Is there any logic behind this bull market – switching positions to Bear Gang

by friendly-cephalopod

I understand that in a bull market, especially given the current popularity of passive investment, stocks will continue to grow and time spent in the market will outweigh any short term losses

But this market has gotten absolutely ludicrous and with today’s rally on “Trade War optimism” I am switching to Bear Gang

Here are my reasons:

  • We are hitting ATHs today despite the China tariffs, inverted yield curve, and major European countries on the verge of recession. All because there is a scheduled meeting in October? What even is the logic here, that we will come out with an even better trade agreement than before the trade war? We have a senile old man with dementia at the helm of this ship, we will be lucky not to Titanic if this meeting even happens
  • We have an upcoming election in which many of the potential Dem candidates are talking about invoking antitrust laws and breaking apart large corporations along with stricter regulations, taxes on top 1% etc. This might be good for consumers but the market will be slammed by a Dem victory in the next election.
  • Every news outlet/analyst points to unemployment and consumer strength/optimism as reasons the economy will continue to grow at the current rate. They completely ignore that these are lagging indicators. Consumers will continue to spend money until their job is in jeopardy or gone.
  • There are hundreds of stocks that have insane value growth in the last 3 years that does not reasonably correlate to revenue growth. Some examples are TGT, up around 100% in two years despite revenue increase of only about 7%. HD up 60% with revenue growth of only 8%. AAPL up 50%, MSFT up 80%, PYPL up 90% WMT up 50%. People are just throwing their money into these retirement stocks without even looking at the potential upside. PE ratios have to come back down to reasonable levels eventually.
  • There are a large number of shit tier companies getting completely unreasonable valuations. Someone please tell me how WORK, UBER, LYFT, DOCU, SNAP, MDB will ever turn a profit. These are companies that lose hundreds of millions of dollars a year, it is only a matter of time before they default. Fucking We Work has a valuation of 47 billion on their company heading into IPO. What reality are these people living in?
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Sold my bullish positions. Going long on Gold and Silver, especially on the dip today

Also buying long dated (Jun 2020) PUTs on sh*t stocks like GE, LULU, WFC. My assumption is these will be murdered by a recession. Might also buy TGT puts because I think the recent spike is unreasonable.

 

 

Disclaimer: Consult your financial professional before making any investment decision.

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