Bubble?

Investment Analysis Clubs Macro Economic Trends and Risks
1

In hindsight clearly the market was in a bubble. That’s history. Where is the market now? I follow a list of companies mostly high growth and some ARK Invest innovation stocks. I don’t recall so many stocks so far down from their all time highs but then, I never before tracked this metric.

Teladoc (TDOC) down 90.5%
Fool darling Stratasys, Inc. (SSYS) down 89.3%
Zoom Video (ZM) down 86.9%
Align Technology (ALGN) down 70.1%
MongoDB, Inc (MDB) down 66.1%

These are not fly by night companies. How much further down?

Rivian Automotive, Inc. (RIVN) down 80.6%

After the IPO RIVN went up to $172 before crashing. It has strong backers, Amazon is using their custom built delivery vans. The chart since IPO

https://bigcharts.marketwatch.com/advchart/frames/frames.asp…

May signaled a bottom and I started buying for covered calls on June 22 at $29.58 and kept accumulating for a cost basis of $29.51. The ‘normal’ risk is still there but the ‘bubble’ risk has pretty much been squeezed out.

Of course the Angels of Doom & Gloom are having a hay day predicting the latest End of the Universe. ¿Are they right? The US$ is not strong because America is on the brink of collapse. China is! Russia is! Would you trade in your dollars from Yuan Renminbi or Rubles?

https://www.google.com/search?client=safari&rls=en&q…
https://www.google.com/search?client=safari&rls=en&q…

My list. Check out their charts!

TDOC: https://bigcharts.marketwatch.com/advchart/frames/frames.asp…
SSYS(one I would not buy): https://bigcharts.marketwatch.com/advchart/frames/frames.asp…
ZM: https://bigcharts.marketwatch.com/advchart/frames/frames.asp…
ALGN: https://bigcharts.marketwatch.com/advchart/frames/frames.asp…
MDB: https://bigcharts.marketwatch.com/advchart/frames/frames.asp…

Not quite bottom by the looks of it but Climate Change is so ingrained that there is even legislation to make renewables great investments. IRA is pumping billions into the likes of Tesla. Tesla is moving battery making equipment originally destined for Berlin to Austin to juice IRA handouts in favor of TSLA shareholders. Simply stated, Renewables is the latest Industrial Revolution. Russia is showing us how unreliable fossil fuel suppliers can be. Remember the AOPEC 1972 Oil Embargo (A for Arab)? They can’t embargo the SUN!


**Symbol    Close      High    Down%      Date       Company** 
 **9/22/2022** 
NNDM       2.39     88.90    97.3    03-22-2016    Nano Dimension Ltd.
XL         0.91     32.59    97.2    12-23-2020    XL Fleet Corp.
SFIX       4.18    106.41    96.1    01-27-2021    Stitch Fix, Inc.
EVGN       0.84     19.99    95.8    12-12-2013    Evogene Ltd.
NVTA       2.56     57.40    95.5    12-10-2020    Invitae Corporation
PTON       8.59    167.42    94.9    01-13-2021    Peloton Interactive, Inc.
DMTK       4.24     79.76    94.7    02-19-2021    DermTech, Inc.
UPST      21.31    390.00    94.5    10-15-2021    Upstart Holdings, Inc.
PSNL       3.08     51.02    94.0    01-20-2021    Personalis, Inc.
FSLY       8.45    128.83    93.4    10-13-2020    Fastly, Inc.
QS         9.12    131.67    93.1    12-22-2020    QuantumScape Corporation
TDOC      27.93    294.54    90.5    02-08-2021    Teladoc Health, Inc.
TSP        6.86     71.24    90.4    06-30-2021    TuSimple Holdings Inc.
PACB       5.41     51.15    89.4    02-11-2021    Pacific Biosciences of California
SSYS      14.58    136.46    89.3    01-03-2014    Stratasys, Inc.
SNAP      10.47     83.11    87.4    09-24-2021    Snap Inc.
ROKU      60.89    479.50    87.3    07-26-2021    Roku, Inc.
ZM        74.54    568.34    86.9    10-19-2020    Zoom Video Communications, Inc.
EDIT      13.28     90.58    85.3    01-08-2021    Editas Medicine, Inc.
TWLO      69.72    443.49    84.3    02-18-2021    Twilio Inc.
APPS      15.27     94.74    83.9    03-01-2021    Digital Turbine, Inc.
COUP      62.18    369.92    83.2    02-18-2021    Coupa Software Inc.
SHOP      28.56    169.06    83.1    11-19-2021    Shopify Inc.
DOCU      54.00    310.05    82.6    09-03-2021    DocuSign Inc.
DOMO      17.15     97.70    82.4    08-26-2021    Domo, Inc.
BEEM      13.39     73.78    81.9    12-31-2020    Beam Global
APPN      42.89    235.24    81.8    01-27-2021    Appian Corporation
EVBG      31.31    166.82    81.2    02-24-2021    Everbridge, Inc.
PLTR       7.37     39.00    81.1    01-27-2021    Palantir Technologies Inc.
OKTA      55.26    291.78    81.1    02-12-2021    Okta, Inc.
FATE      22.47    117.40    80.9    01-14-2021    Fate Therapeutics, Inc.
RIVN      33.33    172.01    80.6    11-16-2021    Rivian Automotive, Inc.
SQ        55.93    281.81    80.2    08-05-2021    Square, Inc.
SITM      80.36    334.98    76.0    12-08-2021    SiTime Corporation
LCID      14.31     58.05    75.3    02-18-2021    Lucid Group, Inc.
ARKK      38.61    155.30    75.1    02-12-2021    ARK Innovation ETF
SPWR      25.18     97.94    74.3    11-06-2007    SunPower Corporation
PINS      23.21     89.15    74.0    02-16-2021    Pinterest, Inc.
NET       56.86    217.25    73.8    11-18-2021    Cloudflare, Inc.
MTCH      48.56    175.53    72.3    10-21-2021    Match Group Inc.
ALGN     217.95    729.92    70.1    09-08-2021    Align Technology, Inc.
BLNK      18.63     60.72    69.3    01-26-2021    Blink Charging Co.
NEOG      14.97     48.33    69.0    04-20-2021    Neogen Corp.
NTLA      57.08    176.78    67.7    09-03-2021    Intellia Therapeutics, Inc.
AYX       60.81    181.98    66.6    07-09-2020    Alteryx, Inc.
MDB      198.20    585.03    66.1    11-16-2021    MongoDB, Inc.
BEAM      48.15    133.60    64.0    07-01-2021    Beam Therapeutics Inc.
SPLK      83.28    223.59    62.8    09-01-2020    Splunk Inc.
ESTC      70.77    186.78    62.1    11-16-2021    Elastic N.V.
BILL     130.16    342.26    62.0    11-09-2021    [Bill.com](http://Bill.com) Holdings, Inc.
PD        22.32     57.37    61.1    06-14-2019    PagerDuty, Inc.
SMAR      33.23     84.41    60.6    02-12-2021    Smartsheet Inc.
LICY       6.07     14.25    57.4    02-17-2021    Li-Cycle Holdings Corp.
DT        34.09     78.76    56.7    10-22-2021    Dynatrace, Inc.
ZS       162.56    368.78    55.9    11-19-2021    Zscaler, Inc.
DDOG      89.44    196.56    54.5    11-09-2021    Datadog, Inc.
VEEV     162.87    341.00    52.2    08-05-2021    Veeva Systems Inc.
TEAM     220.69    458.13    51.8    10-29-2021    Atlassian Corporation Plc.
IRTC     129.42    268.46    51.8    01-20-2021    iRhythm Technologies, Inc.
ISRG     191.08    365.42    47.7    11-08-2021    Intuitive Surgical, Inc.
APPF      98.73    184.32    46.4    12-28-2020    AppFolio, Inc.
CRWD     161.28    293.18    45.0    11-09-2021    CrowdStrike Holdings, Inc.
LSCC      49.35     84.99    41.9    11-16-2021    Lattice Semiconductor Corp.
ROST      86.59    130.56    33.7    05-07-2021    Ross Stores, Inc.
QCOM     123.68    186.46    33.7    12-15-2021    QUALCOMM Inc.
ODFL     244.38    363.24    32.7    12-07-2021    Old Dominion Freight Line, Inc.
^IXIC 11,066.81 16,057.44    31.1    11-19-2021    NASDAQ Composite
SPSC     119.52    173.12    31.0    10-28-2021    SPS Commerce, Inc.
TSLA     288.59    409.97    29.6    11-04-2021    Tesla Motors, Inc.
CYBR     147.89    198.81    25.6    11-09-2021    CyberArk Software Ltd.
V        185.70    248.82    25.4    07-27-2021    Visa Inc.
MA       298.22    396.75    24.8    02-02-2022    MasterCard Inc.
^GSPC  3,757.99  4,796.56    21.7    01-03-2022    S&P 500 Index
^DJI  30,076.68 36,799.65    18.3    01-04-2022    Dow Jones Industrial Average
AAPL     152.74    181.26    15.7    01-03-2022    Apple Inc.
ENPH     283.63    320.62    11.5    09-14-2022    Enphase Energy, Inc.
QLYS     144.79    160.02     9.5    09-12-2022    Qualys, Inc.

The Captain

7 Likes
2

Teladoc (TDOC) down 90.5%
Fool darling Stratasys, Inc. (SSYS) down 89.3%
Zoom Video (ZM) down 86.9%
Align Technology (ALGN) down 70.1%
MongoDB, Inc (MDB) down 66.1%

Stock comp is distorting these moves, imo.
Stock price may be down 90%, but what is MDB mkt cap now compared to 4 years ago, and how does that delta compare to their price now vs 4 years ago.

Always told stock comp doesn’t matter, but when you think the stock is “cheap” because price is back to 2018 levels, yet mkt cap is double or triple from 4 years ago, maybe it isn’t so cheap after all.

Dreamer

3 Likes
3

Dreamer,

Nice post!

See Benjamin Graham’s Intelligent Investor with forward by Warren Buffett. In the appendix is a table of tech companies that are successful. Two out of thirty, the rest were gone during the study. Tech companies usually do not last. There is a downside.

1 Like
4

In hindsight clearly the market was in a bubble.

The market was only in a bubble because China is still doing zero-Covid and screwing up the supply chain, Putin invaded Ukraine causing an energy crisis, and the Fed believes inflation is the top priority and so is making money expensive. Valuation metrics like p/e seem bloated because earnings during the pandemic declined while there were optimistic expectations of a resurgence in revenues post-pandemic.

This seems to be a recession driven by external events rather than weaknesses in the market, which means that I think the downturn in stock prices may be less than everyone seems to be predicting. This is also suggested by the fact that everyone seems to be predicting a huge crash, contrarian that I am. I am slowly dollar cost averaging into companies with lots of cash/positive cash flow. Very likely that companies like Amazon/Google/Berkshire/Apple will come out of a recession stronger than their competition.

One big wildcard is China. I think China does have structural weaknesses in its economy, which may put at great risk US companies who staked much future income on the Chinese market.

2 Likes
5

The market was only in a bubble because…

So you agree it was in a bubble? Charts clearly show that many stocks were in a bubble

TDOC: https://bigcharts.marketwatch.com/advchart/frames/frames.asp…

On the other hand, Tesla was in less of a bubble

https://bigcharts.marketwatch.com/advchart/frames/frames.asp…

The Captain

6

So you agree it was in a bubble?

A “bubble” implies irrational valuation. I think the companies I was following were priced in the high range but still within the bounds of what could be justified. Sudden drops in the market doesn’t mean companies were overpriced if one can find external explanations. There seems to be several obvious explanations for the current market behavior that has little to do with changes in company quality or performance.

I think the market was rationally pricing companies on the basis of the expected post-pandemic recovery and then subsequently rationally pricing companies in the aftermath of China lockdowns, Ukraine war, and Fed actions.

Other than stuff like crypto and gamestock, I don’t see irrational exuberance.