Wednesday, November 09, 2022

FTX, Binance and Crypto

While everyone is watching election ballot drops and wondering what the hell is going on in Maricopa County, investors in FTX are wondering what the hell is going on with their accounts. This is getting a lot of coverage in the financial channels, but outside of that … not much! Yet, those who are impacted are probably feeling really horrible about what’s going on. Binance is in then out. What are these folks going to do?

Overall, what does this mean for crypto? Do people who have money elsewhere invested in various cryptos head for the exits, hold on for dear life (HODL), or what? Bitcoin and Etherium took a beating today on the market, and it will be interesting to see how the whole crypto market holds up in the days, weeks and months ahead.
Disclosure: Zero holdings in crypto.

Sunday, November 06, 2022

Stocks and Election Thoughts and Elon Musk

  • Since I last blogged, the stock market went into a bear market. It remains stuck! Every rally attempt has been beaten down by the bears, chief among them Federal Reserve Chairman Jay Powell. He’s been on a relentless interest rate hike to tame the beast of inflation.
  • Too much money chasing too few goods.” All the covid stimulus, including the stimulus checks, eviction moratoriums, halting student debt repayments, rates near 0%, and government deficit spending and various bills (infrastructure, “inflation reduction act”), juiced spending and inflated asset prices. Meanwhile, the pandemic itself has led to economic shutdowns and supply chain shortages around the globe. And did I mention a war in Europe? Russia invading Ukraine and the subsequent sanctions has driven up the costs of oil and natural gas, while putting pressure on things like fertilizer, wheat, and other things.
  • As rates go up, stock market valuations have come down. In addition, corporate earnings reports have been lackluster and future guidance has been poor. We are also seeing companies announce hiring freezes and layoffs. This could accelerate going forward.
  • California’s tax revenues are coming in light! To be expected, as California receives a lot of tax revenue from a small number of people and companies, and if earnings are down and capital gains are non-existent, tax revenues will fall short.  So much for the budget surplus of yesteryear!
My thoughts on it all: I’m 100% invested and have ridden the bear market down. I continue to add to positions and reallocate to stocks and sectors that I think will do well going forward. I’m not chasing the hot stocks and sectors that have outperformed during the bear market. I’m more interested in tech and growth that will outperform once the bear market ends and the new bull market unfolds. Patience… Patience… Patience…

  • Elon Musk takes over Twitter, and immediately announces layoffs and upcoming changes to the platform. There are a lot of “hot takes” on how this is going and how this will play out. My hot take is that he makes a lot of changes, the changes are mostly well-received over time, and he takes Twitter public again as a hot IPO. Or maybe I’m just borrowing that hot take from something I read on Twitter! 
  • NFL Sunday! Another day to remind me that my fantasy football team is a bunch of hits and mostly misses week to week! But at least the Dolphins have a fun offense to watch again.
  • Election hot take: I don’t know. Generic polls seem mostly useless, as most House districts are gerrymandered. Maybe the polls have more value in statewide elections. Polls seem close for the Senate. GOP might get the House. I think the GOP does well in local races that are out of the national spotlight. 
  • The Senate races are going to be close and contested. I’m not an election denier or believe cheating was found in 2020. But, I’m not sure our election systems aren’t designed to allow cheating by both sides. I just don’t know how they would do it, or do do it. We have so many different voting systems around the 50 states, different rules and laws, precincts, polling locations, drop boxes and mail-in ballots. We don’t have voter ID. Signature validation software is sketchy. Again, I don’t think any cheating was found in 2020.