Week to Week-3
Pain.
The past two weeks have been absolutely horrendous and have led to me “losing” almost $2500. Every single stock/etf I am holding has gone down and the only solace I can find is that I am not alone in the period of red. Going through comments and posts on Reddit, its evident that every trader is down bad right now and some investors have lost almost half of their portfolio’s value.
I guess this had to happen. So much money was created out of thin air last year that as soon as the Fed stopped pumping money into the American economy, everything went south. I feel like so many stocks were overvalued last year and so many of the gains were “faux” because we were living in a trading utopia. Now that Jerome Powell has decided to hike interest rates, even if it is to 0.75%, several traders are almost over-selling and all of the stocks are down. The Tech stocks have taken the biggest beating with the NASDAQ almost down 10% ytd and we’re only 3 weeks into the year.
I recently saw an interesting graphic, comparing the pattern of the S&P 500 ETF in 2008 and 2022 and the resemblance is uncanny. Also, how did Netflix go down 22%!!!
But enough about how the economy is doing, let me give you my 2-week-to-2 week update.
NEW PURCHASES:
It’s not really a new purchase but TQQQ did recently split its stock 2–1 and now I am holding 12 TQQQ stocks at a $300 loss, so that’s great.
WHAT’S NEW IN THE MARKET:
Microsoft woke up feeling dangerous as they decided to buy the AAA game developer Activision Blizzard for $68.7 billion in a bid to buy up the gaming industry for their Netflix-for-gaming Xbox Game Pass.
MY REPORT:
NEW STRATEGY?
If there is any positive from all the stocks going down, its that now is a good time to buy the dip and average my prices. That would be a good idea if:
1- I had the funds
2- The stocks were truly undervalued
The entire idea behind buying the dip is that the stock/index/whatever it is, which has gone down, is now undervalued and the only way for it is to go up. This might not be completely true, atleast not in the current climate of the market, because what is happening in the market right now is a correction. The market was riding high last year after a historically poor year in 2020 and 2021 served as the rebound year. Stocks like Pinterest, Etsy and Wish, none of whom had the business fundamentals to soar to the prices, all came falling down and their current price still looks a little overvalued.
Most of the prices that I paid for my investments seemed good at the time because they were good prices but were still overvalued as signified by TQQQ splitting 2–1.
Stocks like Apple and Microsoft which were previously comparable to savings accounts where you could maintain a DCA strategy and make a good profit at the end of the year are stagnating and seem like poor investments for anybody looking to make money right now. Nike even dropped to its pre-pandemic numbers and Peloton(LOL) is currently trading at its 3 year old IPO price.
That said, maybe I should just be patient and wait for the situation to improve and hold all of my stocks and maybe just buy $1000 worth Netflix seeing that its fallen massively.
FIN:
I am not really sure what my next step should be. I could buy some more and completely exhaust my funds but I want to be 20% liquid. Moreover, it seems like the only solution for times like this is to wish that you miraculously wake up 2 months later and your portfolio is up 20% and everybody loves you.
Thank you,
Anuj.