Scary Markets Our Financials Tortured

Stocks ending in 1930 were dropped by one-third. A year later, the great fade away covered half of the country’s financial assets.  The Great Depression started in 1931, my year of birth. By then, the market tracked 20% below its low point of 1929. Then, by 1932 we  finally bottomed some 80% below the peak. 

Nobody cared or jumped out windows. Born in August of 1931, I had as yet no reference points for good markets, bad ones or indifferent settings. 

During the thirties, my elder brothers and I shared a small bedroom in an East Bronx tenement. The rent couldn’t have counted over $40, monthly. I equated poverty with successive  noisy fights between the brothers. Ben, our Pop, was so harried running his tailor shop on 128th Street that Sundays were more or less the sole day of rest for the Sosnoffs. 

Sometimes,  mom would cook a meatloaf with an egg inserted at the heart of it, but you couldn’t count on such largesse. PS35 was my elementary school home. A bunch of spinsters ruled classrooms with an iron fist when you got out of line. You were then termed a sneak and made to stand in the corner for hours. 

But, some unexpected rewards happened. One morning, Miss Salt came by my desk, hoisted me out of my bench in one snappy tug and whispered I was being skipped seventh grade in junior high school. “Don’t disappoint me”, she said, while twisting my belt tighter. I dared not share such skipping news. You kept mum  and hoped for the best of outcomes. Good at long division, numbers danced for me in rapid succession. 

Lots of sell offs.  Airlines got hit for 10% overnight, namely Delta and United. But hits in prime growthies were fewer. They took Microsoft out to be shot along with Dow stocks like Amazon. No money for Home Depot any longer or for big cap growthies like Microsoft and Qualcomm. Cry yourself to sleep pussycats. 

Below the surface,  was a big bite out of Nvidia, but still a double year-to-date. I’m seeing comparable declines in growth stocks and financials. Microsoft, Qualcomm and Nvidia fell asleep. 

I needed to face a conceptual deep basic. Everything I owned was expensive and volatile. I carried a deep conviction that what I owned was no longer cheap, just big. 

This is how you get yourself in trouble. The market sustains a valuation correction. Additionally, stocks you liked the most that have been kind to you suddenly top out and a serious correction follows. Bang out half your holdings and sell down?

What’s to do when you think the markets got too pricy? You keep your hands in your pockets? Prospective movers like Apple do stay quiet. If Amazon is up 7 points one week and then down  8, I’m in a no hits and runs game. There’s no money now for high priced home improvement stocks like Home Depot.  Microsoft gets taken away and slapped silly. 

I wanted to collect all the Apples of the world.  Investors bid it up to a premium valuation of 25 to 30 times earnings. It held its premium of 25 to 30 times earning for at least a couple of years. There always seems to be money for stocks like Apple.  It can carry a premium price-earnings ratio for years and years. Look at the demand solely for Apple that Buffett created with his enormous reach for it.