zondag 11 juni 2017

Tech Wrecks Are Irrational And Can Last Longer Than You Think

Back in 2014, I underwent my worst drawdown of my life. Here's a blog I had written then, lamenting over my situation;
# The majority of my holdings are in 4 stocks: WDAY, FEYE, SPLK and YELP. I bought them because they were growing their revenues and were winners, led by fantastic management teams. All of that means absolutely nothing today, as this basket of hell, death and aids netted me losses in excess of 10% (that’s right, 10%, for the day). I am beyond words. This is more than what I signed up for and ponder to myself the very meaning of life. As a general rule, I sell after 10% losses. This time around, I rode these stocks straight down the toilet bowl and now swim with them in the raw sewage, with the rats and alligators. I sold out of some small positions today, CLIR, FLXN and ANGI. But the money raised from those sales do nothing for me, as I am completely decimated amidst a crowd of geeks laughing at me for being so stupid...

With today’s sales, I could average down in these stocks again; but the life has been drawn out of me and I am giving up. I won’t sell. However, I intend to drift away on a small piece of wood, into the sunset, without any paddles or provisions. It was just meant to be, a fantastic blow up, broadcasted live in a public forum for all to scrutinize. Please do not let my newly found tone of pathetic contrition stop you from poking fun at my state of affairs, as I would not grant you safe quarter if the scenario were reversed. The reality is the market eats its young and spits out the old men from windows. It’s never personal and just because you suck now and lost a bunch of money, that doesn’t mean you can’t regroup and rise again from the ashes. Greed is a wonderful emotion, but it cuts both ways. You get to make all of that money during the good times, but suffer, abhorrently, during the bad.
# Bottom line: Assess the damage and stay in the game. For me, the market crashed today, and funnily enough, it’s barely down 1% for the year. Fuck me running sideways with a pineapple. Looking back on that post reminds me of the perils of hubris and how success can, in fact, defeat you.
*) On Friday tech stocks, led by Semiconductor, Broadline, crushed traders. The decline was steeped in retribution, cast upon fast trading monkeys by old money bastards. I know for a fact, 'they' don't want you to success. The market is a casino and the house prefers to win. I've read comments by people jumping into the decline, hoping for a bounce. Here is what the Exodus oscillator is saying...


Based on what I'm seeing above, the sector looks somewhat oversold. But that's under normal conditions. Those oscillators are useless in a six sigma event. For those who forgot, let me show you the severity of the drawdown during the tech wreck of 2014...


I recall doing a post, highlighting the losses of early 2014, which displayed a sundry of popular tech stocks down by 30-60% inside of a few short months. The point here is to expect the unexpected during times of duress. Is this the beginning of an extended pullback in tech? Maybe. From a market cap standpoint, tech now represents more than 25% of all stocks, or $10 trillion. I cannot recall the weighting being so high, so you should expect a reversion to the mean in the not-too-distant future. 
# Here I documented corrections from 1998-2000 and a case study of SCMR during the dot com crash....

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