Submitted by QTR's Fringe Finance
It’s an interesting juxtaposition when a black swan that you expected crosses your path but looks a bit different than you had previously suspected it would.
Now, what would be a better proxy for putting a chill on the entire stock market than this one stock? If you had to pick one name right now that could cool sentiment in the market, across dividend payers, index ETFs, technology ETFs and blue chips, this would be it...and this stock could be up against the ropes.
As I noted in my September 2023, this stock was already robustly valued, along with pretty much anything else that trades publicly in the United States right now. This significant multiple expansion means the market expects significant growth.
This means that eventually, growth is going to have to come from new segments of the business. And all of a sudden - just like that - this company doesn't have the visibility on its business it once did...
How can you position yourself for new segment growth and innovation when you don’t even know what the company will look like a couple years from now?
This uncertainty, combined with the fact that every single f***** thing not nailed down to the floor is overvalued right now, and the fact that euphoria is everywhere in markets while rates are at 5 1/2% and liquidity is drying up before our eyes, means that a stall in this one company could wind up becoming a stall for the broader market.
The way the market is priced now, everything needs to be excellent or beyond excellent. All growth targets need to be hit, and companies need to exceed expectations. On top of that, liquidity needs to continue to mysteriously fall from the sky as the inevitable drying up of liquidity continues with rates at multi-decade highs...(READ THIS FULL PIECE HERE).
