SMCI - DXYZ And The Fakers Dozen 13 Stocks With Huge Downside Risk
2024-05-03 15:36:12 ET
Summary
- Traditional investment strategies are no longer effective in modern markets, causing financial pain for self-directed investors and investment advisors.
- Indexation, algorithms, and other factors make investing more like a voting machine, rather than a weighing machine. Most buy ratings are unreliable.
- This article discusses the symptoms of these issues, cites specific examples of securities that reflect them, and my approach to dealing with them.
I call them "the Faker's Dozen." Like bakers do, I'll count to 13 here. Below I cite 13 securities that have taken investors on a wild ride, and to me represent a strong message to investors. Not about which ones to buy or sell "right now" as so much of the publishing business does, and thus so many investors now behave. This list is a set of examples too numerous to just be a few isolated cases. They signal that modern markets behave differently, and any holding for any investor can be subject to the Faker's Dozen treatment at any time. Just look at reactions to this quarter's earnings announcements. They are all over the place. Frankly, it is a good argument for ETFs to hedge the volatility a bit, but that's another article for another time.
What is fair? Not what it used to be.
What price is "fair” for a stock or ETF? Many investors put a lot of well-intentioned effort into trying to figure this out. Ratings are issued in bulk by thousands of people, from big firms to solo artists. Yet for three years, the average stock has gone nowhere, and the stock market has pivoted toward being more of a casino than I've ever seen in 38 years in the profession....
DXYZ And The Fakers Dozen, 13 Stocks With Huge Downside Risk