richer than pre-Covid, and that’s with a good chunk of the S&P taking massive haircuts ALREADY.

If 2021 was the year of reckless overvaluation, 2022 may end up being the year of reckless undervaluation.