What's going on today?

If you tune into Bloomberg or CNBC you'll see them asking the same questions.

Today markets are down globally, some people blame semiconductor shortages, some blame inflation, some blame covid, some blame China relations.

In truth, nobody knows for sure, but what I can confidently say is that it's a mixture of everything. I've mentioned in a few posts that this year is going to be rocky, not just rocky, but perhaps the most volatile year I've witnessed.

The core of what's driving it really is increasing liquidity across markets. Everyone and their mother has started investing in the past 12 months, where else is all that freshly minted cash going?

Bear with me, this part is going to feel pretty unstructured, but let's think it through.

At the start of the pandemic people fled to "safe haven" assets - gold, Yen, Silver, Bitcoin and volatility hedges. Quickly people realised this wasn't enough, money was rapidly taken away from airlines, cruiselines, casinos and anything else "physical" in favour of tech and stay-home stocks. By the middle of 2020 the valuations for many of these companies were getting steep. That's when cryptos started bubbling up. It was only back in November that Ethereum was trading below $500. At the same time renewables rallied hard following Biden's election. By the time we got to 2021 retail investors were joining in a big way, and they were betting on "meme" stocks and low-caps. Gamestop was at the forefront, and the value recognized by WSB quickly lead investors to buy up anything that could be perceived as a "value" play while the media talked of re-opening and vaccine success. Just weeks later, we saw the bond markets erupt into chaos. yields went through the roof because everyone was expecting inflation, and why would they buy treasury bonds when they won't even out-perform cash? Then there's the semi-conductor situation, the US and Europe throwing money around to trying and lure the industry to their shores as shortages cause problems across various sectors, again shifting the attention of investors.

This constant rotation in the search for alpha, while trying to run away from anything considered over-extended is ramping up in speed, and increasingly investors seem unsure on where to deploy capital.

What's driving trades at the moment is fear, not logic.

I want to reassure you all that I'm still observing the situation from a place of cold hard logic.

Of the companies I'm invested in, the majority beat their earnings expectations comfortably, many increased guidance too. My outlook on covid remains unchanged from the start of the year. Re-opening of economies will happen, but not in something we could really call normality. Many brick and mortar companies will struggle. Stay-home stocks will continue to do well, but ultimately, covid is probably going to stick around for at least another couple of years, if not indefinitely. Interest rates will remain steady, and stimulus money printing machines will remain firmly in print mode for at least the next 6 months.

So, while many investors run from one corner of the market to another, over and over, my plan is to keep it simple and stick to an allocation that I expect to do well and generate growth over the next year or so.

My biggest holdings really summarize things well.

$AMD (Advanced Micro Devices Inc) - They smashed earnings and they are currently trading lower than they were 9 months ago despite growing revenue and profit by almost 60% YoY
$PTON (Peloton Interactive) - A similar story, their earnings are due in a few days, they have huge growth and one of the best brand loyalty scores I've ever seen, they will continue growing as people continue working at home.
$MSFT (Microsoft) - They also beat on earnings recently with every sector of the company, from gaming and cloud, to laptops and office doing fantastically.
$ETSY (Etsy Inc) - They were doing great pre-pandemic, and they are well positioned to continue growing regardless of how covid unfolds.
$F (Ford Motor Co) - A small hiccup in production due to semi-conductors over-shadowed one of their best quarterly earnings in the past 5 years. I wrote a post about Ford recently, but it's worth mentioning their investment in Rivian, Argo AI and the partnership with VW too.
$CRSR (Corsair Gaming Inc) - Corsair is next, some consider it a meme stock, but in the age of livestreaming they dominate the hardware space and have growing efficiencies due to acquisitions over the past few years. Obviously great for gaming too.
$ORSTED.CO (Orsted A/S) - Orsted suffered low wind speeds, but in my view they offer the most diverse single-stock exposure to all things renewables, they might be the single cleanest company on earth too.
$GRMN (Garmin Ltd.) - I wrote a post about too, they also totally destroyed earnings expectations

I'm out of characters again. No part 2 this time, the point is, my companies are well researched, and regardless of market fluctuations their businesses are doing great. So keep calm, let's wait for the markets to come to us instead of chasing it.


Questions welcome
by Jaynemesis
etoro trading stocks crypto
www.etoro.com/people/jaynemesis

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