The ups and downs and bubbles to crashes we’ve experienced in the stock market have been historic.
There’s been wild action as we headed into Covid in a Bubble-Blowing Bull Market and then a giant Blow-Off Top and now a Great Speculative Stock Crash.
Here’s a snapshot of where we are. I stumbled across this on Twitter last night:
“The JPEG I bought ain’t worth 1 Eth [ether] anymore. 1 Eth ain’t worth 4k no more. And $4000 ain’t worth $4000 anymore.”
People have lost money by speculating in digital images, cryptocurrencies, speculative stocks, index funds, bonds and even by just holding cash as inflation saps its value.
There have been a lot of ways to lose a lot of money — trillions — and we haven’t even seen one of the major cryptocurrencies crash to zero.
I don’t know if NFT JPEG images are ever going to have much long-term value.
I do think a few dozen, at most, of the current batch of 20,000-plus cryptos will be very valuable.
I think one of every 10 Speculative Stocks will turn out to be a great investment.
I think index funds will be OK but will struggle to match the returns that people have gotten used to in index funds during the last 25 years of mostly Bubbled Up stock market action.
I think Treasury bonds that yield 3% are OK, but the upside potential isn’t worth the risk that rates run higher from these historically low levels that they’ve bounced off this year.
I think cash is a better place to hide than most people give it credit for because it’s at least not compounding your potential pain with capital losses. Still, inflation at the levels we’re seeing these days means it’s not much comfort holding cash either.
On the other hand, there are five or 10 major Revolutionary Technology Trends that will create multi-trillion-dollar marketplaces in the next 10 to 20 years, and I do believe that finding the leaders in those industries is what will create fortunes in the next couple of decades, just like it did in the last few decades before I was even born as The Communications Revolution made radio, television and telephones a normal thing in everybody’s houses.
Those Revolutions, along with our current AI, Biotech and Space Revolutions, wouldn’t exist if the prior trillion-dollar Tech Revolutions that preceded them in the last few centuries before that as The Electricity Revolution and The Energy Revolution went mainstream.
We all realize the impact that The Bronze Revolution had, don’t we?
So, here’s what I’m going to do in the midst of this action, and my analysis around it:
I’m selling half of my Roku ROKU, +9.69% today on the big pop. We’ve made a nice gain here short-term as the company is rumored to be in a potential acquisition for Netflix NFLX, +1.83%. I like ROKU’s valuation here but if they’re willing to sell this company anywhere that’s not at least a double or triple from these levels, I’m not seeing enough long-term upside. I’ll let these rumors settle down a bit and then I’ll revisit the other half.
I’m buying more Intel INTC, -5.47%. One of the big investment bank analysts said he thinks Intel is going to have to pre-announce a bad quarter after he heard Intel’s CFO lament how the company needs to keep its head down to get through the ongoing supply chain and other issues that every company is dealing with in this strange post-Covid economy. In my opinion, Intel’s got a lot of bad news and warnings probably already priced into this stock as it trades near its 52-week low of about $40 with a 4% dividend yield. What if Intel’s actually taking market share as it does appear to be on the highest-end computer platforms that Nvidia themselves chose to use Intel’s latest chips for? I also bought a few Intel call options about 10% out of the money and dated out to July or August.
I think biotech is looking like it could start being a favored industry for the first time in a decade or two. The Biotech Revolution is going to cure many forms of cancer, prolong lives, enable people like my daughter Amaris who was born with trisomy 13 to live fuller, more mainstream lives. I’ve been starting to build a position in the iShares Biotechnology ETF IBB, +0.31% lately as I dig further into finding specific names in the industry to own for the next 10 or 20 years or forever. If you have a favorite biotech name or two, send them along, please, and I’ll dig in.
Cody Willard is a columnist for MarketWatch and editor of the Revolution Investing newsletter. Willard or his investment firm may own, or plan to own, securities mentioned in this column.