The Madness of the Markets

Or at least what I perceived to be a madness. It’s hard for me to characterise what the US stock market is doing, specifically NASDAQ - the last few weeks have seen the valuations of various technology companies whipsawing from +/- 40%, depending on whether people thought that hyper-inflation is upon us, bond yields are climbing, or that the 1.9T USD stimulus is going to trigger a stock-buying spree.

In some ways, they are all correct - at any given point on the graph the over the last couple of weeks. But from the only relevant and selfish perspective, the main question is, have I made any money?

My answer: I had bought midway during the correction and lost money, held on until the rally and made money. Also, at the moment, they aren’t real - paper gains are not gains until you cash them in.

Do I think the markets, specifically technology stocks, are overvalued? You bet I do. When people are buying into companies pushes up metrics such as 1000x Price-to-Earnings or 100x Price-to-Sales, they are projecting that, by conservative estimates, if the business stays the way it is for a century, the company will be able to earn the money to justify what you’ve just paid for.

I can hear the protest coming already - “but these are hypergrowth companies!” Sure, let’s do the math. At the starting point of 1000x P/E, and given a 50% growth in revenue, it still takes the company 10 years of compounded annual growth before it hits a P/E of around 17 that is at the ballpark of a mature company. And that’s hinging on the company doing everything exactly right 10 years straight to hit that figure.

It’s hard to predict anything right in 10 years, let alone anything exactly right. Believing that requires a pretty incredible dose of optimism, or a fair amount of delusion.

If that’s the case, why am I still putting money in the stock markets?

One reason is because it is money that I can afford to lose - my exposure to the US technology markets isn’t sizeable enough to change my fortunes one way or another, but big enough that it’s able to generate an emotional response that sends the stomach churning when one get to hit a daily loss of 20%.

It’s hard to test your mettle and resolve in a stock market that gyrates wildly like that, and in a way, it’s a way to measure my own reactions towards playing short-term trades for overpriced stocks, if it can lead to oversized short term wins.

Will it work for me? That’s the real difficult question. Sure, maybe I’ll get lucky and catch a few wild rides like GameStonk. On the other hand, it’s equally easy to lose it all during the process.

But hey, you only live once.

Smell’s Back

Thankfully, around the 22th day, the majority of my sense of smell is restored; at that point, I was able to transiently pick up malodours, especially the smell of the compound ‘mercaptan’ (ie. the smell of your poop), which had been one of the last to recover. The firsts were citrus-cy and coffee smells, followed by smells of cooked food like bread, melted cheese and stir fries. It was only after the 3rd week was I finally able to detect faint smells of smoke.

Missing the ability to smell smoke (or gas) has been a little bit alarming, given that they are things that warn you of any potential danger. For a while, I had thought I would be living with this new disability and therefore needing to plan how to deal with situations with fires going ahead, but thankfully things did get back to normal.

It might seem a ‘blessing’ not to smell your own (or your partner’s) poop, but it makes for some potential awkward situations in the future too. Imagine if you’d stepped into some smelly dog poo, and is totally oblivious to it while people around you are holding their noses.

Regaining that sense of smell probably also indicates that at least the most sensitive aspect of the nose has somewhat restored back to normal, and hopefully stays that was for time to come.

Not writing as regularly

I had hoped to keep up my writing streak of (random) musings this year, as I did for the last, getting COVID forced a temporary stop while I was spending my time and focus on recovery. But more so, it made me think, “what is the impetus of this all”?

There are plenty of people and platforms around, all wanting to have their voice heard and be paid attention to in this vast Internet we have today. I used to have a (technological) focus on what to write, and with age, that focus has shifted to more of documenting my day-to-day life.

While this might be interesting to me as a matter of record, but on the whole, it really doesn’t contribute much of even entertaining value to others - there’s probably better drama/rubbish to read/watch on Twitter/YouTube than you can get from my writings.

It won’t keep me from writing, but I don’t see a need to try to attain a meaningless metric of ‘a post a week’, or anything arbitrary just to keep it going. But they will keep going, in the random, sporadic fashion as they always had been ever since it started.

And if you had been reading up till this point, I humbly thank you.