rotation from megacaps into small caps
basically everyone has been buying these megacaps to FOMO chase the rally but today they see all these small caps rising they're like shit i gotta take profits on the megacaps to free up cash to buy those small caps now that inflation is slowing down now that fed is likely to cut interest rates
anyway i hope you do buy the dip on AMZN
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aims to identify stocks with rock solid growth fundamentals with 10x potential. also dabbles a little bit in trading
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razo2 : making a fake bull market. while earning is like shit
MomentumPython1337 OP razo2 : u referring to small caps?
it is expected that rate cuts will reduce cost for small caps since they usually need to borrow a lot to finance growth. so lower interest rate is good for their profit margins and for cash flow.
market is forward looking. i will be very surprised if small caps don't explode in 2nd half of 2024. i myself have various small caps + significant shares of IWM
razo2 MomentumPython1337 OP : bro look at oil if JP cut rates where you think oil will go? it be like 1970 again. 2008 also the same thing. oil always loves rate cuts, you cut rates oil will fly so high it will send the market back into inflation and stagflation.
I work on the oil sectors. oil average price is 50 to 60 per barrel. we are way above means inflation. you need to remember today oil price is OPEC+ cut supply back to 2010 and US busy dumping SPR.
MomentumPython1337 OP razo2 : ok look if you're that bearish then the only thing you can do is either short SPY outright or buy naked puts or hold onto cash and put into fixed deposit and be satisfied with 3-4% per annum yields
razo2 MomentumPython1337 OP : I already booked my tech gains bro. made enough to retire. thanks
MomentumPython1337 OP razo2 : you look at $IWM.US$ today you will see what I mean all the smaller banks all the smaller real estate companies all the biotechs they're all exploding today I don't know how many of them are directly affected by oil price because not all of them are directly connected to oil
razo2 MomentumPython1337 OP : the oil market is never wrong about the markets. we don't just blindly increase/cut supply. you can always print money into hyperinflation, but you can never print oil into existence.
razo2 MomentumPython1337 OP : do your homework and see what happened in 2008 and 1970. I don't want to argue with you.
if you are telling me oil price have no impact in real estate and banking, I don't know what weed are you smoking and clearly have no idea how market works.
razo2 MomentumPython1337 OP : do your homework and read up about the oil market. everything you see in your house has a relationship with oil one way or another.
the medication you take, the clothes you wear, the house you built with cement casting, the rebars you use to build your house, the pipes you use, the car you drive, the phone you use now all have a petrochemical product one way or another with either natural gas/diesel/petroleum being used to produce it.
banks even look at the oil market for directions. do you want to know why?
MomentumPython1337 OP razo2 : look between the time the rate cuts happen for the rates to return back to even 3% maybe 2% it's still months away from now even in September if there's 1 rate cut in 2024 it'll only be 0.25 basis points that's still peanuts when the actual rate is still high
but the market is forward looking these small caps have been dead beat for months and years just look at $IWM.US$ the whole year SPY was exploding double digits YTD this IWM and similar small caps etfs have been dead in the water IWM is trading close to 0% YTD and even if you look at SPY minus the magnificent 7 the rest haven't really gone up much at all and
today I'm not here to argue with you either but you look at all these indices forget about individual stocks look at all these indices all of them are exploding today the money is rotating from the tech mega caps into these small caps there's no denying that
and even if your thesis is true it's still at least 1 solid year if not more before the full rate cut happens and the oil price starts rising sure it might happen in 2nd half of 2025 or first half of 2026 before that effect happens the effects of interest rate cuts is more immediate it's the forward looking expectations that people have and more money is going to flow into these small caps in the mean time from now to 2nd half of 2025
that's a lot of gains to be made just by holding IWM and not even picking any single stock just holding the entire bag like a fool
and so I'm holding IWM and I'm buying some small caps and after they rally to exhaustion and if the earnings are shit in 2026 because oil rises or whatever then they will tank again sure but between now and then there's a lot of money to be made
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