The Nasdaq is down almost 15% from its labor day highs.

Apple is down almost 25% in the last two months.

Facebook is down about 40% since July.

Bitcoin is down about 80% from its highs last December.

Ethereum is down about 90% from its highs in January.

All of those are examples of bleeding, if you happen to own any of them.

So what do you do?

Close out your position?

Buy the dip?

Sit on your hands?

It all depends on your fundamental views on these various investments.

Here are mine.

Apple is the easiest one for me. They aren’t going anywhere, although growth is slowing as they are close to saturating the high end of the mobile phone market. It will be a value stock at $120/share. If it gets there, load up on it.

Facebook is harder. They own some incredible assets like Instagram but the outlook there is cloudier given likely regulation and it won’t be a value stock for another $100 of losses. 

The Nasdaq is even harder. Are we in a bear market now? Or just a painful correction? A bull market that is almost ten years old feels long in the tooth and I can see the arguments for a bear market more clearly than a correction.

Bitcoin will form a bottom at some point and is a buy when it does. But where is that bottom? Probably not $4500.

Ethereum feels like the easiest one to make a bull case for right now. It is hated. Everyone has lost their shirt on it by now. Nobody other than developers want to know about it. It feels like time to start nibbling on it but not loading up on it.

But the thing to understand more broadly about what is going on right now is that big sophisticated investors are reducing their risk exposure across all asset classes and have been doing that for some time. The pace of the “risk off” trade is accelerating. Which means a flight to safety is going on. And when that is happening, you really need conviction to be buying. 


Comments (Archived):

  1. jason wright

    “Which means a flight to safety is going on.” What’s the destination?

    1. fredwilson

      Cash and interest bearing instruments, ideally short term in duration

      1. jason wright

        the shorter the smarter in this market. you just never know…

  2. Matt Zagaja

    So you’re telling me there is something more to this than the stock exchange reducing prices for Black Friday?

      1. Lawrence Brass

        omg. I guess it is already Christmas for those which enjoy risk.

    1. TeddyBeingTeddy

      Where is that “buy gold for the lowest price [here]!” troll when you need him…

  3. John Frankel

    Investing is just like being George Constanza. Sell when everything feels great, buy when everything feels bad. We are getting to a buying phase. But when? Yesterday was an exhaustion selling day, if today is a strong buying day, then we are very close: if not, then wait until the exhaustion selling is done, followed by strong buying.Factor in the Thanksgiving family conversations about the market, and next week could be an interesting time.Value is a key measure: anything trading at 90x revenues can have a lot of downside before being value, anything that is not close to profitability can take a long time.The truth is that the tech growth that we have seen in the last couple of years in public markets has been very cyclical in its nature: people can always wait another year to buy another iPhone, etc. The tech growth in private markets (i.e. startups) has been far more secular, and so can continue to be strong in a downturn. The impact on startups (especially those with valuation below $500mm) will likely be, to the extent there is impact, from the risk-off/risk-reducing nature of investors.

  4. falicon

    The most exciting thing you’e said in awhile, “Nobody other than developers want to know about it.”That, my friend, is when the magic happens!

    1. Lawrence Brass

      Developers are methane breathing creatures. 🙂

  5. Lawrence Brass

    How this flight to safety affects venture capital?

  6. Noah Rosenblatt

    The key whether this selloff has legs probably starts with credit markets and spreads. If spreads continue to widen and credit markets deteriorate, requires will follow. Equities follow credit. Credit leads equities, whichever way you prefer. If it does get uglier, I would think money pours into dollars and treasuries.. if treasuries selloff in sync with equities and credit, all bets are off.. that’s the unintended consequence you get when Central Banks across the globe experiment the way they did after the great crisis of 2008

    1. Noah Rosenblatt

      “If spreads continue to widen and credit markets deteriorate, requires will follow.” … Sorry typo, meant “equities will follow”

  7. Tom Labus

    The most recent Tax Bill was my signal to begin to sell and pare down. This has been an amazing run since March of 09. I clearly remember buying some AMZN ++ but then not sleeping for about six months. Whether it’s just being weary or a combination of other issues including political, it’s time for a market break.

  8. LIAD


  9. Mostafa Maleki

    For Facebook, did you mean another $100 off the share price or $100 billion off market cap? The former doesn’t quite make sense given it’s already trading at 16x forward P/E ex-cash.

    1. Mike Lee

      $35 facebook would be painful!

  10. Dan Moore

    I’d rather buy a broad index on a regular basis, rebalance once a year, and not try to be smarter than the markets.Also gives me peace of mind and lets me focus on areas of my life (financial or otherwise) that I have more control over. I do know that I have a longer time horizon than many.I am a big fan of the stock market as a weighing machine.

    1. Dan Moore

      I am also not in finance as a profession 🙂

  11. Jeffrey Warshauer

    Santa Claus rally coming. Investor confidence is weak but there is nothing like a good holiday season to turn that around.

  12. William Mougayar

    The name of the game is to be able to stay in the game.Part of the crypto sell-off is driven by regulatory uncertainty and many crypto hedge funds who are liquidating their positions because they will shut down by end of year.

    1. jason wright

      hedge funds as ICO funded projects? not all ICO projects are hedge funds. Do you think ICO founders should consider hibernating their projects, sit out the down cycle, hold on to their BTC, and go again when regulation is decided and the next bull run begins?

      1. William Mougayar

        It’s a case by case situation. They should focus on getting users and completing the work they promised.

    2. Alessandro Prioni

      Why are they shutting down?

  13. JLM

    .If you buy back in, buy engines not assets or commodities.There will be the largest Black Friday. Cyber Monday in history.Huge Christmas.Santa Claus RallyJanuary Small Cap extravaganzaYou can buy great stocks approaching 10% dividends and get paid to wait.The economy is going to roar in 2019.This is what opportunity looks like but don’t focus only on FBs of the world.JLMwww.themusingsofthebigredca…

    1. Lawrence Brass

      What do you mean by engines? Businesses with cash output, dividends?

      1. JLM

        “MIC” NYSE businesses with real businesses. Bit of understandable bad news creating 10.7% yield. You get paid to wait.JLMwww.themusingsofthebigredca…

    2. Richard

      There are factors that suggest economic growth for 2019, including low interest rate, low unemployment, low oil prices, a huge domestic oil industry, and almost all regionals economies performing well. The issue is whether inflation starts to eat away at earnings? If so we could get higher GDP but moderate increases in earnings. With little room for expansion of P/E ratios, it seems like earnings will be the principal component for equities in 2019.

      1. JLM

        .Wage growth.On the down side tariffs, long overdue discipline of China, immigration illegal.Inflation will be fine. Fed is way out in front of it.This is a very good time.JIMwww.themusingsofthebigredca…

        1. Richard

          Will wage growth impact earning or will productivity nip it in the bud? Trucking / Energy companies are under enormous pressure.Funny how we don’t hear from those self driving cars will create massive unemployment crowd these days. Self driving cars and trucks in our lifetime will go down as the bonehead call of the first half of the 21st century.

          1. JLM

            .Who will self driving benefit? When? How? Who will change the flats?Agreeing more with you than you do with yourself.JLMwww.themusingsofthebigredca…

          2. sigmaalgebra


          3. sigmaalgebra

            The media wants revenue from eyeballs from grabbing people by the heart, the gut, below the belt. Grab’m one of those ways and their eyeballs will be sure to follow. For grabbing people, boneheaded, brain-dead, outrageous, irrational stories, fake medical cures, fake news, anything to create controversy, are all very welcome. Also welcome, even incite violence, are “You bring the pictures; I’ll bring the war.”, Trump supporters are racist, sexist, homophobic, xenophobic, Islamophobic, Bible and gun types, Wal-Mart shopping deplorables, and, thus, hint, hint, should be targets of violent demonstrations.Also welcome, even standard fare, are scandal, sleaze, crime, “If it bleeds it leads”, anything scary.Sharyl Attkisson’s explanation is, IIRC, “Everything you see in the media was put there and paid for by someone who wants to influence your opinion.”.Solid, rational, credible, objective information with primary references for an “informed electorate” is not welcome.But apparently when some situation is really bad something of the truth actually leaks out. E.g., for the recent, likely still current, California wild fires, as I posted here 8 days ago at…to explain the cause in partIt appears, first cut, that there is a big pissing match between the Greenies who want everything with a tree to be 100% all natural, organic, as nature wants, totally untouched by humans. And on the other side are some people who want to do logging on some of the lands with trees. But the Greenies, even if only the convenient idiots, HATE logging and the loggers.So, what happens is, the lands with the trees that burned have relatively small trees. So sunlight gets through to the ground and lets brush grow. Also, as trees drop leaves and limbs and die, the Greenies don’t want such trash on the ground, or the brush, to be removed and, without loggers, there’s no money to remove the trash and brush. Then the first time there is a drought with some winds, it’s all up in smoke and damages in the hundreds of millions of dollars. Apparently Greenie Moonbeam believes that this is all 100% natural, organic, and GOOD!But what is supposed to be “natural” is that the forest is to have a lot of tall trees that don’t let much light reach the ground. So, there’s not much brush. Apparently with a lot of tall trees, the forests are reasonably safe from such forest fires.So, for forests with small trees, loggers would go in and clean out the trash and brush, cut out trees of unwanted species, and let the trees with valuable lumber grow. So, the loggers would do good “forest management”. But then, when the trees were ready for market, the loggers would “clear cut”, and the field mice, Thumper and his friends, skunks, raccoons (had one on the back porch last weekend, looked big, strong, well fed, healthy), foxes, Bambi and her friends, birds, and GREENIES would be REALLY upset.Of course, always look for the hidden agenda and follow the money.So the hidden agenda is a battle between the Greenies and the loggers. The loggers would spend the money, clean out the trash and brush, and keep down the fires, and harvest the trees, but the Greenies, tree huggers, don’t want the trees harvested. So, the Greenies block the loggers. But the Greenies don’t understand the need for cleaning out the trash and brush and/or don’t have money to do that so we get forest fires.For more, with US logging thusly throttled by the Greenies, the US imports more lumber, and that is likely part of the hidden agenda and source of money. I.e., lumber importers support the Greenies!! And LAT, NBC, Moonbeam, etc. all go along with the importers but claim that they are just trying to save Thumper and Bambi. Then the Greenies and Moonbeam blame the fires on global warming with the hidden agenda to excuse the fires to help the lumber importers and throttle the fossil fuel people and get subsidies for the wind/solar people.Trump, as anyone with even two functioning brain cells, some basic common sense, and not bought off by the Greenies, etc. and seeing the deaths, destruction, and millions in costs speaks the truth about “forest management” with his hidden agenda of helping the US logging industry, slowing lumber imports, and sticking it to the Greenies and their money for dirty politics. Apparently in that post I got it about right. For my research, I did some Google searches. I found hundreds of media stories about the cause being the winds and the drought from global warming. That is, the media was nearly total Greenie propaganda. Only one story explained anything like what I wrote above.So, since that post, apparently it has leaked out even in the mainstream media (MSM) that Greenie Governor Moonbeam and the other Greenie convenient idiots, overly emotional, hysterical, irresponsible, irrational, destructive, cost California, including much of Malibu and essentially all of the town of Paradise, lots of blood and cost California and the rest of the US many $billions of treasure.So, as Big Daddy, Father Trump has calmly informed the country, really we should really learn about Forest Management 101 from Finland, Germany, etc. Really.Uh, hint: In the video clips of Trump inspecting the fire damage, destroyed houses, burned out cars, in Paradise, CA, notice that with all the destruction the healthy trees are still standing and look undamaged!!! Think about that fact a little!!I know; I know; it was cruel, so cruel, how could Trump be so cruel, as to cast doubt on the feelings, the really strong green feelings, sensitive, about Bambi and Thumper, and about the 100% all natural, pure, organic, totally green, of the Greenies????Maybe eventually we will work our way up to setting aside the US national electric power grid and electric power engineering ideas of Alexandria Ocasio-Cortez, e.g., her recent call for 100% renewable energy in 10 years. Yup, more greenie disaster, more convenient idiot, overly emotional, hysterical, irresponsible, irrational, destructive nonsense, would take the US economy, industry, infrastructure, daily life, etc. all back to about 1900 with massive losses in blood and treasure: That destructive, convenient idiot would kill tens of millions of US citizens and turn the US into a third world country. Electric cars? Heck, there’s wouldn’t be enough electric power for hospitals or even electric lights or, for some good news, even TVs and the MSM newsies getting ad revenue by grabbing eyeballs from outrageous nonsense. Instead the newsies would be grabbing eyeballs from the disaster of the electric power engineering ideas of dangerous convenient idiot Greenie Alexandria Ocasio-Cortez.So, some of the truth leaked out, a few hundred lives here, $100+ billion losses there, and finally even Governor Moonbeam looks ashamed and contrite.Big fires two years in a row, and finally even convenient idiot Moonbeam is beginning to catch on.But, a true Greenie like Moonbeam is diligent, at least with the blood and treasure of other people: E.g., as he predicted, IIRC, in another five years we will all believe in global warming.Moonbeam, baby, that prediction was tried before, maybe 30 years ago, and by the best climate scientists, and their predictions, like Chicken Little’s “the sky is falling”, didn’t happen in any measurable sense at all.Civilization has been there before: Wildly overly emotional stuff, no solid evidence, irrational nonsense, was very costly in blood and treasure. Biggie results were The Enlightenment and The Age of Reason.But the MSM are eager to promulgate irrational stuff, take us back before The Enlightenment and The Age of Reason, establish sewage as the new normal, create continuing narratives, like the NYT has done with the threat of global warming, and then be able feed us a 24 x 7 stream of sewage, via, gee, TV. Uh, e.g., we have leading NYT climate scientist Tom Friedman explain that the cause of global warming is that CO2 absorbs sunlight:First, little Tommy, did you make a good grade in college freshman physics? Disclosure: I led the class by a wide margin.Second, Tommy, did you have trouble with rationality in 8th grade general science? Disclosure: I used the class time with my head down and resting, listening a little, and the one time the teacher called on me I immediately gave such a good, detailed answer that he never called on me again.Third, Tommy, what’s the problem: If the CO2 doesn’t absorb the sunlight, then the buildings, plants, ground, water, etc. will, and what’s the biggie difference?Fourth, and worst, Tommy, you are just wildly misinformed, uninformed, ignorant, and dangerous: Tommy, exhale and see if you can see the CO2. If CO2 absorbs sunlight, then you should be able to see the CO2. Can’t see it, right? So, CO2 doesn’t absorb sunlight.And, that’s right: CO2 doesn’t absorb sunlight.Instead CO2 absorbs light out in the infrared, in three narrow bands, one for each of the energy levels of bending, twisting, and stretching of the molecule. But the infrared is NOT from the sun. Now, little Tommy, your homework for today is:(1) Where does that infrared come from?(2) Why would absorbing that infrared by CO2 be different then with less CO2?(3) In the past, back 1 million years or just the past 2000 years or so, the global temperatures have at times been significantly higher and significantly lower than now. What is so far the leading cause for, say, the last 2000 years, e.g., that caused the global cooling that caused the three years of crop failures that caused the French Revolution and had ice on the Delaware River as Washington crossed it?(4) With all the extra CO2 emitted during WWII, why did we have some measurable global cooling until the 1970s of so?(5) Why are there serious predictions of some measurable cooling in the next few years?Hints, Tommy: Consider the work of Max Planck and Eugene Wigner. For Wigner’s work, get an introduction to group theory and quantum mechanics. Disclosure: That group theory, group characters and group representations, were the subject of my undergrad math honors paper.Tommy, I expect your answers in 24 hours and then your profound apologies for your dangerous ignorance, front page, above the fold, 24 point type, bold face, in a block in the NYT.Finally, Tommy, you are to come after school and write on the board 500 times “I will not be a Greenie convenient idiot.”.And I’ll be calling in Jerry Moonbeam also to write the same 1000 times.For Alexandria Ocasio-Cortez, I’ll just send her home was a note to her father.

    3. LE

      There will be the largest Black Friday. Cyber Monday in history.I want to do a Kickstarter which will essentially be a documentary filming at Walmart’s showing the madness of people fighting over large screen tv’s. God poor people they love those LCD’s in big boxes.Fwiw Whole Foods was packed this morning when I stopped to get a bagel. I couldn’t even get a spot where I normally park for the first time ever (I am there all the time usually at the same time). It was so busy I ran into my wife who was there as well with a cart full of food.

      1. JLM

        .Amazon has seamlessly absorbed WF. It is amazing.Sam’s has unbelievable inventory and prices on TVs. It was nuts this morning.JLMwww.themusingsofthebigredca…

        1. LE

          The indians are restless though. Change of attitude in the workforce. More ‘supermarket’ grade behavior going on. Punching a clock. In one case the seafood guy who was all over me and helpful (would give me free lox) now has an attitude. He was passed over for seafood manager I think is the reason. And they are typically understaffed. All that is fine they are still a better ‘supermarket’ than a regular ‘supermarket’. In another case the girl at the return counter (where you can often pay if no line) copped an attitude saying ‘I will do it this time but this is really for returns’. If I wasn’t such a nice guy and concerned about the little people I would have totally mowed her over by yelling at the store manager for both having a line and having a return girl with an attitude. It really hurt my experience. That is part of the reason you overpay at Whole Foods (or at a high end car dealer). For the experience. Even a Casino is not all about winning.

          1. Richard

            Yep, amazon is begins to make mistakes, and is increasing the pace of a weakening value proposition of WF. And this was after 10 years od a deteriorating WF experience. WF new Store opening have come to a halt? But margins may just not allow for a competitor to move ahead.

          2. Salt Shaker

            It would be a smart and bold move if AMZN does buy some or all of the regional sports networks (RSNs) up for sale. They could make live games (some, not all) exclusive to Prime. If this leads to even a 10% conversion of RSN subs to Prime it’s a windfall (in both sub and ad revenue). Sports fuels TV viewing like no other programming.

          3. LE

            Well as Albert Wenger might say ‘the turkeys are happiest prior to the slaughter’.You know how I will know for sure? When the store fires the ”intellectual disabled’ man who helps with bagging and does a poor job of that job. When he get cut it will be like when Fredo was taken out on the boat. So keep an eye out for the Fredo’s in those stores. ATX by the way is hometown so toss that datapoint.

          4. JLM

            .ATX is the mother ship. I knew John Mackey when he had ONE WF. Very genuine.JLMwww.themusingsofthebigredca…

        2. TeddyBeingTeddy

          Costco baby!!

        3. sigmaalgebra

          To me, TV is awful. I don’t get TV, either via antenna or cable. A big screen TV would make awful TV bigger. So, why have a big screen TV?Yes, apparently there are still lots of people who like TV. Then maybe they would like a bigger TV. Important to understand that: A lot of those people might be customers of my startup!!The crash of the bubbly techs? Fear of fewer people suddenly with loose money and, thus, for the stockholders fear of not finding bigger fools tomorrow to sell the bubbly stocks to today? So it’s a big rush to the exits.The traders were able to see the fewer bigger fools on their screens a month or so ago? If so, just what did they see?Would I really like to see a good macro econometric model of the main indicators going worse over the last month or so. The main explanation is fear of inflation from tariffs and higher labor costs from less illegal immigration and maybe deporting of illegals, then to slow the inflation, fear of higher prime rates from the Fed and then some bonds defaulting and a crash of the bond market?The main cause is nervous Fed watching fearing that the Fed is a flock of nervous birdies? Maybe they are.It’s a HUGE WASTE to have people out of work: Looks like we need a way to keep stable prices and keep people working. Looks like the present situation, in a medical analogy, is to keep a guy from losing weight by giving him medicines that make him sick in bed and unable to eat. Wouldn’t it be better to exercise more?

        4. Simone Brunozzi

          You should remove your link from your signature, under JLM. I saw it twice already and it’s annoying. If someone wants to find about you, she will.

  14. Mike F

    Rebalancing to larger investment targets should generally force a discipline of selling high, buying low. i.e. in a down or bear market selling bonds to buy more stocks?

  15. Seine

    Do anyone think something had changes on how Quant or Ai are used which could explain those big dips in the last two days on large volume?

  16. iggyfanlo

    I’m not sure about 10%, 20% or 30%… Interest rates are normalizing and liquidity is being siphoned off (relative to a few years ago) every month (Fed is not buying and is not re-investing proceeds from previous purchases) to the tune of hundreds of billions.That can only lead to higher rates and then with a normal risk premium; a higher discount for cash flows. The market level of the equity discount rate has been artificially low for several years and this appears to be the move back to rationality.Combined with low productivity (which seems incredibly surprising in the technology deployment phase) but is probably driven by excessive overall debt levels in public, household and corporates.In this environment, I think a market (S&P) TTM P/E of 13-15X feels about equilibrium. We may overshoot.In the end, it’s most likely not a bear market from cash flow or earnings, but from valuation excess.

    1. JLM

      .Not interest rates, inflation.JLMwww.themusingsofthebigredca…

      1. Richard

        But if the convent lite leveraged loan market begins to fall apart and banks shut off lending we are in a different interest rate spread paradigm.

      2. Salt Shaker

        Not mutually exclusive.

      3. JLM

        .The only reason the Fed has given for raising benchmark rates is inflation caused by potentially overheated business growth.Lead lag indicators.JLMwww.themusingsofthebigredca…

    2. LE

      You have totally confused me.

      1. iggyfanlo

        Sorry.Summary: Discount rate for risk assets has risen; which means price SHOULD fall… not numerator problem; a denominator problem

  17. Ronnie Rendel

    My buddies and I made 24% on MKR – a solid coin with solid community that feel victim to market panic. It was a beautiful Black Friday sale for us. What’s making coins like MKR go down in these market days is something to investigate – my bet it has something to do with the way algo order routers trnsfer value between coins. Oyoy when Bancor gets into this full speed – it’s gonna be so aewsome.

  18. Mark Gavagan

    I’m not suggesting anyone buy or sell, but Apple has $230B in cash, out of an $850B market cap. While they’ve been a first-class product maker and marketer, there haven’t been any big new products lately.That said, Apple Watch Series 4 is the first watch that strikes me as having genuine, real-world value to regular consumers, because of the health-related tracking capabilities, but so far it’s not been a home run.

    1. sigmaalgebra

      Thanks for those two numbers. Now I don’t have to look them up. So, 550 – 230 = 320 so that the investors are giving Tim Cook a $320 B round of venture capital. Hmm. I’d say that Apple is nothing like a value stock and has a long way down before it hits a floor of any kind.

  19. Mike Lee

    Hi Fred – love your updates.Any fundamental views on Amazon and Google?Thanks!

  20. LE

    It all depends on your fundamental views on these various investments.I think it’s actually more about ‘what them thinks’ than ‘what you think’.More precisely what you think others will think, rather than what you think yourself, and importantly what reality is. That is what I have always found to be the case over time.So you can try to be really smart all you want. In some cases you might even have an edge. But in the end how other people are interpreting information, feelings and emotions and what they are doing (as a result) is way way more important than whatever you judge as fundamentals or reality.Take Amazon in LIC. Real estate has shot up. It went up just on rumor and even more now once announced. The reality is we are far off from any significant change in actual demand. The body is not buried and the ink is not dried. The time table is long. There will be plenty of extra inventory which will be adapted to the market. So if you try to evaluate on fundamentals and actual demand you would be wrong. If you try to think what others will think then you will most likely be right. Because there will be people thinking or trying to think ahead of the actual curve. That is what is what will work to drive up prices.

    1. sigmaalgebra

      Right: An individual actually doesn’t want the stock. Instead they want to sell it to a bigger fool and keep the money. So, others, bigger fools, are just crucial to the whole situation.Have to understand why someone wants to sell too low and later why they want to buy too high.So, right, in that game, it’s about understanding other people. The investment can be quite literally just tulips if others want to sell to you too low and later buy from you too high.I very much wanted to know about what was true about reality and then got trained for that.But in addition to what is true in the STEM fields, it’s also important to know what is true about people in stocks, romance, and more; for that, likely the best, close to the only, academic subject is clinical psychology.But good mathematician James Simons made, IIRC ballpark $11 billion investing in stocks, etc. So he was able to use data, math, or something to predict when people were selling too low and buying too high. I don’t know what he did, but I believe there was some data and maybe some math in there somewhere. In that case, it is possible to at least add to, likely replace and greatly improve on, all the analyses we have seen here today.One thing is, can’t expect a person like Simons to be popular: Necessarily so since anyone really successful is rare, not like other people, and does things other people would have thought were foolish or been jealous of had they believed that those things done were better. Well, maybe they are popular and respected once they are successful and retired!!! I still wish I knew what he did. But my startup might do still better.

      1. LE

        It would be interesting to see the percentage of people buying stocks who make money other than by the greater fool. In other words the company gets bought or there is some other reasonably legitimate liquidity event or earnings dividends etc. Then you have to decide how many years you carry forward for the ‘investments’. For example if you buy a stock in 1950 that goes up but there is no end result of purchase or liquidation by 2018 then in theory that is great fool results regardless of whether it pays 5% dividend or not.

        1. sigmaalgebra

          Well, if by 2018 the stock bought in 1950 is really valuable, then the price on the exchanges will look good but ONLY because people ARE ready to be “greater fools” and buy it. But, of course, if got dividends all those years, then maybe will have done well whatever the stock is worth in 2018.But for that stock in 1950? That was AT&T? Nope: they split up into the Baby Bells and Bell Labs. IIRC some of the Baby Bells, e.g., Verizon, are still around. For Bell Labs, IIRC, it got sold to Lucent, etc. and finally Alcatel some European company. So, you are thinking about Packard? In WWII it made a lot of British designed Merlin V-12 fighter plane engines, made them better than Rolls-Royce (RR was not yet really into inter-changeable parts but Packard was). So, I got it: IBM, GE? IMHO, IBM didn’t do so well. GE is, close to bust?So, you must be thinking of GM, Ford, and Chrysler. Chrysler got sold to the Italian guy with Fiat, Ferrari, etc., but they seem to be doing well.Okay, it is DuPont you were thinking of?IIRC, Bezos just said that companies can do well for 30 years but nearly none of them do well for 100 years and, thus, someday even Amazon will go bust.So, just buy and hold for 68 years? Maybe don’t expect to do that!!Oh, there was a company we were suppose just to buy, put in a drawer for the grand kids, and otherwise just f’get about — ComSat or some such??? Or was it Control Data? Sure, AT&T!!!Why, whatever could happen to telephones OR AT&T?? All that copper wire in the ground and buildings — who could compete with that? Why, with that copper wire AT&T got their US long distance data rate up to, way, Way, WAY up to, about 38 Gbps, and no one ever would be able to compete with that!!!Of course, now a Google search quickly shows lots of 100 GbE NICs — 100 Gbps Ethernet network interface cards!!!With DWDM, dense wavelength division multiplexing, etc., what can go down a single optical fiber, long distance, is 1+ Tbps or some such, with 144 fibers in a cable, several cables in a right of way?Let’s see: Really good video at, say, 50 Gbps for each of 300 million people would be (50)(300) (10^15) = 15 (10^18) = 15 ? bps? Well, there are giga, tera, peta, exa, zetta, yotta for exponents of 9, 12, 15, 18, …. So, we’re looking at 15 exa bits per second, 15 Ebps.Okay, to blue sky this extrapolation, for the Internet backbone, put 10 Tbps on each optical fiber (a bit blue sky but a Google search shows that 43 Tbps has been done on lab scale) and 1000 fibers per right of way for 10 Peta bps. Then 1500 such long haul links would get us to 15 Ebps. This is likely awfully rough since the 43 Tbps may not have included all the multiplexing options, especially WDM, wavelength division (send at several discrete wavelength) multiplexing.Those 1500 long haul links would be digging up a lot of right a way. Maybe we’ll get there.That’s selling a LOT of targeted ads!! A LOT of Skype calls! A LOT of Netflix movies, critter cams watching raccoons, beavers, lynx, falcons, etc. have babies even while humans aren’t.But, right, for politician press conferences, Netflix movies, NBA games, …, could implement the old multicast ideas where the backbone transmits only a few copies of each such stream and the local ISP or peering center makes the multiple copies.At any rate, the apparently MIGHTY AT&T with 38 Gbps via copper in the ground — the 40 GbE NICs are < $1000 now– has gone with the wind while the rusty iron of Detroit has lived on!Ah, as in Jurassic Park, “Chaos theory, it just has to do with the unpredictability of complex systems” or “The type of control you are attempting is not possible”.Or, “all politics is local”. Well, in math, in calculus, the derivative is an extrapolation but is usually only local. So, in business, all success is local in time and maybe also geography.Net, for making money in one investment over 68 years, mostly f’get about it.Where might still do that? Real estate, maybe tree farming, or, guessing at some of what Trump has in mind, golf courses now, paying attention to location, location, location, and selling off lots at big bucks by his great grandchildren. Sooo, the great grandchildren could spend some of the revenue from selling the golf courses and buy more golf courses farther out from the densely populated areas.How might this go wrong? Hmm, how ’bout the Internet that makes densely populated areas no longer economically advantageous? Irony here: Bezos, who has done so much to show that much of retailing no longer has a local geographical barrier to entry and more generally that geography doesn’t matter, rushes back to expensive, densely populated geography in NYC and the DC area???Soooo, maybe THAT is what the California Bambi and Thumper greenies are all about, i.e.: Telling the California tree farmers that they have to support the greenies or the greenies will have Bambi and Thumper shut down the tree farms? Or have the 100% pure, all natural, organic, renewable energy greenies tell the energy industry that they have to support the greenies or the greenies will use the scare scam of massive global warming to shutdown the energy industry. Shakedowns. Hmm ….

  21. Richard

    I’d love to see an investigation into the large institutional NY / Chicago bitcoin investors as well as the effects that the margin call ( via home mortgage) bitcoin sell off is having on equities

    1. creative group

      Richard:Many would concur.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT

  22. LE

    It will be a value stock at $120/share. If it gets there, load up on it.To me if I were to gamble would make more sense to buy it north of there. It’s a magic number (where many will act) so if it’s good at $120 it’s good at more than $120.Facebook is harder. They own some incredible assetsCore product is not of interest to younger crowd and even the older crowd is tiring of it. It’s a fad that will pass. And you don’t even use it (nor do I other than every now and then I log in to see what’s up) so you have no seat of the pants feel for the value (and the impending loss of value). All they can do is try to buy other things that make money. No way I know enough to say whether they can pull it off. As I have said before I will involved in a deal with them and got it done specifically because the core product is going in the direction of ‘suck’ and they need to find other ways to make money going forward other than the core product. And I actually said that (using nicer words than ‘suck’) in an email which Zuck and other execs read. They ended up paying 5x their highest offer over 1 year ago when their outlook was more confident (in millions). What does that tell you? They know they have a problem. And they are trying to sell it before they smell it (beef industry phrase).The Nasdaq is even harder. Are we in a bear market now? Or just a painful correction?As long as we are guessing I say interest rates going up (on savings) mean less money gambled in the market. That is what is going on. That will continue to bring prices down.Ethereum feels like the easiest one to make a bull case….It feels like time to start nibbling on it but not loading up on it.What does this even mean? If it’s bull it’s bull. What good does it do other than entertainment value to nibble? You will not make any money nibbling. You will just have something that is entertaining. This sounds like something that Cramer would say (not that I watch Cramer I don’t). Or a way for someone making a statement to win (like the fortune tell) no matter the outcome. Hah!what is going on right now is that big sophisticated investors are reducing their risk exposure across all asset classes and have been doing that for some timeThis is an example of where Fred has an edge over the rest of us. Fred is in NYC and has access either directly or by way of credible word of mouth of people that the rest of us don’t have. As a result he can use that information to form an opinion of where the market is going and act on it. I think this is an example of Jeff Carter’s (pointsandfigures) feeling the energy of the trading floor and acting on that. Fred gets the energy here and there and would know this prior to the same appearing in either the market or in the papers (by that time it’s of little value).

  23. Richard

    Nice try Fred. Your vague attemp to fool your readers by weaving cryptocurrencies into the category of assets held by large institutional investors/pensions funds etc. is sad. To date, crypto has been a drug cartel infuses poker game / nothing burger.

    1. JoeDad637

      Good thing assets are priced on their future cash flows, and not their ‘to date’ ones

  24. Salt Shaker

    Should Fb extract value from instagram and spin it off? It’s the growth part of their engine. Base biz seems mature.

  25. Salt Shaker

    At $177 APPL has a p/e of 15. Not a terrible buy currently, plus the company can use its strong cash position to cover any significant downside w/ buybacks. If the stock does drop to $120 that suggests it’s somewhat in a free fall (-33%). Too much brand equity for that to happen imo, but likely not a high growth stock given their current product bundle.

  26. Olaf Görensen

    I also think that Ethereum is still a good long-term investment. It’s probably the most important crypto/blockchain project that actually has any real projects up and running.Also the machine learning price predictions for ETH are quite bullish:

  27. Adham AbdelFattah

    What do you think of Amazon? It’s down ~25% from its peak as well

  28. Jim Peterson

    If one looks at buying stocks like buying parts of a business (that pays you from cash flow while you own it, i.e. dividends) it’s a good time to buy. Dividends from the great companies have been increased this year- not reduced. JPM increase 42%; MSFT 9%, UPS 9% etc. All at very reasonable PE’s.Picture two lines: the first one is your dividend stream which stair steps up each year. While the second line- the value of your account, bobs and weaves over and above the dividend line.Add to your income dividend stream while values are lower.

  29. Frank W. Miller

    I went to a 75% cash position about a year ago. I recently bought a large set of 6 month CD’s and a large position in AT&T (T) for the dividend. I’m still sitting about 40% in cash. I will eventually go all back into the market but I’m sitting on the sidelines for at least the next 3 mos. Big surprise, no crypto for me…

  30. sigmaalgebra

    Facebook … the outlook there is cloudier given likely regulationThat regulation promises to be slow in coming with likely not much effect on earnings and may not come at all.Apple? Best I can guess, their smartphones don’t wear out or rust out. So, when they have saturated their market, there’s no longer any biggie reason for people to buy more. So, for continuing earnings, Apple needs to find some more hot products to sell. Hmm …Facebook is in the ad business, in particular the targeted ad business, getting eyeballs from social media, and that business promises to continue.Tech has ridden a fantastic wave from Moore’s law and similar laws for rotating disk space, solid state disk space, optical fiber bandwidth, and the explosion of the commercial internet. The good news is that the prices per processor core cycle, per byte of storage, per bit per second of transmission bandwidth are all way, way down. E.g., now Amazon is selling the AMD FX 8350 processor, retail, one at a time, in stock, free shipping, for $78.49. That puppy has 8 cores, 64 bit addressing, and a standard clock speed of 4.0 GHz. That clock speed, and progress on processors for consumer use from Moore’s law, appears to be about the end of the line at least for some years. A 2 TB rotating hard disk goes for about $60. E.g., the first server for my startup I plugged together has less than $1000 in such parts and totally blows away and makes look silly decades of $1+ IBM mainframes.For such parts, the issue now is what the heck to do with them.AI, ML, self driving cars? Let me recover from choking from laughing. When I was at IBM, I was in an AI group, gave one of our papers at an AAAI IAAI conference at Stanford, but later alone totally blew the doors off such work with just some applied math I derived. So, I don’t see any future from anything like current AI/ML.To generalize from the example of how I beat AI, IMHO, this amazing hardware and readily available infrastructure software have not been nearly fully exploited, but I don’t see such exploitations being an expected extrapolation of Apple’s past.Net, I could see Facebook, as an ad company, being a value stock but not Apple. Or IIRC, Buffett’s criterion of a value stock was one where one could be sure for the next 20 years would be growing and making money. With that criterion, I could count Facebook but not Apple.

  31. Pointsandfigures

    Markets are really barometers of human behavior

  32. george

    Apple: Painful to experience in the short-term but overall, Apple is perhaps, the best run company (at scale) on the planet. Q4-2018 YoY: Revenue up 20%, earnings up 41%, and double digit ASP iPhone growth, doesn’t sound like slowing down. Q1-2019 guidance was conservative, but Apple is faced with the some macro challenges factored into the market (mainly Trade). Over time, trade sorts out and Apple’s $100B share repurchase program will help neutralize the share price concerns.Bottom line, Apple is in a very unique situation – experiencing double digit revenue and earnings growth while continuing to expand and shift the sales mix across to higher growth engines – in services.Final thought: Transitioning business lines at enterprise scale is difficult to accomplish, but Apple is executing brilliantly and I’m blown away by their organizational abilities…Bullish on Apple

  33. kirklove

    Where is “safe haven”? Just curios: T-Bills, Bonds, and Gold?

  34. Ricky Ng

    Assuming there’s a portfolio of only bitcoin and ethereum, how would you allocate the portfolio for the most upside? For an example, 50/50 means they are equally likely to appreciate.

  35. Prokofy

    This is why I think it’s time to cash out and close my Acorn.