RE:A NOTE OF CAUTIONAre you ready? It's going to be a very rough ride. Read #4 below, and then the next one (also says #4..should have been 5). Massive tax hikes? Now, guess what the big headlines are today.
CLICK HERE TO READ Now read this article from Barron's, posted just 5 hours ago.
CLICK HERE TO READ Sheesh, with all these clouds forming, it almost looks like time to short the whole S&P. Oh, wait, I already did. ;)
Homestench, Weed, how's your $44 Weed shares doing from a few months back? Oh, wait, never mind. DEAD MONEY. ;)
Starsearcher80 wrote: This is not a comment on WEED per se. I've already made my position clear, having sold at $44 a couple of months ago now.
Whether you're a trader or an investor, you need to look at your stock in the bigger context of the broader overall market. Personally, I've thought the market was overdone for a couple of years now, but now it's essentially lost its mind to now be at levels that are at best artificial. Flat out, this market is now dangerous. It doesn't mean you can't make money. Just that you're going to have to be even that much better, essentially peeing in the wind. I'll explain:
There are some major forces now in play that are going be ending the 12 year party that has been going on. In no particular order:
1) The current bond market is only stable becuase the Fed has injected about $80 BILLION per month. This was necessary during the pandemic, but as the pandemic ends the Fed withdraws. Look for what is commonly referred to as a "taper tantrum". The Fed's disccusion tomorrow at 2pm will be important, and any words that suggest Fed "easing" will be taken to mean the party is over.
Realistically, the Fed has no other position at this point to ease. It won't be immediate, but they will "nudge" into their forward guidance.
2) Bond Market: As the bond market rises, interest rates rise. This will be allowed to happen to keep some throttle on the market as we go "post pandemic". Growth is one thing. But if it leads to inflation, as is now being expected, the market reacts by putting money into bonds and taking it out of stocks.
3). The U.S. debt: If it wasn't insane already, it is now completely out of control, now over 28Trillion. The amount of tax dollars just to service the debt is completely unsustanable. If interes rates rise, it gets even worse. There will be tightening. How/where/when remains to be seen.
4) Corporate Tax Cuts from Trump: This absolutely juiced the market the past 3 years. The idea was that this tax break would have companies expand, creating more jobs, therefore more tax revenue. It did work somewhat, but far more money went to stock buybacks, which didn't help jobs nearly to the extent hoped. It did absolutely juce the market though, artificially.
4) Biden will raise taxes: He's already announcing this, but the market is still in giddy-mode and is trying to ignore this fact. Ultimately, it can't be ignored. Especially if he wants to a big infrastructre spend, he'll have to raise that money, let alone to try and do something about the debt. The days of "let's just raise the debt ceiling are now effectively over.
5) Stimulus money: This was much needed money, but it did add further to the debt. As the pandemic becomes a thing of the past though, watch for new and very difficult realities to come in. Right now there are all kinds of "zombie companies", only viable with the stimulus money put in. They are the walking dead, and when this money ends, they will not even be the walking dead. Additionally, people will have to pay things like rent money, that they didn't have to pay for the past year. It's not forgiven...just delayed. Well if they're now in a rent-hole, they're sure not gonig to be spending in the broader economy. This is where the Pandemic legacy will come in. The Pandemic will end. The economic legacy will go on for years.
6). Back to the debt, there were any number of countries that were in financial trouble prior to the Pandemic. It will be interesting to see how that manage having spent money they didn't have ove the past year. Look no further than countries like France or Italy.
So what does this have to do with WEED? Of course the resident Clowns would say "nothing at all. To the moon!". The smart investors however will consider this backdrop and its future implications on this stock and every stock.
Now, get ready for the Clowns to all chime in. They are just SO SO predictable! ;)