Thread by @peregreine

1) A history lesson in $COMPQ screenshots for all the youngsters thinking their hypergrowth stocks have bottomed. View this screenshot of the monthly chart for the NASDAQ starting from Dec. 1998 going through Dec. 2003:

2) Now a screenshot of the $COMPQ showing five years of data like that of the chart above from the Dot-Com above.

Friday, 13 MAY 22, the Nasdaq Composite closed at 11,805.00

The Nasdaq is "only" down -27.18% since its All-Time high in Nov. 2021.

3) So what are the headwinds which should be giving rocket ship emoticon pumpers pause?

1. War in Ukraine
2. Treasury yields almost double in the last 12-months
3. Fed looking for another 1.90% in rate rise.
4. Quickening of corporate bond downgrades.
(continued)

4) (Headwinds continued)

5. EV assembly lines everywhere idled for lack of parts.
6. China lockdown turning into supply chain choke-outs.
7. Droughts planet wide hurting agriculture.
8. India stops exporting wheat to impoverished countries in Africa and South America

5) (Headwinds continued)

9. COVID death tolls creeping upward again.
11. Semiconductor shortages.
10. Oil, Nat Gas, and Gasoline still in bull market
11. The rise of Nativist and Nationalist politicians across America and other areas of the planet fanning conspiracy theories.

6) If you were alive in 1999, you know the extreme greed of the period feels like the silliness today of people hawking stock symbols in which they've vested no due diligence.(Hell, most of the meme stock pickers wouldn't know an Earnings report if it bit them on the ass.)

7) Last Friday was a big double-digit "bounce" day for magical unicorns with cashflows which don't cover expenses or which cannot pay off earlier debt. This is what needs to be understood here and now: corporate debt must be paid down or refied. Corporate debt is more expensive.

8) This is a time of flight to value. The top three of the eleven sectors of the S&P 500 which are in any kind of bull market are Energy, Utilities, and Consumer Staples. Everything else is breaking down with these weekly bounces.

9) Why chase a unicorn stock which can fly or die when you can simply think through ramifications of shortages in certain commodities (especially agriculture and energy) and buy companies still ascendant with bullish crossovers intact on their daily, weekly, and monthly charts?

10) Look at that Dot-com crash chart above. It wasn't a five-month affair of going down and then off to the races again.

Look where we are today.

Be smart. Conserve capital. Deploy it in strong sectors now, not stuff you fell in love with in 2019-2021.

Follow the macro.

@threadreaderapp unroll

11) Addendum of a new shortage: cooking oil.

Great collaborative article which provides how drought, crop rotations, war - and more - are taking the toll on cooking oils from sources as different as palm trees and sunflower seeds.

businessinsider.com/cooking-oil-sh…