I'm confused.
1) The 10-year Treasury rate is up by a whopping 0.1%... to yield a gargantuan 1.4%... and this means fund managers should sell stocks growing at hundreds of percent? Because they're risky and the "risk-off" T-bills are
so much more attractive at 1.4% than at 1.3%?
2) "Rising interest rates mean inflation." But doesn't that make growth stocks more attractive than investments that get destroyed by inflation, such as fixed-rate bonds?
3) "Inflation could slow the economy." Enough to stop the industrial disruptions that ARK invests in? When such disruptions are
accelerated by recessions, according to ARK?
Unless someone can explain what I'm missing, I'm thinking these practitioners of
the dismal science are emperors with no clothes.
Confusion Part Deux
So yesterday I was a bit perplexed by some expert commentary on current market dynamics. But today, thanks to penetrating journalism from Reuters and Bloomberg, I find the dynamics are as clear as raw sewage.
Wall Street ends sharply lower, tech selloff weighs as bond yields climb
...The Treasury note yield rose above S&P 500 dividend yield, wiping out the stock market yield's strong advantage.
"Rates matter. At 1.5%, the yield is comparable to S&P 500 dividend yield," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "And there's no capital risk with a 10-year, you'll get your principal back. All of a sudden it's competitive with stocks,"
I see. So this market professional claims investors buy the S&P500 for the
dividends only? And you'll get your capital back from 10-year bonds... except for that pesky inflation that rising bond yields are a sign of?
Bloomberg has much the same story...
Treasury Yields Surge Past 1.6%, Sounding Alarm for Risk Assets
...and they helpfully include a chart of this mighty bond-yield surge, which is certainly tempting until you notice that the numbers are negative because they're adjusted for inflation. Look out TSLA!
So let me get this straight. Investors are dumping stocks, especially high-yielding techs, because negative-yielding bonds are crawling upward toward zero because nobody wants them. Investors are dumping stocks because they are dumping bonds. Where is their money going if they're worried about inflation? Beanie Baby futures?
I inputted all this data into the Thinkomatic 9000, my personal AI (Addled Intelligence), and generated the following conclusions:
1) Many market professionals don't understand what
@StealthP3D has taught here: Great growth stocks like TSLA can keep rising much longer and farther than you imagine if you "lock in gains" by locking out further gains. And these professionals don't understand what Professor Cathie teaches nonstop: Great growth companies like Tesla are disrupting the world, which will never be the same as when "value" stocks flourished.
2) Some market professionals profit from big volatility, so we get big volatility... along with a smokescreen of utter nonsense explanations pretending that the price swings are rational.
Either way, I will thank Jesus, Mary and Allah if I get another buying opportunity like last March: a 50% drop from the high right before Tesla unleashes a megaton of progress. I've ridden this bronco before, and it don't scare me. Bring it on.
