📉 𝙄𝙨 $𝙉𝙎𝘿𝙌𝟭𝟬𝟬 𝙤𝙫𝙚𝙧𝙫𝙖𝙡𝙪𝙚𝙙 𝙖𝙣𝙙 𝙝𝙤𝙬 𝙄 𝙢𝙖𝙙𝙚 𝙤𝙫𝙚𝙧 𝟭𝟬𝟬% 𝙨𝙝𝙤𝙧𝙩𝙞𝙣𝙜 𝙞𝙩 𝙨𝙤 𝙛𝙖𝙧 𝙞𝙣 𝙖 𝙬𝙚𝙚𝙠? 📉
We have had 3 years of double-digit growth in the US, led mainly by the growth stocks. Growth vs Value is at historical levels and we have had stocks such as $TSLA $MSFT $AAPL and others really sky-rocketing in the past years.
The current PE of $NSDQ100 is 33.09, more than double the historical PE of 16 for American Indices. In comparison, $SPX500 has a PE of 26. Stay-at-home economy emerging during the Covid pandemic only helped the technology stocks with the move towards digital economy.
Opinions are divided on the future of NSDQ100. Many are pointing towards good earnings and, thus, justifiable valuation. To me, the PE of 33 is way too high for an index overall and, although I like some positions in NSDQ100 (e.g. PTON, BIDU), I decided to short this index with x20 leverage. I opened the position on 28/12/2021 and it currently brings +105%. I will move my SL higher and higher to lock in the profit when the trend reverses, although I think we can still go lower.
Given the yesterdays FED Meeting Minutes, the more hawkish stance of increasing historically low interest rates, NSDQ100 is facing a big pressure and tanked -3.3% yesterday, which is the biggest drop since March 2021. The rates and taxes are other reasons which make me go short on the Index, rather than long.
Attached Graph represents 5-year performance on $NSDQ100 vs $SPX500. As we can see, SPX made over 100% while NSDQ double that. Although this created many very performant investors here on eToro and beyond, the question is whether it is sustainable. Some analysts point to dotcom bubble of 2000 when valuing some of these companies.
Looking very simplistically, it is rather common sense that we cannot have $AAPL making 300B revenue and being valued 3T (or compare $TSLA with 46B Revenue and 1.1T valuation). Companies such as BOXL are making 173M revenue being valued 81.9M. That is very asymmetric and I am not uncertain that we will have to reverse to the mean.
Instead of quoting all the analysts and their predictions, let us have a civilized discussion in the comments below.
𝙒𝙝𝙖𝙩 𝙙𝙤 𝙮𝙤𝙪 𝙩𝙝𝙞𝙣𝙠? 𝙒𝙞𝙡𝙡 $𝙉𝙎𝘿𝙌𝟭𝟬𝟬 𝙝𝙖𝙫𝙚 𝙖𝙣𝙤𝙩𝙝𝙚𝙧 𝙥𝙤𝙨𝙞𝙩𝙞𝙫𝙚 𝙮𝙚𝙖𝙧?
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