Skip to main content

May Deja Vu - Third Year in Row!

May deja vu - third time in a row. If you go back in 2010 and 2011, one could have almost predicted what would happen in 2012 and could have saved tons of money by moving to cash at end of Apr. While I almost knew what was coming in May, I did not act on moving my investments to cash (luckily I told few folks who may be smarter in acting on it). Well now that May has again proved true to old saying of "Sell in May and Walk Away" and month is over, what's in store for rest of summer?
Given Facebook IPO fiasco (which was supposed to be savior for markets) and continued political and policy mess in Europe, things don't look very promising. Dismal labor market conditions in USA and sudden slowing down of economies in China and India are adding fuel to the fire which Europe's lack of action has created. Here is my prediction on how it would play out:

  • Markets would be very volatile till elections on Greece on Jun 17. Most likely Greece results would be slightly positive with pro-bailout parties with ND coming first
  • ECB and Fed would show some determination of action and may intervene in providing support in later half of Jun. Here comes QE III or Operation Twist II
  • Summer would be tough for President Obama with continued dis-appointments in Jun and July unemployment reports
  • Markets would start turning around after DOW briefly goes below 12000. S&P may touch 1250 and then turn around
  • As summer progresses, there would be calm returning to markets preparing for Nov elections in USA
As investors, one may want to wait for 2-3 weeks and when S&P touches 1250, one may want to consider putting money in markets slowly and steadily.
I cannot possibly end my blog without writing about Facebook IPO fiasco. The main blame for this goes to Facebook (for being too greedy), Nasdaq (for blowing out opening) and Morgan Stanley (for creating pre-IPO bubble about what investors are willing to pay). If Facebook had priced at $30 or $32, it would have created quite a bit of positive momentum and stock could have been trading around $40. Now it would take few quarters before its stock would see $40. I was (un)lucky enough to get 50 shares allocated  in IPO. Given the losses, I should consider ordering physical copy of shares to frame it and put it in my study room as an example of Internet Bubble 2.0!
Have a great week!
/Shyam

Comments

Post a Comment

Popular posts from this blog

Clicks to Tokens: Will 2026 Echo 1998's Boom or 2000's Bust?

My "blogging" was in hibernation last 8 months due to my self-imposed restraint given the environment as well as built-in inertia to get started despite so many interesting events and markets reaching all time highs after taking a big dump around "Liberation Day" in Apr...Around that time I had the blog ready that it would be repeat of Mar/Apr 2020 panic and recovery during onset of Covid Pandemic. The hunch happened to be correct and I was glad that I could keep and take some positions which I am still holding especially around AI theme. But that was then...as 2025 is about to wrap up in 10+ weeks, let's look at what's in store for rest of 2025 and 2026. And what's better time than to start writing again just before one of the most important week on the calendar with multiple key events coming up next week... Fed meeting to decide the course of interest rates - it's almost guaranteed that Fed will cut rates by 25 basis points (2nd time in 2025) and...
Post a Comment
Read more

2026: The Year of Convergence – Melt-up, Moonshots, or Mid-cycle Correction?

Happy New Year! After another period of self-imposed hibernation from the blog—partly due to the festivals, travel, intertia and partly to watch the dust settle on a chaotic 2025—I decided to use the quiet of this New Year’s morning to finally reboot.  Looking back at my October post,  “Clicks to Tokens,”  the hunch about the AI theme held firm. We spent much of 2025 debating whether we were in 1998 or 2000. As we enter 2026, the answer seems to be "neither and both." We have the roaring optimism of the 1920s fueled by "Silicon Spirits," but with the high-speed volatility of the 2020s. So, as the calendar flips, what is in store for 2026? Markets may experience melt-up (S&P touching 8000),  with some moonshots (like SpaceX and OpenAI) IPOs or even see mid-cycle correction bringing down S&P to 6000. That's a wide range and will be decided by Four R's... Here are my thoughts on the " Four R’s ":  Rates, Robots, Rotations, and Real Assets. 1. ...
Post a Comment
Read more

Rockets, Relics & Roaring Markets: The $4 Trillion Crossroads of 1927 and 1999

Happy (almost) Summer! After watching Kevin Warsh get sworn in at a White House ceremony two days ago, tracking three S-1 filings that could collectively hoover up more capital than every U.S. IPO since 2022 combined, and watching 26-year-old stock charts finally break to new highs — it felt like the right moment to ask the uncomfortable question out loud. Are we at a party that ends gracefully, or one that ends with the furniture on fire? The market is simultaneously flashing the neon signs of 1999  and  the orchestral excess of 1927. Most commentators reach for the dot-com playbook. I think the original Roaring Twenties is the better map. Here's why... Assembly Lines to AI Clusters Ford's River Rouge complex was the largest industrial facility on earth in the 1920s — raw iron in one end, a Model T out the other. Steel, rubber, and oil became the picks-and-shovels of the age. GE and Westinghouse were electrifying factories and homes. The infrastructure buildout  was ...
Post a Comment
Read more