Popular tech stocks like Nvidia, Facebook are getting smoked as investors rotate into bank names
https://www.cnbc.com/2017/11/29/popular-tech-stocks-like-nvi…
I’m gonna guess this is a panic over North Korea. What doesn’t make sense is why folks think a bank stock will withstand a nuclear blast better than a tech stock.
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That was my initial thought as well, however, when I searched for news the article above came up. Also found another article with a similar explanation: https://www.reuters.com/article/us-usa-stocks/nasdaq-drops-a…
Its happened before and it will happen again. If I learnt one thing from the great people on this board is that if you believe in the Companies you have invested in, stay the course until the story changes. In the meantime, don’t look at the screen, the TV etc. Go outside, enjoy your family your friends, take a walk, whatever. On that note, off to the nearest boozer.
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I’m gonna guess this is a panic over North Korea
It’s more likely now than ever that pre-emptive military action will occur before the end of January. This won’t be pretty. This is not Iraq again.
It’s the tax bill, Powell and mkt rotation, nothing to do with Korea or Brexit.
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Did somebody say sector rotation? I think I did… Yes I did. This morning!
Sector rotation also happens. Right now high tech is golden but at some point it will lose some of it’s luster as investors start lusting for something else.
http://discussion.fool.com/buy-the-best-sell-the-rest-that-sound…
LOL
Denny Schlesinger
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I am wondering how that works…the tech were in favor up until yesterday, and today they fall out of favor?
the big money movers decided that just now? Isn’t that preposterous? Tell me another story. No not North Korea…
tj
I am wondering how that works…the tech were in favor up until yesterday, and today they fall out of favor?
the big money movers decided that just now? Isn’t that preposterous? Tell me another story. No not North Korea…
South Korea? LOL
You got to follow the news. This out yesterday but the Morgan Stanley report must have been earlier, worming its way through the market…
Warning On Semiconductors
Samsung Electronics Shares Drop 5% After Morgan Stanley Sees Chip Boom Peaking
28 November 2017 - 9:30am
Cho Jin-young
Samsung Electronics Co. shares fell more than 5 percent due to “Morgan Stanley shock.” The main Korea Composite Stock Price Index (KOSPI) closed above 2,500 for the first time in a month. As Morgan Stanley expressed concerns again that a boom in memory chips is likely to peak soon, investors sold their Samsung shares for profit making.
[snip]
An increasing number of market experts show concerns over the peak in the semiconductor industry, which is rising with the super cycle boom. More and more of them also say that the downturn in the semiconductor industry will come faster than expected.
http://www.businesskorea.co.kr/english/news/ict/19941-warnin…
BTW, even though I had seen these news earlier, my replay to Raptor Dan was not based on it but on the generality that sectors rotate. Big boys like Morgan Stanley and Goldman Sachs don’t make money from people sitting on their portfolios but from the churn. I would not at all be surprised that the big boys felt in need of some sector rotation churn. 
Denny Schlesinger
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BTW, even though I had seen these news earlier, my replay to Raptor Dan was not based on it but on the generality that sectors rotate. Big boys like Morgan Stanley and Goldman Sachs don’t make money from people sitting on their portfolios but from the churn. I would not at all be surprised that the big boys felt in need of some sector rotation churn.
Agreed 100%
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There is also the end of the year factor. Portfolio managers have, just like us, had great returns this year and unlike us they have a tendency to lock some of that down for their year end reports.
A lot of re-balancing going on I suspect.
Mike
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Big boys like Morgan Stanley and Goldman Sachs don’t make money from people sitting on their portfolios but from the churn
This is baldly false and prima facie absurd. GS makes almost no money on PCS equity trading commissions, and the even smaller % of that they would make in a day from selling SQ and moving into CALM wouldn’t pay the paper clip bill.
All transactional revenues on ALL Inv Mgmt accounts - generally mutual funds and hedge funds but also expensive products like high-yield comes to a grand total of 2% of revenues according to the Q3 release.
Equities are 20% of those assets, so 0.4% of total revenues. An extra equity trade or 5 makes that a completely negligible amount of the $168m total for the division for the Quarter, on top of being blatantly illegal.
Stick to talking about what you know, Denny. Defamatory accusations are beneath you.
Individual investors don’t move the markets down 5-10% in stocks with $10-15Bn+ market caps like SQ or ANET or SHOP.
And they never will.
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Portfolio managers have, just like us, had great returns this year and unlike us they have a tendency to lock some of that down for their year end reports.
A lot of re-balancing going on I suspect.
Mike
Also, hedge funds are raising money for year-end redemption. Anything after Xmas there’s going to be no volume so any selling must be completed btw now and the 21st in all likelihood, so about 16 trading days.
Guys who made 25% in Square in a few weeks are going to take that rather than risk losing those returns btw now and year-end. Plus they can just as easily buy it back next year if they believe it’s a long-term winner.
Loss aversion is huge in this industry and then combine that with the utterly random performance deadline of 12/31 you get measured by, plus tax changes…it could get wild out there for a few weeks.
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NajdorfSicilian,
“Stick to talking about what you know, Denny. Defamatory accusations are beneath you.”
I personally find your response to Denny to be repulsive and condescending. A little more kindness and class would be nice…then I could hear what you are trying to say.
Thanks,
Jim
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not sure it matters, but naj called the accusation defamatory, not the poster. I guess he could have used the politer word ‘inaccurate’ but…
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OK, I too am getting hammered today just like most folks that follow this board. But here’s the deal, about a week ago I crowed about being up 97% for the year. Today, after the market closed, I’m up 83% for the year.
I’d still be crowing about that. It is still wildly beyond anything I ever expected.
Is the bleeding over? My guess is no, I (we) may see additional net loss over the next week or so. A lot of algorithmic trading has obviously kicked in and there likely will be more. And it’s likely that the human traders are spooked and will place sell orders before the bargain hunters enter. It’s just the way it works.
But, nothing significant has changed with the companies I own. Nothing significant has happened with the economy. There is the potential that the tax bill will get approved, but it could just as easily fail. Irrespective of which was it goes, I have trouble making the connection between whatever happens with taxes and my specific investments. So far as I can tell, the businesses I own aren’t folding their tents. Their customers are not abandoning them - in most cases they have no place to go that’s better than where they are.
The end consumer, well they might take a hit with the tax bill. I don’t want to take a political position or start an argument. I’m just going with what the CBO has already reported. I imagine there’s some folks on this board who will benefit, but most of us average people will see our taxes go up. I’ll suck it up. I don’t have a choice. No one else does either. Overall the economy might slow down a bit, but it won’t be cataclysmic. And it will slow down across the pretty much all sectors. Yeah, banks might raise their rates, but if fewer loans are taken out it’s not going to help the bottom line a great deal.
So by year end what if I’m only up 70%? Should I feel bad because I was up a lot more at one point? Should I feel good because it’s still 3.5 times better than my annual 20% goal?
Should I sell the stuff least hurt to buy stuff down the most - There’s a thought. I’m not going to do anything rash right away. But, I’ll keep my eyes and options open.
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I personally find your response to Denny to be repulsive and condescending.
I bet you’ll get over it. I also find your response condescending. He lied – either knowingly or through pure ignorance – about tens of thousands of hard-working Americans. I find that inexcusable and utterly classless.
There’s an ignore button if you don’t like the facts I posted. Use it in good health!
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Additionally, virtually all PCS salesteams at those firms have moved to a flat-fee% model so make nothing on any stock or bond trades. Only when AUM goes up.
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But, nothing significant has changed with the companies I own. Nothing significant has happened with the economy
I hear what you’re saying, and in a more perfect world I would even agree with you, but this is an overly facile analysis.
Valuations, can, and do change – and they can change on a dime. Companies go from 25x sales to 15x to 10x to 5x to less in a hurry. Same company though!
Nobody buying Amazon at $110 in 2000 thought it would go to $10. The correct thing would have been to hold but nobody could ever have envisaged what Amazon has become - AWS for example. No cloud profits in 2000!
Then there’s counterexample of Valeant - nobody was buying that at $265 ever ever thought it could drop to $10. I won’t even bring up Lehman or Bear.
You don’t get to determine what a stock is worth – the market does that. We can disagree all we want, but that will never make the price go back up to our individual guess at ‘fair value.’
Look at Wynn Resorts - 100 to 250 to 50 to 155 in 5 years and not a single major thing has changed in the casino industry since the Wheel of Fortune-type slot was invented 20 years ago! Their Macau openings were telegraphed years and years in advance. People got overly excited, then overly pessimistic and now…maybe the right price? It’s impossible to know.
Perceptions change just as fast of the future outlook of the economy. That’s why recessions are so bad for the market - you get declining EPS alongside declining valuations. So people sell now in fears/hopes of avoiding that outcome 6 months from now.
The market is, and always will be, a discounting mechanism of 6-12 months. Saying ‘Nothing has changed’ misses the mark.
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Stick to talking about what you know, Denny.
Thank you kindly for your unsolicited advice. I seem to have hit a raw nerve.
Denny Schlesinger
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