I half-joked to my colleagues a couple of days ago (one can never comment on the marketâs future direction with 100% seriousness :D) that if we were indeed entering a major bear market, it wouldnât exactly be a surprise.
-Stretched valuations
-Investor risk levels are maxed out and cash levels are non-existent
-Accelerating economic growth, if it materializes, is not good for stocks in the long run
-Tech stocks rise first, but they also fall first as stereotypical long-duration stocks. Recently, value / small caps (not Finnish ones, but elsewhere) and defensives have performed better.
Addition. As @Kaunohammas aptly pointed out, no results are enough anymore; instead, they are a reason to sell stocks to investors.
It feels a bit like a bear market is starting when earnings beats donât seem to matter at all; instead, we head down unless there is an absolutely massive surprise in the forecasts.
I mentioned e.l.f. Beauty yesterday, and now that the market has opened, Iâll continue: the company released a stellar report that initially got the market excited (+16%). Even during the day, the reaction was still up 8%. Now, somehow, this incredible report has actually pulled the stock into the red.
AMD, Google, and Amazon also took a heavy beating (in anticipation, even though the report isnât until late tonight), even though I canât find any weakness in the numbers, let alone the outlook.
On top of this, those who actually released poor results (Paypal) tanked -20%.
From the Tesla thread, you get the impression that this year Optimus will suit up and replace humans in absolutely all factory work. Most likely, it will handle the entire product supply chain independently by the end of the year. I even predict that Optimus, together with Grok, will be awarded a Nobel Prize in 2028 after curing cancer.
Personally, I plan to get these gizmos as soon as they go on sale, and they can go to work for me and support me while I focus on FIREing.
Doesnât a global equity index fund (i.e., MSCI ACWI) generate exactly that average market return? Though not âat least,â as the index fundâs modest fees are deducted from the top.
I donât quite understand this argument. Of course, one could speculate that achieving excess returns would be easier in the future if/when a US-driven bubble has been inflated into the indices. However, there doesnât seem to be much scientific evidence supporting this speculation.
Yep. 5 years ago, people there were talking about how Tesla would be the only car manufacturer left in 2026, as sales figures were drawn upward with a ruler. 3 years ago, FSD was supposed to drive us everywhere this year, just because they added bigger numbers to the FSD version.
I have such a realistic imagination that I canât think of what the next hype job will be after these humanoid robots.
Are there still any nutjobs or diamond hands here whose portfolios are still well in the green YTD?
Mine is barely in the green, but a red Friday will likely take care of that⊠feel free to speak up!
Note: The screenshot below is poorly editedâthe top one is the market close and the bottom is the year-to-date high (Jan 15).
Optimus is Teslaâs undoing. Nothing stops Optimus from founding its own company and making a better version of itself, and of self-driving cars.
Heck, getting a human to Mars or colonizing the whole of space isnât even a feat anymore. Throw some Optimuses in a rocket and head for some planet. Pack some pine and spruce cones etc., and soon the whole planet is reforested. A cooler full of sperm and a couple of detached wombs, and wonât Optimus soon be birthing humans with those? A hammer and nails for houses, of course, plus a few kilos of uranium and copper, and theyâll have electricity set up too.
Letâs agree that over 5 percent is plenty for the start of the year⊠youâve delivered well in this turmoil 
Today on this red lantern day, YTD finally went into the red by just a millimeter (not that kind :D)
Well, at least earnings growth is positive there. Here, the index is posting double-digit YTD gains with negative earnings growth 
Itâs hard to believe that a bear market would start now, although it could be the case. Last November, the AI bubble was supposedly bursting and so on. Liberation Day was a major dip for a reason, but the trade war situation has also calmed down. Iâd say, buy the dip and never stop the madness!
I guess this ongoing dip is influenced by soft labor market data from the US, Mag7 CAPEX fears (again), the âAI kills softwareâ narrative, and the US-Iran escalation. In itself, on an index level, we havenât even dropped that much. If the S&P and Nasdaq drop -15-20%, then Iâll start to get really scared of a bear market.
I have invested in the Xtrackers Artificial Intelligence and Big Data ETF because I believe that AI is a revolutionary technology and a big deal in the future.
This ETF is down 5.68% over the last five days, because AI is such a revolutionary technology that⊠Yeah, my head is spinning alreadyâ
There have been plenty of promises that this year (too) would be the year of small and micro caps, but itâs just not showing in my portfolio 
. On the contrary, the pace at the start of the year has been even more brutal. Iâd hope this is the final capitulation, but thatâs been hoped for who knows how many times already.
Itâs actually quite amusing at times to listen to podcasts where American investors open up about their tough times, which lasted about a week, or sometimes when the interviewee is completely broken, a whole year. Personally, I can barely remember the last good year.
Isnât that exactly how itâs been going in Finland? Even the mid-caps have joined the small-caps.
There is a perceptible change in sentiment in the air, suggesting that Bitcoin and AI-linked stocks may no longer be the absolute hottest thing, which would consequently hit the portfolios of tech-believers. However, if economic growth remains strong and China stops searching for new bottoms in its real economy, it is easy to see this as a healthy normalization of stretched valuation multiples and a fairly standard rotation away from the tech sector into other market sectors, rather than a true bear market. For investors exposed to the US, any change to the current situation is naturally a threat, as the S&P 500 has concentrated in recent years to an exceptional degree, becoming a sandbox for a handful of companies, while the state has also shifted toward an inward-looking âgood olâ boysâ techno-oligarchy.
Of course, the investment strategy used by everyone for yearsâfilling a portfolio with the worldâs largest stocks perceived as the highest qualityâcannot work forever. The Nifty Fifty worked exactly until too many people tried to generate alpha with the same strategy, at which point it stopped working. At some stage, it will inevitably be time for Mag Seven investors to take a major beating, and you donât want to be the last fool whose portfolio is still full of Microslop or Tesla.
The obvious solution, of course, is to put your money elsewhere and look into, for example, mining companies, consumer products, or the real estate sector. This is a hell of a challenge, especially for the younger generation of investors who have been in the market for a shorter time; they have fared excellently all these past years with monoculture investing in the tech sector and thus feel strongly that they donât even need to stoop to broadening their expertise into less glamorous stock sectors. After all, people generally donât give up on something that has worked excellently in recent history and brings approval from their peers.
Lest this become too much general babble, I have protected my own portfolio from AIrmageddon by pivoting into European small and mid-cap pharma and healthcare stocks (but definitely not Faron). There, you donât have to worry about the price trends of GPUs and memory, or fear that AI models will destroy the companyâs business through either surprising competition or their own reckless over-investments. The whole start of the year has been nothing but smiles, even though some risks have materialized. Bring on the S&P index crash and the return of the mega-techs among the mortal stocks; Iâm not afraid at all 
I partly agree, but also disagree. After all, the current global economic ârestartâ has already been anticipated in the indices for nearly two years now.
A small pause for thought and a breather from the hype is my own view. Too much and too fast has never been the pace of global change. Everything has always been anticipated in everything. Reality is seen in hindsight. The swiftest companies have managed to get somewhere, but will everyone make it⊠is it needed for everything? Is it necessary, though? Possibly so, but stock prices ponder it many times⊠and itâs about AI.
It seems like almost all engineering companies have taken a hit this earnings season after their announcements? Have valuations risen too fast, too high?
Phew, Iâve been feeling a bit under the weather these past few days. Itâs warm inside, but Iâm dressed in layers and Iâm still shivering and freezing. 
My throat hurts, I have a cough, and my voice is pretty much gone â might as well get a fever now that the weekend is starting. 
This shivering is almost funny because Iâm freezing so much. Iâll have to rest this evening and actually the whole weekend. 
As per usual, another down day in my portfolio⊠but the big highlight of my day was that I got to publish Pyysingâs interview: LINK to the interview.
Wishing everyone a very relaxed and nice weekend! 