Yesterday? Pure POMO.
Today? Fake FOMO, imo.


Like acronyms?

I call BS on today’s rally. This BMR will hopefully die soon.
My eyes can’t roll hard enough for the market/news cycles telling me it is the end of the world one day and then MSFT and GOOGL both miss top and bottom, and then market rallies and we are told everything gonna be just fine.

Yes, cloud will grow.
No one is disputing that.

Yes, DDOG deserves a higher multiple than majority of stocks.
I am certainly not disputing that.

But if most “growth” stocks decompress down to multiples in the 5-15 P/S range, does DDOG need to be at 25, or is something like 17-18 more realistic. Still a premium.

So that is the “sign” I think I am waiting for. We have seen a lot of stocks hit a 52 wk low in past couple of months. TWLO was at Aug 2018 levels, for crying out loud. All the former greats coming back down to Earth, and I think it is only a matter of time for the more current darlings to follow suit. Basically, I am looking for everything to be re-rated. Not all equally valued. That would not make sense. Rather, I want to see them all with the air let out of the balloons.

Then, the greedy side of me says “it always goes farther than you think” and that was (is?) true with everything from GLBE to PTLO to UPST. It is also true on both the downside and the upside.

So I expect we hit a “fair value” valuation level for growth and hyper-growth, and then perhaps it even goes a bit lower. I would want to start buying at fair value (think: Target prices I have in mind) and if it goes lower, then just add more as appropriate.

Only UPST at the moment is below my recent targets.
DDOG and others were making progress again yesterday, which was washed away so far today.
The day is early though.

I think August might be a helluva month.



FOMO wins the day!

Fed declares another oversized rate increase, says more likely coming.
In general, things not good.

The Market reaction? Just have everything go up 10%, and let ETH go up 15% for good measure.

Makes sense.

This is/continues to be market chop hell. It is a “Meh” market, for me.
We are back at Friday levels at moment.

Stocks aren’t too low yet, and aren’t too high yet.
Meh, indeed.


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I think August might be a helluva month.

Watch out for the next CPI results, reporting Wed Aug 10 for the month of July. Energy and commodity prices have been declining. The market could rally if the number suggests lower inflation ahead.

PCE inflation (which the Fed prioritizes) for June will be reported Fri, Jul 29, but unless the results are weird and different from the already released CPI inflation for June, I would expect the market to mostly look past this (famous last words).

Of course, plenty of earnings to come and we could have more war, disease, drought, fire, nuclear accident, flooding, a few hurricanes in a row, and so on.

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Watch out for the next CPI results, reporting Wed Aug 10 for the month of July. Energy and commodity prices have been declining. The market could rally if the number suggests lower inflation ahead.

Rationally, this makes sense, but market seems to do opposite of the news.
I think most expect inflation comes under control/declines.

In fact, the economy slowing and demand getting crushed leads to oversupply and then you have rapid deflation. Or so the econ wannabes online seem to indicate.

But inflation wasn’t really an issue in Dec 2018, Fall/Winter 2019, or Covid drops.
The narrative at moment is that the stock market is down solely due to inflation, but at a super-simplistic ultra-high-level view, I look at market like this:

  1. we had unsustainable multiple expansion in overall market and especially in “growth” from 2017-Feb 2020.
  2. Covid hits w/ black swan. Rates dropped, free money printed like mad, stimulus given out like candy. Stocks decide to just go parabolic.
  3. 2021 has a mix of some things (crypto, ad-tech, tesla) still going parabolic, especially early in 2021, and then the “re-opening” narrative kicks in for things like SPG. Basically the US markets say “Covid what?” and play dumb.
  4. 2022 spends most of the first 6 months letting the multiples contract back to #1 levels. But everyone thinks “omg, we are, like, totally, like, 70-80-90% off highs…total, like, bargains!”

Meanwhile, I am sitting there going “well…there is a reason TWLO is at 2018 levels, or OKTA back to 2019 levels, or ROKU, or TDOC, or ZM, or PINS, etc etc etc”

Folks are still telling themselves “my CAGR the past 5 years is X, and that includes my 200%+ gain in 2020” and they really think their average CAGR is normal, yet this 2022 drop is “unfair”.

Maybe this isn’t a BMR and the bottoms are in. Ok. So then what? You really just expect all those growth stocks to retrace to their extreme previous highs? Back to highs they never should have been at?

The momentum trading/investing strategy based on growth of today at Saul’s is not what Saul was doing prior to 2017. I find his success pre-2017 a lot more interesting, and probably sustainable, than just jumping on Stock X no matter what the multiple, because it is growing the fastest.

Not every company becomes AMZN or GOOG or NVDA. Social media stocks are built on a dangerously hollow foundation…there is nothing stopping all the consumers in the world from simply ceasing to use their products immediately, if they choose. META is right to try and pivot hard and leverage the massive ad monster they have, while they still can.

META has approx 2b DAU’s? I call BS on that, but either way, if you have 2b people in the world using your stuff, you won. Game over. Do the math…what does DAU growth look like from there? Gonna get 4b, then 8b, then more DAU’s than humans that exist? All babies using Instagram or WhatsApp? Huh?

Facebook DAU growth is akin to how I look at the momentum growth stocks…it was never reasonable to expect high-growth in a perfect linear fashion forever. And whatever the end state is, it always seems to be less valuable than the “potential” of the company on the way there.

How else do you explain ZM? It will take DDOG 3 years at current pace to match ZM annual revenues. Yet their mkt cap already same? So what happens if DDOG growth slows? Ouch.



Many good points, I agree.

Social media stocks are built on a dangerously hollow foundation…META has approx 2b DAU’s? I call BS on that…
Agree on social media. I don’t care for meta.

…unsustainable multiple expansion…
This and your other comments on valuation, of course, make sense - just look at the last 9 months. I still like software, but your concerns on valuation are valid.

In fact, the economy slowing and demand getting crushed leads to oversupply and then you have rapid deflation.
A deflationary environment favors high growth companies.

Maybe this isn’t a BMR and the bottoms are in.
If inflation moderates and supply shocks aren’t too wild, then the bottom could be in - but this doesn’t imply a big rally, could just go sideways. And the political realm (Putin imperialism and Europe energy mess, China covid response, the usual developing market chaos, rise of nationalism in developed world) is quite unpredictable. China could really be unraveling, or at least slowing a lot economically, which is deflationary for commodities. Can they really keep building apartment buildings that stay vacant?

My base case is to look at the last decade pre-covid: slow growth, low inflation, low rates - this is what the bond market seems to be pricing in. I would then add the wrinkle of various supply shocks, which can be substantial.


Like I mentioned last month, watch out for the upcoming CPI inflation release, on Sep 13. If it is moderate, stocks could rally.

Last month stocks briefly ticked up after the release, then peaked and marched back down. However, this month stocks are already lower after that selloff.

On the other hand, if inflation comes in hotter, look out below. But indications are that commodity prices are falling and economies everywhere are slowing, with associated slowing demand.

Maybe if there is a rally, it’s time to short. I haven’t had success shorting, very difficult to time, and the market seems to goes up in the long run.

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watch out for the upcoming CPI inflation release

Thanks for the heads up. These kinds of things cause issues for options tactics such as I am following, particularly with the weekly options. Under the current macro conditions, a CPI report is somewhat like a quarterly earnings report, except for the entire market. Can cause big moves. Since this report is 8:30 on Tuesday morning, I might make it a 4-day week again. Wait for the report pre-market and then decide on options, if any. Anticipated volatility is good for premiums, actual stock price movement not so good for sold options.

ZS earnings are AFC today, Thursday. I am exposed on that one, but only on the call side. If the price spikes I am rid of the shares I took last week.

It is a crummy market.



These kinds of things cause issues for options tactic

Agreed, something to watch for. I like to sell options as well.

What happens is,
trade makes little $
trade makes little $
market moves bigger then trade loses more $

and net outcome of all of that is a wash. But it’s entertaining.

Good luck.

Looks like “everything up” rally today. Closed out some short puts and reloaded (etf index, no single stock, no leveraged etf).

Both quality and non-quality up.

I’m focused on Tues CPI release for my next primary data point.

Will give 2% weight to any sentiment narrative, 2% weight on the idea of anchoring on prior 52 week highs and lows, prefer to focus on economic and company data releases.