chetan shenoy

Day 4 – The Current Market

11 Nov 2021

This is day 4 of my effort to write everyday for the next 30 days.

I find investing money to be exhilarating. The stock market has drawn to me since I was 14. I took a business class in high school and won our quarterly stock contest. I "bought" shares of tech companies that I knew well. It helped that I had impeccable timing – the bull run of the late 90s was reaching its apex.

An endless supply of companies went public during that time. Investors plowed billions of dollars into them knowing that they had no revenue. Stocks were jumping over 100% day-to-day. The euphoria spread like a disease. A few of my friend's parents left their full-time jobs to start day trading. I recall feeling like the mania wasn't sustainable. My hunch was right. Within the year, the bubble burst. High-flying companies went bankrupt months after going public. Accounting scandals consumed Wall Street. Stocks that had shot up 4000% had lost 90% of their value. I'm glad my dad wasn't brazen with his stock picks.

I write all this to say that we're in a similar situation right now. Although the circumstances are different, there are eerie similarities to the dotcom era. Public and private tech companies are worth many trillions of dollars. Yes, companies these days have to prove that they can make money. That is fine but a low bar nonetheless. The pandemic has brought about unprecedented supply chain strains along with the loosening of monetary policies across the world (which I agree with). Without any data to back this, my gut says we'll be able to navigate out of our global supply chain woes sometime in 2022. But with inflation on the rise, we risk being smack dab in the middle of the ocean during the perfect storm.

I'm certain we wont see a crash like that of two decades ago. But we are long overdue for a proper correction. I don't see how some companies will continue to justify their valuations. I haven't even mentioned one of the biggest bubbles right now – crypto. I'll write more about that subject later but suffice it to say that I'm not optimistic.

I'll continue to gauge the market. It's tempting to cash out. But I've learned that it's better to ride through the waves than try to guess when they're coming. I can only stay grounded and rational even as those around me make decisions I would not.