The question to ask is not where the indices are going?
The question to ask is if the tech or other stocks you own can generate the enormous growth in the long term to be worth the price of today, and for some it is yes but for many it is no.
In this thread, I have shown which ones are poised to be affirmative and which are destined for no.
Reversion to the mean is only going to happen at some point, if it has not already started.
The ones to be really careful about are the fresh idea concept stocks that are great on promises but have yet to show any business traction let alone revenue outcomes , and market participants tend to be overly carried away that those so-called collaborations and pilots have near term outcomes, in reality it may well take years to fruition if it ever does. Fastbrick Robotic (FBR) is one such stock alongside BRN and YOJ, since FBR has announced its Brick As a Service (BaaS) programme as replacement for its failed robotic construction business model, it still has generated no revenues, the only income it received are interest income on capital raised from shareholders and Government grants totalling $300+k while it doles out $1.6m in share payment expenses to its directors.
As I have said many times, you do not judge a stock based on its share price movements. Fine if you are speculating but do not delude yourself thinking that because the share price has surged so high, it must be the best stock in town and therefore worth investing for keeps in the long run, and worse double the stake as it goes lower. And if you do not take profits while they are there, then you will only regret having that delusion. Sir Issac Newton's South Sea Bubble (see previous post) tells you exactly this.
Therein lies the dichotomy between investing and speculating. The latter is based on quick gains centred on a widely disseminated and held belief (correctly or otherwise) coupled with FOMO behaviour and desire to make a fortune out of holding to that premise paying no due regard to the company's track record nor fundamentals. The former is based on well founded basis of buying a stock based on its underlying value and future growth prospects based on macro driven factors that can contribute to a sustained outperformance of the stock over time, regardless of what the indices do. A good example of the former is a stock like NST and CHN, if you map its chart to what the share market and gold price does, you would be amazed. Over time, they do not care what the indices nor gold price does in any direct proportionate correlation you may expect.
One must understand the distinction between manias. Tesla may well be described by many as irrational exuberance or mania. But the only thing one can question about Tesla is its overripe valuation, while you cannot dispute that it is probably the best and strongest EV franchise in the world, you cannot dispute that EV will be replacing fueled vehicles very quickly over the coming 5-10 years. So there is still a basis for Tesla's price action, the only thing is if it has overshot in the short term. On that, the answer is a resounding yes but Tesla will be a great long term stock because of the EV phenomenon. EV is no longer a concept, it is real, it is selling and growing strongly. This is so different from the mania around tech stocks with a technology that has yet become a reality but may become one. So understand what you buy and dont assume anything. If your stock is already trading at substantial premium to its tech peers in a peer comparison and has yet any business traction, one should understand that that premium is essentially speculative premium, and they deflate quickly as speculators start exiting in droves, worried about the uncertainty and its lack of fundamental underpinnings.
Most of the growth stocks need to show enormous (almost impossible) growth in the long term to be worth the price of today. (Source: Insider Opportunities)
(Source: Insider Opportunities)
