Today was one of those days where I woke up.
I checked the market, and I wanted to just go back to bed.
That was my reaction. After seeing the market this
morning, it started off bad. We had ourselves in the red,
right? From the get-go and then it only
got worse throughout the day. We ended up with the Dow Jones
down 3.12 percent. That's the Dow Jones.
These are the old Boomer stocks. These are the ones that are
supposed to stay pretty flat and not be volatile and they're
trading down. 3% in a day we have the S&P 500 down 3.5%,
Five, six percent. So even the oil trade and the
consumer defensives aren't holding up today.
And then we have the NASDAQ, which is basically trading like
penny stocks, even though this index contains the most
profitable, most powerful companies in the world.
And it's down 5% had a 4.99 to be exact.
This was one of the worst days in the market in my recent
memory. In fact, I have to go back to
2020 during the pandemic to recall a day that was worse than
this. Now, if we look at my portfolio,
Down to twenty eight thousand dollars in gains around, half of
that is from dividends. So we're getting close to
entering back into the red. In fact, if we have more days
like today, where the entire Market just sells off left,
right and Center, I'll be entering back into the red.
Now if we look at the one day performance here, let's go ahead
and check this out. We're down 4.25 percent and
we're down fourteen thousand, eight hundred dollars, fourteen
thousand eight hundred dollars in a day.
That's a lot of money for me. That's a that's a ton of money.
To see vanish in one day's time. If we look at this on a
breakdown in my portfolio, the tech category which is Apple,
Microsoft is down, 5% apples down five point, five seven
percent, you don't see that that often even Microsoft is down
four point three, six percent and the rest of big Tech is down
more than Microsoft. So Google and Facebook are down
even more, the consumer categories down, 4.5, 3%.
We just have everything across the board Costco, Disney Home
Depot, Nike Target, all down. The one that did the best was
targeted. Why did this one do the best?
We don't really know in the core category, SC HD, held up.
The best s CH G the growth companies traded down the most
and BST traded down in between the restaurants, didn't really
fare any better. They're all down in the red.
Even Vici was down a bit. I guess it held up.
Okay, but this one still traded down and I guess the financials
did OK, JP Morgan traded down slightly less than the rest of
the market but that's it. That's a look at today's trading
action in my portfolio. Literally every single stock I
uh Own was in the red and in the red, by over two percent.
See the big problem with days. Like, today isn't just a single
isolated day of a sell-off. Even though this is a pretty
intense sell-off going down 4 percent or 5 percent, or 3
percent in a single day, is pretty intense.
I think most of us, most of us have the mental fortitude and
the chops to be able to handle one isolated day of a large
sell-off. We've been used to this.
We've seen a lot of volatility over the past couple of years
but this is especially difficult.
The handle this type of cell off with almost every single company
in the market. After seven months of continual
capitulation pessimism and overall a bearish market since
November, the qqq's had a lot of volatility like normal and
that's fine. Most of us are used to these
jarring ups and downs. The problem is we see days where
it sells down a lot and then we get a ray of Hope and it spikes
back up and it seems like we might have a shot here.
We might enter back into a bull market, then the market sells
Down another 10 or 15 percent. Then we have a ray of hope, it
goes back up 7%, followed quickly by a sell-off.
We have the ups and downs of the market, but mostly mostly the
stock market's going down. And even after having these nice
little rallies, like we did mid-march of 16%, we quickly
have the following sell-off over and over and over again.
In this is very mentally difficult to deal with having
seven months of a continual sell-off.
So having said that, I want to share a story with you, this is
the story of your pesky. That once you're home that's
right. In this story I think is highly
applicable to the market that were in.
So this is about a neighbor that wants your home because you have
a nice home you live in a nice neighborhood.
Your home is like a 4,000 square foot home with a big front yard
and backyard. It has a beautiful view and it's
on one of the nicest, Lots in the neighborhood.
Well you have a neighbor that really does want to upgrade his
home. He lives down the street, it's
not on As Nice of a lot as yours and his home is a little bit
smaller so he wants to buy your home from you and upgrade his
home. And what he does is, last
November 20, 21. He comes to you and says, hey, I
really like your house. I know that you probably like it
as well. So I'm going to give you a
really good offer for it. This is probably more than your
home is actually worth and he offers you 750,000 dollars for
your home. That's a pretty dang good offer
because you're home according to Zillow and according to most
Realtors is worth around 700,000.
So he's offering around fifty thousand dollars for your home.
You think about this, you talked with your Spouse and you say,
you know what, this neighbor once our home he's willing to
pay a little bit extra, but I don't want to move.
I really like our home, I really like the view, I really like the
neighborhood and the lot that we're in and I think we're lucky
to be in it. So you refuse his offer and the
neighbor goes back home. He's disappointed and then to
your surprise just a month later this Neighbor comes back and he
offers you 700,000 dollars for your home and your taken aback
by a little bit. You're thinking why would I
accept his offer now when it's Fifty thousand dollars, less
than what he offered me just a month ago.
So obviously without a doubt you reject his offer.
Now the months go on, we get into February of 2022 and you
think that your neighbors done bothering you, but he comes back
again and says, hey I'll buy your home but this time I'm
going to pay 600,000. That is the bid for your home.
That's what I want to pay for it.
And now you're almost bothered by your neighbor.
You're hoping that he'll go away and stop giving you offers for
your home. You tell him that it's insulting
that in November. I was offering seven hundred and
fifty thousand dollars for your home now.
He's only offering 600,000. Right.
Why on Earth would you sell your home for a hundred and fifty
thousand dollars less than what it was just a few months ago.
So, you tell your neighbor to take a hike and not to come back
to your house to stop giving you offers, but your neighbors very
persistent. He doesn't leave you alone and
come March of 2022. He leaves a note right on your
door, saying the offer for your home is now five hundred
thousand dollars. Now, obviously this is bizarre,
it's somewhat insulting, you're looking back on all the Offers
you've got your discussing it with your spouse sing in
November, he offered. Seven hundred fifty thousand
dollars from my home, then in December, he offered 700,000
then February 600,000 March 500,000.
This is really weird. Why does he keep offering me
less money for my house? Nothing has changed.
My house is the exact same. Now, obviously you grab that
offer for 500,000, you angrily, throw it away in the trash,
you're disgusted and annoyed by the offer, you're annoyed by
your neighbor, but you're also thinking in the back of your
head, why is he offering me less and less and less?
Every couple of months a lot less he offered me 750,000
dollars at one point. Now the offer is 500,000 and
you're becoming slightly concerned and the back of your
mind that maybe you should have accepted that first offer at
750,000 one month passes just one month and you find another
note on your door from the same neighbor.
This is May of 2022 and the offer this time is for 300,000.
That's what he's offering for your home in this time.
You're not angry Ari you're terrified, you talk to your
spouse and you say, you know what, I see the trend here,
we've gone from seven hundred fifty thousand dollars and it
was a huge mistake not to accept that offer every single
subsequent offer has been less and less and less and it's
rapidly declining. Next month is probably going to
be two hundred thousand or a hundred thousand.
We have to take this offer right now.
I know it was a mistake to not take it earlier but it would be
a bigger mistake. Not to take this off right now.
So you go to your neighbor and tell them.
Look, I don't want to be selling my home. 300,000.
This is painful to do. I could have sold it for so much
more, but because I think there's a good chance with the
way things are going. That it could go lower in value.
I want to sell it right now and I'm going to take that offer for
300,000. Now, I know what you're thinking
when you're listening to this story, you're thinking the
neighbor took advantage of these homeowners, right.
He kind of scared them into selling their home at an
incredibly low price but the neighbor didn't do anything
wrong. All he did was give them B you
give them offers. These people could have rejected
all of these offers and just stayed in their home and from a
third party perspective, you're probably sitting here thinking
these people are dumb. Why would they sell their home
for three hundred thousand dollars, if that's not an offer
that they liked? And if they think that their
home is worth more, why don't they just hang on to their home
and sell it to another bidder? That's willing to pay more in
the future, right? If they think their home is
worth more than 300,000. Why would they sell it to this
annoying neighbor for 300,000? Well, the reason why is because
they're afraid In the future, he might offer them less money.
That is the reason that they're selling.
And even though, when you're a third party, looking at a story
like this from the perspective of homeownership, the truth is,
most of us have a big problem with this.
If we think that the price might continue to go down for an
asset, we own we get pressured into selling at prices, we don't
think they're worth just like these homeowners in our
portfolios in the stock market, we have a neighbor that's more
annoying than this neighbor in the story because that Uber only
gave a bid once a month, but our neighbor in the stock market
gives bids every single day. Every single day, he's coming to
our door. Leaving a note on the door and
giving us an offer, that's either higher or lower.
And the worst thing that you can do is look at the neighbors
bids, go down, more and more, and more and feel pressure to
selling, because they might go further down in the future.
Let me just give you an example. When I look at the bids that I'm
getting, for my company's, I don't currently like the bids
that I'm getting. So I'm ignoring the neighbor.
Me these bids. I'm getting offers to sell my
Apple shares for 156, and I'm not going to budge and give my
shares to someone else for 156. They want my Apple shares.
They're gonna have to pay well over $200.
A share. That's at the point that I
consider accepting an offer but as of right now, this is the
pesky neighbor offering to buy my home for 300,000.
When I know it's worth 700 thousand, we have Microsoft.
Is another example, I'm getting offers for my shares of
Microsoft for 277 to me. That's a joke.
I think that Microsoft should Could be worth in the range of
342 380. That's when I would start
looking at possibly accepting bids for Microsoft, but in the
range of below 300, I'm not even going to look at him, I'm not
even going to consider selling them.
And I'm specially not going to consider selling Microsoft
because my pesky neighbor might offer me a lower offer in the
future. In the restaurant category, the
neighbor right now is giving me very poor offers for these
restaurants. He's offering me $77 for
Starbucks. I think that Starbucks is worth
115. Not accept an offer from my
neighbor becomes by. An offers me 115.
I would accept the offer to day. That would be a great offer, but
at 77 I'm going to hold. And if he offers me less money
next week or next month, over the next six months, I'm going
to continue to hold because I have no reason to sell the
company right now. For Fears of it may be going
lower right now. My neighbor's offering me seven
eight dollars and forty one stents for Texas Roadhouse right
now. I think this company is worth
above $100 a share. So, do I have any need to sell
it right now? Of course not, I can just hold
on to it. Have the company grow over time,
open up more locations, pay me, dividends create more free cash
flow and I'm definitely not going to sell this company for
fair that next month. The neighbor might offer me a
lower price and the same goes for Domino's and every other
company in my portfolio. So that's the story this time
don't be the dummy that sells your home for 300,000 because
you might get a lower offer next month.
In some cases, the best decision is just to hang on to your home
that's all for this time. Then, I'll see you in the next
episode. Then, I'll see you in the next
episode.