I know what happened yesterday – Wednesday December 18.
The market crashed.
Here’s the last two days. The chart looks more dramatic that way. All three — Nasdaq, Dow and S&P 500.
I think I know what happened. The market took umbrage at the Fed saying it was only going to drop interest rates twice in 2025 – not the four times that people had believed from previous Fed intonings.
I’ll buy the peoples’ disappointment. But not their “logic.”
My main holdings are in The Magnificent Seven, which are selling more and earning more – but not borrowing more – or less. In fact these guys are rolling in cash and don’t borrow money. Interest rate drops may cost them a few shekels in interest. Bu won’t cost them more (or less in borrowing). And won’t affect their burgeoning earnings.
What they are doing is spending oodles on data centers crammed with Nvidia chips and smattered with a handful of their own chips which they produced for sundry half-crazy ideas – like weaning themselves off Nvidia, or making themselves something “special” that would work in some special (loosely defined) way for them.
The whole thing wreaks of equal parts fear and fantasy.
Maybe the fear/fantasy scenario also freaked out the hedge funds who dumped huge holdings? Maybe the hedgies feared for the next two weeks and figured they’d made enough for their returns to look good for 2024.
So sell.
Report nice numbers for 2024. And take the family skiing or to the beach for 2024’s remaining two weeks.
I could do that, too. I’m up nicely.
But then I’d have cash, a big tax bill, and a question:
With all that cash, what do I do?
I’d undoubtedly decide to buy back into the market – most likely the exact same stocks I own now.
That will be good. The stocks will be cheaper.
But will they be?
I’ve never been good at what they call “timing” the market.
In fact, I suck at timing the market. If I sell, it goes up. If I sell it’s guaranteed to go up. I have The Reverse Midas Touch.
My learned friend has sage advice: Never dump the date who brought you to the dance. The date, of course, was Nvidia. She’s still handsome and appealing, though she probably won’t grow as fast next year as she did this year. But who can?
Meantime, everything commerce-wise is humming nicely along. Employment is strong. Business is strong. Tourism is booming. At least from what we saw in New York’s Times Square last night.
We took one family to the theater and to a meal at Joe Allens. I’ve never seen the theaters so packed, the restaurants so crowded and the streets so brimming with tourists. We sat behind a Norwegian couple at – of all things – the Michael Jackson musical.
So, what will I do?
Absolutely nothing. Neither sell. Nor buy.
In coming days, I will have two choices: Sit and pray. Or sit and ignore.
I suspect I’ll sit and be depressed, as I was yesterday big-time after the Fed put its big foot in its big mouth.
Maybe we’ll get a bounce today? Maybe we won’t.
I’ll be back — Harry Newton
