Speculation
The jobs number today left the market range bound, slipping between slightly positive and negative. The only real movers were the current favorites in the market, financials and energy stocks. Tech stalled and the market was generally dull. It is pretty clear we will be in this range until earnings start coming in. If earnings are better than expected, we will probably go higher. Lower, and it could be very bumpy. Bitcoin, however, ended the day over $54,000 per coin. It’s gains (and losses) this year have been spectacular. The other big movers were the hard hit Chinese stocks, another speculative area of the market just now. Hard not to be tempted though, particularly in a market where you do not see a potential for any strong positive movement any time soon.
Mark Twain said, “There are two times in a man's life when he should not speculate: when he can't afford it and when he can.” This is good advice. Cramer thinks you need a little speculation to keep you interested in the market, the game of it. I disagree. Money lost is opportunity lost. For every speculative stock you consider, there will be a far less speculative one that will probably get you a good, even great, return without the risk of losing money. Yes, you will not get a huge win, but this is the stock market not a slot machine. To pick a winning biotech, your chances are about 1 in 12. I am not sure about the stats on tech firms, but they are probably about the same. Bitcoin could work out, and it is cool to say you own some, but you could also lose a lot and chances are you will pay pretty high transactions fees just to own it. It may work out, but it is not really investment grade. Yet.
I have not practiced what I preach, but the few speculative stocks I have owned have pretty much all been losers. I simply do not do them anymore. I have a close friend in the biotech industry, very knowledgeable and he told me about a company that I lost half my investment in. I had told myself never again, then took the advice of a young gamer on a sure thing. I lost again. So now I really, really mean it.
If you are young and have been lucky enough to have funded a emergency savings account, are regularly contributing to an employee sponsored retirement plan and have maxed out both your IRA and HSA, then you have permission to invest a small percentage of your extra money into Bitcoin or a ‘sure thing’ someone told you about. Invest, lose money and get it out of your system. Classic case of ‘your first loss is your best loss’. Then save your speculation for that trip to Vegas.
Market Today: Quiet day, only about three trades. Market was range bound and waiting for earnings next week. Jobs number disappointed and confused people. I think part of the low numbers of people filling jobs is: 1) people found they could make do with a lot less during the pandemic (and have savings aside to cushion themselves) 2) women found that being at home helped family life - especially around the issue of childcare 3) there is a lack of immigrants to take the low wage jobs 4) people want jobs that give them flexibility - and not enough jobs do so people are sitting out returning to work.