You can say that to console yourself and to protect you from feeling FOMO. But that’s not how the cycles work kid. And these are not penny stocks and on top of that they evaluation is not even high enough for them to even afford to be cut in half instantly whenever growth is about to flat line. investors see it coming a mile away so that growth never gets priced in in the first place if it is going to flatline. and for something to come down, the first have to be at the really high evaluation, which they are not at, at least not yet which will warrant a PE cut. But if you don’t have high multiples and growth comes down to zero, there’s nothing to cut.
Learn how multiples work before you speak. And of course, how cycles work.
I owned about $8k of AMD for around $2 a share for years (I’d have to see if I can access my history). It was play money but being into tech I believed in it and owned it for years; the stock was flat for a while so I figured I’d use the money and chase gains elsewhere.
Damn stock started climbing just weeks after. I probably would have sold by now, but man - FML.
Flip side, also play money I currently own $3k of INTC at $19 something a share. I’m pissed I didn’t put more money in but whatever.
I bought about 10 nvda in idk 2019 or so and sold flat after a year long dip in 2021.
Oh and I also bought Intel in 2021 and sold at 25 about 3-5 months ago lmao
Oh and I bought AMD at like $8 in 2019 and sold around $30 😔
Look at the flat periods on my chart, my positions usually last more than a month, typically two to three, and I sell covered calls and puts to trade the ups and downs while using the share position as the core, exactly like how Pentwater did. You can call that hedgies think alike. And options premiums for something like this (with IV at \~1.0) are huge.
Especially in the US when you have that stupid flat 30 year mortgage. What are we doing here? Do you really need an explanation?
If you have $5M cash and want to retire, you could buy one home in SF for $1.5M outright. OK great. You very likely are doing fine with the interest from $3.5M. I concede.
Or you could just buy two such homes for 2x500,000 downpayment, turn one to rental. You get cashflow.
Or you just buy one for $500,000, so you still have $4,500,000, and just use the interest to live and pay off the cheap mortgage. Your market performance likely beats the mortgage rate.
What if you have $50M, $500M, $5B, same principles. You can manage these cheap debts , buy multiple homes for investments or business workshops, and come out ahead.
But I also concede, if i was in this situation I would be more inclined in paying cash knowing I would screw up the investment and DRIP. And that relief of having paid off your home is a big deal. Just economically, the richer you are the better off or the more well-placed your money will be by playing these cheap debts… when you are poor you arent thinking about these because thats your only option (mortgage).
I hope you were kidding btw. This is super obvious.