Investing can be fun, but it can also be bloody scary. I guess it all comes down to your temperament when bad things hit the fan. For example, I notice that I tend to sell a stock too early. By selling a stock too early, I had experienced missing out on huge gains. Also, whenever I get greedy in playing stock options, I would get slaughtered. Sometimes, the stock I invest in heavily would go way down. I tend to get slaughter when I buy puts of stock in thinking that stock would go down.
2020 is the year in which I think the stock market is acting incredibly weird. Out of nowhere, the COVID-19 pandemic spreads throughout the globe, causing the weirdness of the stock market to go on steroids. For example, in March of 2020, everything was going way down. In November of 2020, everything seems to be skyrocketed and unstoppable. Now, in December, somehow, I feel the stock market is somewhat sluggish. Still, the weirdness has yet to go away because I notice that a lot of retail investors push the valuation of newly minted SPACs out of proportion. For example, QuantumScape won’t produce solid-state batteries until 2024, and yet the market cap for this company is now above 20 billion dollars.
I feel like we’re revisiting 1999 when the Dot-com bubble burst. Nonetheless, this time I think it’s somewhat different since many SPACs are trying to merge with private companies that do have decent revenues. There always will be exceptions, and Nikola is one of these exceptions. Nikola has yet to produce a functional vehicle for the mass, but the retail investors at one point pushed Nikola stock over the moon. In September of 2020, a short seller known as Hindenburg Research targeted Nikola with a ghastly bashing report and got Nikola’s founder, Trevor Milton, fired. Nikola stock is now plunging steadily down.
As we speak, the interest rates are all-time low, the gold price is way high (around $1,800 plus), and the COVID-19 pandemic is still raging. President Trump is about to step down to allow president elected Biden to take over the administration in 2021. The dollar is slipping in strength. Unemployment is way high! Parts of the United States are in a lockdown state so people could have a social distance to fight the pandemic. Vaccines that could take on the COVID-19 pandemic is about to roll out soon. Things seem to be in limbo, and it could get worse. Somehow, the stock market is shooting way up! Is there a disconnect?
In the video right after the break, Deadnsyde Youtuber mentions that MicroStrategy’s stock price plunged so hard in 1999 might had been the reason that the Dot-com bubble popped in the first place. The surging of unfounded stock valuations of today’s stocks could also be the catalyst in which it may take only one over-valuated, well known stock such as Tesla to pop that could lead the bubble of today’s stock market to pop hard.
What do you think?