Overview Of The Week 17: A Goldmine For Memes
Hi Multis
Pfew, what a week, right? On Thursday and Friday, the stock market dropped the most since the COVID-19 crash. I don't have to tell you that the reason was the tariffs that were presented.
I started writing about the tariffs for the Overview Of The Week, but, as has happened before, it became too long for the OOTW and I will publish it as a separate article tomorrow.
Articles in the past weeks
With all the turbulence this week (that I wanted to understand and researched in depth), I didn't publish too much. I added to the Forever Portfolio twice this week and wrote two articles about it.
The first time I added was on Monday. That was a smaller portfolio addition, just the 'on steroids' part of my DCA On Steroids plan.
You can read the article here.
The second time, I added substantially more money. You can read about these additions in this article.
Memes Of The Week
This situation is, of course, a goldmine for memes. But earlier this week, it was April Fool's day. I launched this one on X.
But, of course, most memes were about the tariffs. Here are a few.
This is not really a meme (which you expect to have an image) but I had to laugh anyway with this comparison:
Tariffs on Bangladesh/Vietnam are like a hedge fund manager fighting with his cleaning lady to get the right back to clean his own toilet.
Interesting Podcasts Or Books
I don't always read about investing. Health is another one of my passions. Right now, I'm reading the excellent book Brain Energy.
In the book, Dr. Palmer explains very well that mental problems, from Alzheimer's disease, substance abuse, dementia, schizophrenia and many others are related to metabolic problems like obesity, diabetes and inflammation. He argues convincingly that everything comes down to the function of mitochondria.
The markets in the past weeks
The markets were up a little bit until Thursday. In just two days, the indexes chalked big losses. We got a weekly loss of 9.08% for the S&P 500, 9.70% for the Russell 2000 and 10.02% for the Nasdaq.
The Greed & Fear Index dropped to a level not seen in five years.
This meme was spread widely:
Extreme bearishness is often very good. The last two times the Fear and Greed Index was this low were in September 2008 (the Great Financial Crisis) and March 2020 (the Covid Crash). Both were great buying moments in the review mirror. I don't see why that would be different this time.
Should you have hedged? I see many trading bros pounding their chests that their hedges worked perfectly. And I'm sure they will have. But they don't talk about the costs when the markets go up, which is most of the time. This tweet was refreshing in that sense.
This is why I'm never hedged. I'm not emotionally impacted when stocks drop. As I have the luxury of dollar-cost averaging (on steroids), and my time horizon is at least two decades, I'm happy with lower prices. But of course, all situations are different.
The 10.5% drop on Thursday and Friday was the 5th biggest 2-day decline since 1950. If you look at history, you see that stocks were higher 100% of the time over the next 1, 3, 5 years every time.
Do you want another data point? Here's one. This is the VIX, the volatility index. As you can see from this chart, it closed above 45.
Historically, the returns are positive following such a high VIX. For the 1-year return, based on the historical data, there's a 93.3% chance of positive returns. For three years, that's 96.7%. For 5 years, it's 100%. The average return over 5 years? 104%. In this table, the VIX is still at 30.02, but it's already at 45 after Friday.
The real question to ask is: "If you think the stock market will hit new highs during your investing horizon, why don't you buy now?" Do you want to time the bottom? Good luck.
Don't let the fear porn get you in its power and just keep buying. If the market drops more, it may feel like you burned money, but that's not true. The people who say to wait until the bottom is reached miss the bottom as much as the people who don't try to time.
Quick Facts
1. You didn't lose that much
If you think you lost a lot of money... these people a bit more.
(Source)
2. Datadog to Open Aussie Data Center
Datadog announced it’s launching a new data center in Australia, which is its first in the region. It will support all existing Datadog products.
This is important for speed but also to comply with local privacy, compliance, and data residency requirements. Especially for sectors like healthcare and finance, these are strict. Until now, Datadog customers in the region relied on data centers in North America, Europe, Asia, and AWS GovCloud.
Datadog also opened a Melbourne office recently and expanded its teams in Sydney and Auckland.
If you want to continue reading, you will need a paid subscription, but you can grab this offer. As the S&P 500 is down 17.5%, I decided to give an 18% discount.