Read an interesting piece yesterday on how Zymergen, a synthetic biology company imploded after a $3 billion IPO on the Nasdaq (link below). With markets flooded with liquidity, money is chasing all kinds of assets, even undeserving ones like Zymergen. EV companies going public without revenue is another indicator of the frothiness of the market (Rivian an EV truck manufacturer that recently went public with zero revenue and $1 billion in losses in the first half of 2021!)
In such times it’s essential that we are able to recognize and invest in solid and sustainable businesses. How do you guys evaluate and identify the right opportunities in such a market?
Having traded in the NSE since 2016 and the US since 2020, with varying degrees of success, I finally came to the conclusion that, in the short term, stocks and markets make no sense at all. The price is just a lot of noise. It’s like a global virtual casino where, since there’s no ‘House’, the hedge funds and experienced traders mostly, not always, win. We must be aware that when you put in an online bid for a stock, it is intercepted by the said traders bots which then put in a bid before you which is detrimental to your buy or sell price.
I realised that these guys are so much smarter and better at trading than me, that in the long run, I’d be lucky to break even. So I decided to follow Mr. Buffett’s philosophy of buy and hold. Unfortunately Vested doesn’t have tools like screener where one can analyse stocks sorted by various data points. The one that I like is Market Cap. I like the safety of buying stock in the biggest or most promising companies in the world, mostly US, China and Europe and accumulating after a retracement of at least 10% and just holding it for a long time, like a house or flat, as an asset. Statistics show that equity outperforms the other asset classes significantly in the long term. Currently my long term Portfolio consists of two stocks each in the US, China and Europe. Happy investing.