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Tuesday, December 17, 2013

Joe Fahmy was there in 1999, and here he explains why this isn't a replay of 1999.


I quit reading Fahmy for a couple years, but it turns out he's starting to post interesting stuff again. I'll have to re-RSS him.

He was around in 1999, so he can tell you what that market was like in 1999. Here, read this entire article:


Joe Fahmy - stories from 1999. Hell, I'll just quote most of it for the lazier readers:

- Back in 1999, many of the companies that were trading at $100-$1000 had earnings of less than 0.50 cents per share. Some had no earnings and the metrics analysts used to value them were “clicks” and “eyeballs.” When you look at many of today’s high-priced stocks (MA, GOOG, PCLN, AAPL), these companies are earning $30-$50 dollars per share! BIG DIFFERENCE!

I'm sure, though, that someone will reply "hurr durr Facebook, hurr durr Tesla, therefore herp derp bubble". Because two stocks with major market dominance in growth fields is the same as an entire constellation of venture tech stocks in the late 90s.

- For about 6 months during the dot-com bubble, this was my strategy: At 10AM EST, I would buy the top 3 stocks on the point gainers list. The stocks were usually up around $3 at that time. I would leave the office, go to my morning meetings, have lunch, attend more meetings in the afternoon, and then come back to the office by 3:30PM to sell my stocks. Every stock was usually up between $10-$30. Again, this went on for months! Talk about complacency, huh?

Is that complacency around today? Frankly, the only market I've seen like that in my few years was the 2009-2010 gold stocks. Hey, wait....

- One friend who was on that trip got “option fever” and decided to open his first brokerage account (don’t worry, I explained options to him during halftime of the Monday Night Football game). He started with QCOM options in November 1999. The stock went from $200 to $400 in 2 weeks and his $10,000 deposit went to $50,000 in 7 trading days[...].

Do you know any market rookies who are trading options on stocks right now? That sort of craziness seems to be what you'd see in 1999. Sounds more like trading junior mining warrants... oh, wait....

- Another friend was trading a stock for 6 months and then one day it was up 40 points. He called me to ask what the news was and I told him they got FDA approval for one of their drugs. He paused for a good 5 seconds and said “OHHHH SHIT! They’re a BIO-tech company!…I had NO IDEA???” For the prior 6 months, he thought he was trading a semiconductor stock. He then said “Oh well, who cares, they’re all just letters and symbols, right?”

"Oh well, who cares, they're all just letters and symbols"?!? That sure sounds like complacency, right there. Sort of like being in 2010 and happily trading a known-to-be-valueless junior miner with a history of incompetence, OPUD and generous management compensation, instead of a well-managed company whose stock just doesn't fly up as fast. Oh, wait....

- I remember putting in a market order for 500 shares of a stock that was trading at $50. I didn’t get filled for 3 minutes and the stock moved to $55. I thought maybe my order never went through, so I cancelled it and placed another market order. Now the stock was at $60 and I still DIDN’T GET FILLED!!! I said to heck with this, cancelled the second order, and left it alone. At the end of the day, the stock was up $60 to $110, lol.

Does that sound like today's S&P 500? You seeing any fast markets in S&P stocks?

And this, to me, seems to be the key takeaway from Joe Fahmy, since Josh Brown has picked up on this too:

In fact, all my friends that I described in these stories currently HATE the stock market. I try to encourage them to invest for the long-term, but they have NO interest in getting involved. As I mentioned in my previous blog, I think people use the term bubble to describe today’s market because they are annoyed. They want the market to come down but it won’t, so they call it a bubble out of frustration.

I guess there must be a lot of people out there who didn't buy the Summer 2011 "imminent Euro breakup" crash, and are pissed off at how they missed the subsequent 60% advance in the S&P. Then they didn't buy the two 10% S&P 500 corrections in 2012 (I don't even remember what was happening back then), then they didn't buy the three teensy 5% corrections in 2013, and all the time the market has gone higher.

Germany's gone up 60% since summer 2012, UK 30% in the same period, Japan popped 30% in 6 months on Abenomics, and I bet a lot of doomers are pissed at having held PMs while the broad markets went up and the doom of coming worldwide economic collapse vanished.

So they call a recovering stock market a bubble.

They want the market to come down, but it refuses to.


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