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Here we go into the Holidays UPDATE 12 2 2025
Down we go and up we go. More economic news hits the wires. Packaging box sales are down. Everything comes in a box don’t you know. (Yahoo Finance). Freight shipments plunge also from Yahoo Finance.
Signs are popping up everywhere that things are getting more obvious as to the damage inflation is causing.
Meanwhile artificial intelligence stocks hit the roof then that roof turned into a ceiling and last week near week’s end those very same stocks plummeted.
Meanwhile the government reopens as the Democrats capitulate, although it is not for certain who was really at fault, so says the newswires.
Who knows what, or who, really caused all the budget hub bub. But as I penned last week, it’s all about the money. It’s always about the money, so likely Washington, and both political parties, were to blame.
So the question becomes what will the holiday season bring as it pertains to holiday sales. With inflation still burning up prices and both UPS and FEDX having about 10% of their planes grounded because of the horrific crash of a UPS transport jet two weeks back that killed 14 unfortunates, its anyone’s guess how the consumer and the companies that sell to them will negotiate the upcoming season. My guess is not well.
I said the same thing last year but never did see those lagging 2024 holiday sales posted much of anywhere. Good sales numbers they shout from the rooftops. Bad ones are swept under the news rug and one has to dig deep to get them.
Anyway, back to the stock market.
With many of the artificial intelligence (AI) stocks charts looking like one of Elon Musk’s rocket launches, it’s difficult, at least for me, to buy much of anything lately. I am talking about stocks of course.
Take a look at the charts of many of AI stocks like Advanced Micro Devices (AMD), Palantir (PLTR) or Nvidia (NVDA) and note the almost vertical climb in their stock price over the last year or so.
An advisor I know, in fact many advisors I know, tell me not to worry, and that the markets will continue to rise including those vaulted AI stocks.
Sometimes I wonder what they teach these guys in advisor class. Certainly not what a stock bubble looks like when displayed in a chart.
Note to advisors: Vertical lines that look like rocket ships blasting off are bad.
Yes, they can continue to go higher still. Much higher than one might think. But those rocket ships usually flame out and crash and burn, bringing down investor money with it.
An advisor I know bought DocuSign during the CoVid shutdown period, and watched it rise from around $50 a share to over $300 starting mid-2020 to about late 2021, the shutdown period.
Lots of people were using DocuSign due to being locked out of their offices. As it started to fall, the advisor said “how low could it go?’ and kept holding it. I told him look to where it started its rise (about $50.) and that’s where it could end back up. He laughed and said no way was going back to $50. He was kind of right. It didn’t end up at $50. It went below $20.
The lesson here is the gravy train of mania stocks that experience these sort of ballistic increases are, in my opinion, accidents waiting to happen.
Sure, some people make a lot of money, but some also lose their shirts when they crater.
When people ask me about the stock market now, I have to say I have my doubts that some of these stocks won’t end in some horrific pull back that will shock investors.
Sure, stocks can go a lot higher than anyone expects. And that anyone is me from time to time. But I just can’t chase the tiger by the tale in good faith.
People do chase these ballistic stocks in a moment of greed. They have a FOMO moment, (FEAR OF MISSING OUT) and no, I didn’t make that one up. It’s a real stock term.
But those vertical stock charts in some stocks, coupled with what I see as a faltering economy, may play out in a nasty sort of way, draining investor portfolios in the process.
I could be wrong. I never think I am 100% right, which is part of what I’ve learned in my 50 odd years of doing this stock thing.
But many times throughout history those darn rising vertical lines turn tail and vertically go the other way. And like investor icon Warren Buffett’s two investing rules say:
Rule 1: Don’t lose money.
Rule 2: Don’t forget rule 1.
Anything can happen, and some of it may not be so good.
Caveat emptor.
“Watching the markets so you don’t have to”
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(As mentioned please use the below disclaimer exactly) THANKS (Regulations)
This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance services. Email: news@moneymanagementradio.com.
