New Address as of 10/4/24 — 60 Broad Street, 39th Floor, New York, NY 10004
DJIA: 46,914
Buy the dip… just not the last one. And so it goes, buy the dip works until it doesn’t. This doesn’t seem like that day. The market is a teaching process, and the process seems yet incomplete. We don’t seem at that stage of buyer be unaware. When earnings come through as well as they have, including those of Palantir (PLTR – 175), the comfort level of buying the dip seems sure to grow. Also growing is the reality that almost half the stocks you might own are the wrong stocks. More than 4 out of 10 NYSE stocks are below their 200-day moving average, a good proxy for the medium-term trend. With this reality comes the probability of a further shift, stepping up to what’s working and thereby further perpetuating the dichotomy: Out with the old economy and in with the new economy, as they said in 2000. In this case, out with Staples in with Tech.
Bubbles are not a disaster. The disaster comes with overstaying them. Bubbles are about driving a theme or a group of stocks to excess. Most obvious and recent were dotcoms. As is typical plenty of money was made, until most of the money and even the companies disappeared. Of course, the dotcoms were not profitable, the hyperscalers are. The nifty-50 stocks were profitable, and also known as one-decision stocks. It certainly was one decision for the likes of Polaroid, Beatrice, Tropicana and others. Bubbles are not just about buying something to excess, they’re also about ignoring almost everything else. Eventually the liquidity for even that buying is dissipated. This, of course, after we all wish we had more money to invest, but we don’t, and we’ve learned to buy the dips. Doubtful we are there yet.
Frank D. Gretz
PLEASE NOTE: Unless otherwise stated, the firm and any affiliated person or entity 1) either does not own any, or owns less than 1%, of the outstanding shares of any public company mentioned, 2) does not receive, and has not within the past 12 months received, investment banking compensation or other compensation from any public company mentioned, and 3) does not expect within the next three months to receive investment banking compensation or other compensation from any public company mentioned. The firm does not currently make markets in any public securities.
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